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Markets

Global Markets Report - 28 November

ASX set to open higher, after a subdued session on Wall Street saw all major indices close slightly lower.


Australia

Australian shares are set to open higher, after a subdued session on Wall Street saw all major indices close slightly lower.

ASX futures were up 0.1% or 6 point as of 8:15am on Tuesday, suggesting a higher open.

U.S. stocks closed lower on Monday, taking a breather from a powerful rally sweeping through the stock market in November.

The Dow Jones Industrial Average shed about 56 points, or 0.2%, to end near 35,333, according to preliminary FactSet data.

The S&P 500 index fell 0.2% and the Nasdaq Composite Index closed about 0.1% lower.

In commodity markets, Brent crude oil fell 0.7% to US$80.04 a barrel while gold was up 0.7% to US$2,014.44.

In local bond markets, the yield on Australian 2 Year government bonds was up at 4.27% while the 10 Year yield was also up at 4.56%. US Treasury notes were down, with the 2 Year yield at 4.88% and the 10 Year yield at 4.38%.

The Australian dollar hit 66.04 US cents up from the previous close of 65.84. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 97.88.

Asia

Chinese shares closed lower, dragged by property and beverage stocks. Vantone Neo Development Group led the losses, falling 10% while Zhuhai Huafa Properties shed 3.7% and Poly Developments & Holdings declined 2.5%. Beverage stocks Kweichow Moutai and Shanxi Xinghuacun Fen Wine Factory fell 0.8% and 1.5%, respectively. Coal and semiconductor stocks gained with Shanxi Lu'an Environmental Energy Development rising 6.2% and Will Semiconductor adding 4.0%. Chongqing Changan Automobile rose 10% on the company's plan for a joint venture with Huawei. The benchmark Shanghai Composite Index closed 0.3% lower at 3031.70, the Shenzhen Composite Index fell 0.4% while the ChiNext Price Index declined 0.6%.

Hong Kong shares closed lower, dragged by property and consumer products stocks. Although the contraction in China's industrial profits eased for the eighth straight month, the struggle to revert to growth territory indicates that economic recovery has been slow, market strategist Jun Rong Yeap from IG said. The benchmark Hang Seng Index closed 0.2% lower at 17525.06, dragged by the property and consumer products sectors. New World Development and Longfor Group Holdings led losses, dropping 6.4% and 4.1%, respectively. Country Garden Services was down 3.7%. Li Ning was down 2.6% and Budweiser Brewing lost 2.9%. Semiconductor Manufacturing International led gains, rising 3.0% and Chow Tai Fook Jewellery Group was up 2.8%, leading gains. The benchmark Hang Seng Tech Index rose 0.2%.

Nikkei Stock Average fell 0.5% to close at 33447.67 on possible profit-taking by investors. JPY strength, which hurts the overseas earnings of Japanese exporters, may also have weighed on the local equity market. Among the worst performers on the benchmark index, Mitsubishi Heavy Industries dropped 5.0%, Zensho Holdings lost 4.6%, and Sumitomo Metal Mining was down 3.8%. The broader Topix index closed 0.4% lower at 2381.76. USD/JPY was at 149.11, down from 149.24 as of Friday's Tokyo stock-market close. The 10-year JGB yield was up a half basis point at 0.775%.

Indian shares ended slightly lower, with weakness in tech stocks offsetting banking gains. HCL Technologies dropped 1.55% and Wipro was down 1.5%. Tech Mahindra fell 1.0% and Tata Consultancy Services was down 1.5%. Bank and steel companies led gains. Axis Bank and JSW Steel rose 0.9% and 0.8%, respectively. HDFC Bank and ICICI Bank both rose 0.7%. The benchmark Sensex closed 0.1% lower at 65970.04, closing the week 0.3% lower. Investors are waiting for India's GDP data due next week.

Indian shares ended slightly lower, with weakness in tech stocks offsetting banking gains. HCL Technologies dropped 1.55% and Wipro was down 1.5%. Tech Mahindra fell 1.0% and Tata Consultancy Services was down 1.5%. Bank and steel companies led gains. Axis Bank and JSW Steel rose 0.9% and 0.8%, respectively. HDFC Bank and ICICI Bank both rose 0.7%. The benchmark Sensex closed 0.1% lower at 65970.04, closing the week 0.3% lower. Investors are waiting for India's GDP data due next week.

Europe

The Stoxx Europe 600 closed down 0.3% at 458.41, pulling away from last week's two-month peak, as stocks reversed recent gains in quiet trade after the U.S. Thanksgiving holiday. Oil stocks and miners were among the fallers as crude oil prices fell, though higher gold and silver prices lifted precious-metal miners. "After weeks of gains, it is not surprising to see stocks catch their breath in afternoon trading," wrote IG analyst Chris Beauchamp. However, with U.S. interest rates looking to have peaked, the broader trend of falling yields and rising stocks could continue well into December, he says. Germany's DAX, France's CAC 40 and the U.K.'s FTSE 100 all closed 0.4% lower.

The FTSE 100 fell 0.4% to 7460.70, led down by falls in heavyweight oil and mining stocks, though Rightmove rose sharply after the U.K property website raised part of its revenue guidance for 2023. "The FTSE 100 is underperforming its European peers this morning, with energy-stocks in the firing line ahead of this week's OPEC meeting," wrote Joshua Mahony at Scope Markets. However, declines in crude and natural-gas prices could help allay inflation concerns, he says. Oil giants Shell and BP fell 1.1% and 0.7% respectively, and miner Glencore lost 0.7%. Gambling company Entain was the biggest faller, down 2.1%. Rightmove jumped 6.2%, with other property stocks rising in tandem, and higher precious-metal prices lifted Fresnillo by 5.2%.

North America

U.S. stocks closed lower on Monday, taking a breather from a powerful rally sweeping through the stock market in November.

The Dow Jones Industrial Average shed about 56 points, or 0.2%, to end near 35,333, according to preliminary FactSet data.

The S&P 500 index fell 0.2% and the Nasdaq Composite Index closed about 0.1% lower.

U.S. stocks have staged a powerful rally this month, fueled by a sharp retreat in benchmark borrowing costs. The 10-year Treasury yield fell to 4.388% on Monday, the lowest in about two months, after briefly trading above 5% in October, according to Dow Jones Market Data.

A major source of concern has been that higher borrowing costs might help the Federal Reserve tame inflation, but also derail the U.S. economy.

With that in mind, investors will be keeping a close eye on economic data due this week, including the personal consumption expenditure index due on Thursday, a favored inflation gauge of Fed officials.

The Dow was up 6.9% on the month through Monday, while the S&P 500 was 8.5% higher and the Nasdaq was on pace for a 10.8% monthly gain, according to FactSet.

Energy stocks declined as natural gas prices slipped with worries about demand, and oil fell ahead of an OPEC meeting later this week.

Consumer discretionary shares got a lift as investors digested results from the kickoff to the holiday shopping season. Amazon gained 0.7% and Shopify climbed 4.9% after reporting strong Black Friday results and good demand for deals on cyber Monday.



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