Global Markets Report - 29 November
ASX set to open higher, after US stocks posted small gains as investors bet on Fed rate cuts in the first half of the year.
Australia
Australian shares are set to open higher, after US stocks posted small gains as investors bet on Fed rate cuts in the first half of the year.
ASX futures were up 0.2% or 15 point as of 8:30am on Wednesday, suggesting a higher open.
U.S. stocks posted modest gains on Tuesday, resuming a strong rally in November that has been propelled by tumbling U.S. bond yields.
The Dow Jones Industrial Average closed up about 83 points, or 0.2%, ending near 35,416, according to preliminary FactSet data. The S&P 500 index was 0.1% higher, while the Nasdaq Composite Index closed up 0.3%.
In commodity markets, Brent crude oil rose 2.1% to US$81.62 a barrel while gold was up 1.4% to US$2,041.29.
In local bond markets, the yield on Australian 2 Year government bonds was down at 4.22% while the 10 Year yield was also down at 4.49%. US Treasury notes were down, with the 2 Year yield at 4.74% and the 10 Year yield at 4.33%.
The Australian dollar hit 66.43 US cents up from the previous close of 66.06. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 97.46.
Asia
Chinese shares closed higher, lifted by auto stocks after local media reported that Huawei has invited four existing smart-car partners to invest in its smart-car joint venture with Chongqing Changan Automobile. Changan jumped 9.8% and Seres Group gained 3.7%. Investor sentiment might have also been lifted after People's Bank of China Gov. Pan Gongsheng struck an upbeat tone about China's economic prospects at a financial conference on Tuesday. Pharma stocks rose broadly as well, with Shenzhen Mindray Bio-Medical Electronics up 1.2%. Property stocks fell despite a slew of stimulus measures. China Vanke shed 0.4% and Poly Developments & Holdings Group dropped 1.3%. The benchmark Shanghai Composite Index ended 0.2% higher at 3038.55, while the Shenzhen Composite Index and the tech-heavy ChiNext Price Index each rose 0.6%.
Hong Kong stocks ended lower, dragged by losses among big tech names and food-and-beverage companies. Meituan slumped 5.2% ahead of 3Q results due after market close, while heavyweight Alibaba shed 2.1%. Beer makers added to the losses, with Budweiser Brewing down 3.7% and China Resources Beer sliding 2.0%. The strength of China's economic recovery was again in focus after a speech by PBOC Gov. Pan Gongsheng, in which he gave an upbeat outlook but called for more efforts to transform the economy and nurture more growth drivers. The benchmark Hang Seng Index fell 1.0% to 17354.14, while the Hang Seng Tech Index lost 0.8%. Hardware and equipment stocks rose broadly, with electronics maker Xiaomi up 2.5% and PC giant Lenovo rising 1.0%.
The Nikkei Stock Average edged 0.1% lower to close at 33408.39 amid yen strength, which hurts exporters' overseas earnings when repatriated to Japan. Investor-led position adjustment ahead of the month's end also probably weighed on the local equity market. Among the worst performers on the benchmark index, Denso dropped 4.8%, Ono Pharmaceutical shed 2.6% and Mazda Motor lost 2.3%. Meanwhile, Sojitz rose 8.5% after it set a three-year average net profit target of Y120.0 billion as part of its medium-term management plan. USD/JPY was at 148.27, down from 149.11 as of Monday's Tokyo stock-market close. The 10-year JGB yield fell 2 bps to 0.750%.
Indian shares edged higher, led by Adani companies and energy stocks. Shares of all Adani Group companies advanced following reports that India's Supreme Court has wrapped up hearings related to short seller Hindenburg Research's allegations of stock-price manipulation by the group. Adani Energy Solutions gained 19% and Adani Power rose 12%. Gulf Oil Lubricants India gained 8.4% and Indian Oil was 4.6% higher. Among stocks on the benchmark index, Sun Pharmaceutical Industries shed 0.4% and ITC was 0.6% lower. India's Sensex ended 0.3% higher at 66174.20.
Europe
European shares closed mixed as investors await key U.S. inflation data later this week, with the Stoxx Europe 600 ending down 0.3% at 457.04, though major German, Italian and Spanish indexes rose in line with gains in U.S. stocks. "Global stock markets saw a lacklustre, slightly negative session as volatility slides to January 2020 lows," writes Axel Rudolph, senior market analyst at IG. Meanwhile, the euro rose to its highest level since mid-August at $1.1003 after U.S. Federal Reserve governor Chris Waller said a weakening U.S. economy should lower inflation. Gains in industrial stocks helped lift Germany's DAX by 0.2% and France's CAC 40 lost 0.2%.
The FTSE 100 closed Tuesday down 0.07% in another soft session for markets in Europe. The index dipped on the back of more light profit taking, as the end of a strong month for stock markets draws close, CMC Markets UK chief market analyst Michael Hewson says in a research note. "The FTSE 100 has struggled, slipping briefly to a 2-week low, with weakness in the luxury sector acting as the main drag after HSBC cut its outlook on the sector due to concerns that demand is likely to be subdued for the next five to six months," Hewson says. On the plus side, Rolls-Royce shares have seen another decent uplift, rising to a four-year high after upgrading full-year expectations, Hewson says.
North America
U.S. stocks posted modest gains on Tuesday, resuming a strong rally in November that has been propelled by tumbling U.S. bond yields.
The Dow Jones Industrial Average closed up about 83 points, or 0.2%, ending near 35,416, according to preliminary FactSet data. The S&P 500 index was 0.1% higher, while the Nasdaq Composite Index closed up 0.3%.
Equity investors were emboldened after Fed Governor Christopher Waller said on Tuesday that a cooling economy could help bring inflation down to the central bank's 2% yearly target, even though he also said it's unclear if more interest rate hikes were warranted. The 10-year Treasury yield slipped to 4.335%, its lowest yield in about two months.