Global Markets Report - 6 March
Australian shares are set to gain today after economic data pushed US indices higher on Friday.
Australia
Australian shares are set to gain as another trading week kicks off. US services industry data pushed stocks higher on Friday, assuring investors of the economy's strength despite aggressive rate hikes.
US stocks gained Friday after data on the US services sector showed its strongest activity since the summer. The signs of economic resilience outweighed concerns about inflation and tighter global monetary policy that prompted selling earlier in the week.
The Nasdaq Composite jumped 2% as technology stocks recovered some of their losses from a dismal performance in February. The S&P 500 advanced 1.6% and the Dow Jones Industrial Average gained 1.2%.
All three indices finished higher for the week, snapping a four-week losing streak for the Dow.
Friday's gains capped off a week of moderate peaks and troughs as investors weighed strong global economic data against higher inflation expectations. The resilience of the world economy likely means that central banks will keep raising interest rates to tame consumer prices, investors and analysts said.
ASX futures were up 58 points or 0.8% as of 8:00am on Saturday, suggesting a positive open.
In commodity markets, Brent crude oil added 1.36% to $US85.90 a barrel while gold gained 1.10% to US$1,856.03.
Australian government bond yields edged higher, with the 2 Year increasing to 3.59% and the 10 Year rising to 3.90%. US Treasury note yields remained higher, with the 2 Year at 4.86% and the 10 Year reaching 3.96%.
The Australian dollar climbed to 67.65 US cents from its previous close of 67.28. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, dipped to 97.52.
Asia
Chinese stocks ended the session mixed, resuming their range-bound trading pattern of recent weeks. The benchmark Shanghai Composite Index inched up 0.5% to 3328.39, while the Shenzhen Composite Index edged 2.4 points higher to settle at 2152.13. The tech-heavy ChiNext Price Index rose 0.2% to 2422.44. Industrial sectors such as engineering, heavy equipment and construction companies led gains. China State Construction Engineering rose 3.7% and China Railway Hi-tech Industry added 1.1%. Producers of consumer goods offset the momentum, however. Beijing Yanjing Brewery shed 4.8% and snack company Bestore fell 3.1%.
Hong Kong's benchmark Hang Seng Index finished 0.7% higher at 20567.54, driven by positive sentiment as the National People's Congress annual meeting approaches. Hopes are high that Beijing will set a clear pro-growth tone for the year, supporting equities markets. Most stocks on the HSI climbed, with tech companies leading the gainers. The Hang Seng Tech Index rose 2.1% to 4211.31, while Baidu added 5.5% and JD.com put on 3.2%. Video-sharing platform Bilibili jumped 10% after posting Q4 earnings Thursday showing a narrowed net loss. ZTO Express closed 1.3% higher after rejecting allegations in a U.S.-based short-seller's report. Consumer stocks weighed on the market, with Budweiser Brewing Co. dropping 3.7% and Li Ning Company ending 1.6% lower.
Japanese stocks ended higher, led by gains in pharmaceutical and trading companies, as concerns eased about borrowing costs. Daiichi Sankyo gained 5.1% and Mitsui & Co. advanced 4.1%. The Nikkei Stock Average rose 1.6% to 27927.47. The consumer-price index, excluding fresh foods, in February for Tokyo rose 3.3% on year, down from a 4.3% rise in January.
India's benchmark Sensex index extended early gains to end 1.5% higher at 59808.97, supported by lenders and Adani Group stocks. "Investors are likely to remain positive and look for bargain buy opportunities. They are also reacting to the results of assembly elections," ICICI Securities analysts said in a note. State Bank of India advanced 5.1%, IndusInd Bank added 2.2% and HDFC Bank rose 1.9%. Adani Group stocks ended higher, following news that Florida-based GQG Partners invested nearly $1.9 billion in the shares, which had tumbled due to a report by U.S. short-seller Hindenburg Research in late January. Adani Enterprises surged 17% and Adani Ports & Special Economic Zone gained 9.8%.
Europe
European stocks closed higher as Wall Street rose after the release of stronger-than-expected US service industry data.
The US Institute for Supply Management services PMI index for February dropped to 55.1 from 55.2 in January, but above market expectations, with new orders and prices paid both topping forecasts. "The strong jump in new orders stands out," Forex Live analyst Adam Button wrote. "Prices cooled, but not much and perhaps not enough. Without knowing any of the context, you would look at this and see a strong economy that's picking up."
The pan-European Stoxx Europe 600 added 1% Friday, the French CAC 40 gained 0.9% and the German DAX advanced 1.6%. The British FTSE 100 managed to close 3.1 points or 0.04% higher. Industrials stocks and miners led the index as optimism increased over China's economic recovery.
"Today's best performers have been the likes of Glencore, Antofagasta, and Rio Tinto on the back of this morning's improvement in Chinese economic numbers, while on the downside today's weakness has resulted from disappointment over earnings numbers," CMC Markets analyst Michael Hewson said in a note. The online grocer Ocado lifted the FTSE 100 with a 4.5% rise, followed by Persimmon and Legal & General, up 4% and 3.3%, respectively. Amid the top fallers, Pearson closed down 3.8% after reporting a cautious outlook as it sees a revenue drop by low-single digits in its higher education division, Hewson added.
North America
US stocks gained Friday after data on the US services sector showed its strongest activity since the summer. The signs of economic resilience outweighed concerns about inflation and tighter global monetary policy that prompted selling earlier in the week.
The Nasdaq Composite jumped 2% as technology stocks recovered some of their losses from a dismal performance in February. The S&P 500 advanced 1.6% and the Dow Jones Industrial Average gained 1.2%.
All three indices finished higher for the week, snapping a four-week losing streak for the Dow.
Friday's gains capped off a week of moderate peaks and troughs as investors weighed strong global economic data against higher inflation expectations. The resilience of the world economy likely means that central banks will keep raising interest rates to tame consumer prices, investors and analysts said.
"Investors are getting comfortable that higher rates aren't going to crush the economy," said Michael Arone, chief investment strategist at State Street Global Advisors. That should continue unless investors start to forecast the US Federal Reserve will boost its federal-funds lending rate above the 5.25% to 5.5% range, he said.
Two readouts released Friday on the health of the US services sector showed relatively robust spending in February.
The S&P Global US Services PMI index rose to 50.6 in February from 46.8 in January. That was the highest reading since June, and it pushed past the 50.0 threshold that signals expansion. Similar data for the eurozone and China showed that activity in the services sector in both markets expanded last month.
The Institute for Supply Management's services activity index decreased minutely to 55.1 in February from 55.2 in January but exceeded the consensus forecast of 54.3 among economists polled by The Wall Street Journal.
"We're trying to draw a signal from each data release about whether that means that we're close to the peak in inflation and interest rates," said Sebastian Mackay, a multi-asset fund manager at Invesco.
Dell Technologies fell about 1% after the computer maker gave a cautious outlook due to weaker demand.