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Markets

Global Markets Report - 5 December

ASX set to open lower, after all three major US indices lost ground.


Australia

Australian shares are set to open lower, after all three major US indices lost ground.

ASX futures were down 0.5% or 38 point as of 8:30am on Tuesday, suggesting a lower open.

US stocks started the week lower as losses by technology and communication services shares weighed on the broader averages.

DJIA fell 41 points to 36204, the S&P 500 lost 0.5% to 4569 and the Nasdaq dropped 0.8% to 14185.

In commodity markets, Brent crude oil fell 0.8% to US$78.28 a barrel while gold was down 2.1% to US$2,029.36.

In local bond markets, the yield on Australian 2 Year government bonds was down at 4.11% while the 10 Year yield was also down at 4.44%. US Treasury notes were up, with the 2 Year yield at 4.63% and the 10 Year yield at 4.25%.

The Australian dollar hit 66.13 US cents down from the previous close of 66.73. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 97.97.

Asia

Chinese shares closed lower, dragged by property and pharmaceuticals stocks. Pharmaron Beijing fell 9.9% and Poly Developments & Holdings declined 2.8%. Property stocks China Vanke and China Merchants Shekou Industrial Zone fell 2.8% and 1.9%, respectively. Gainers included Shandong Gold Mining which rose 4.5% and Zijin Mining up 3.0%. Shanxi Lu'an Environmental Energy Development gained 2.0% and China Coal Energy advanced 1.8%. The benchmark Shanghai Composite Index and the Shenzhen Composite Index each declined 0.3% to 3022.91 and 1881.64, respectively. The ChiNext Price Index fell 0.9%.

Hong Kong shares ended lower amid concerns over China's economy, as investors await more economic data due later this week. Goldman Sachs reckons that markets haven't responded much to China's recent easing moves because investors don't think the stimulus measures are large enough, and questions remain around their net impact. Previous experience has also left investors more cautious about responding to policy-easing news, GS added. The benchmark Hang Seng Index fell 1.1% to 16646.05, a near-13-month low. The Hang Seng Tech Index declined 1.9%. Pharmaceutical stocks fell broadly, with Wuxi Biologics (Cayman) down 24% before trading was halted. Wuxi AppTec dropped 8.8%. China Evergrande Group jumped 9.2% after a court granted the Chinese property developer more time for a restructuring plan.

The Nikkei Stock Average fell 0.6% to close at 33231.27, dragged down by JPY strength, which hurts the overseas earnings of exporters when repatriated to Japan. Among the worst performers on the benchmark index were auto-parts manufacturers Toyota Industries and Denso Corp., which fell 5.2% and 3.3%, respectively, and video game publisher Bandai Namco Holdings, which lost 3.6%. USD/JPY was at 146.78, down from 148.04 as of Friday's Tokyo stock market close. The 10-year JGB yield was down one basis point at 0.690%.

Indian shares ended higher, with investor sentiment boosted by the results of state elections over the weekend. The ruling Bharatiya Janata Party's win in three out of four states should ease market concerns over more fiscal populism and mitigate downside political risks ahead of the national elections next year, Nomura analysts Sonal Varma and Aurodeep Nandi said in a research note. Financial and energy stocks led gains. ICICI Bank gained 4.7% and State Bank of India added 4.0%. GAIL (India) was up 4.2% and Coal India rose 2.3%. Larsen & Toubro gained 3.9% and UltraTech Cement was up 3.0%. The benchmark Sensex ended 2.05% higher at 68865.12.

Europe

European stocks dropped amid losses for oil shares as demand concerns and production uncertainty hit crude-oil prices. The Stoxx Europe 600 fell 0.2%, the CAC 40 retreated 0.3%, the DAX traded flat and Norwegian stocks backtracked 1% as Brent crude slipped 0.3% to $78.64 a barrel. BP, TotalEnergies, Shell, Eni, Equinor and other oil-related equities lost ground. Additional supply cuts from OPEC and allies have failed to lift prices amid doubts about whether some OPEC-linked producers will reduce output as promised, HSBC says. "Among the countries that have pledged new cuts, at least four (including the UAE, Iraq and Russia) are over-producing versus quotas. Another interpretation is that cuts are needed because demand is weak," HSBC analysts wrote.

The FTSE 100 ended Monday down 0.22%, as a weaker commodities sector weighed on the index. Weakness in basic resources and energy acted as the main drag on the FTSE 100, though there also appears to be an element of profit taking at play, says CMC Markets UK chief market analyst Michael Hewson in a market comment. This hit the miners after a broker upgrade inspired gains on Friday, with miners Anglo American and Antofagasta slipping back Monday. BP and Shell also dragged down the index on the back of further weakness in oil and gas prices, Hewson says.

North America

US stocks started the week lower as losses by technology and communication services shares weighed on the broader averages.

DJIA fell 41 points to 36204, the S&P 500 lost 0.5% to 4569 and the Nasdaq dropped 0.8% to 14185.

Semiconductor makers were among the biggest losers with Intel, Nvidia and Advanced Micro Devices all falling.

Uber Technologies gained 2.2% as it will join the S&P 500 index, while Spotify Technology gains 7.5% after announcing its third round of layoffs this year. Alaska Air shares slid 14% after the carrier agreed to buy Hawaiian Airlines, which surged 192%.

Treasury yields gained some ground and the dollar strengthened, while oil prices fell on demand worries.



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