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Markets

Global Markets Report - 6 December

ASX set to open higher, while US stocks continued to pull back from their late-November rally.


Australia

Australian shares are set to open higher, while US stocks continued to pull back from their late-November rally.

ASX futures were up 0.4% or 27 point as of 8:30am on Wednesday, suggesting a higher open.

U.S. stocks finished mostly lower on Tuesday, with the Dow logging back-to-back losses for the first time in nearly a month, while a rally in megacap technology stocks helped boost the Nasdaq.

The S&P 500 fell by 2.60 points, or 0.1%, to 4,567.18, according to preliminary closing data from FactSet. The Dow Jones Industrial Average fell by 79.88 points, or 0.2%, to 36,124.56. Meanwhile, the Nasdaq Composite gained 44.42 points, or 0.3%, to 14,229.91.

In commodity markets, Brent crude oil fell 1.0% to US$77.22 a barrel while gold was down 0.5% to US$2,019.03.

In local bond markets, the yield on Australian 2 Year government bonds was down at 4.07% while the 10 Year yield was also down at 4.41%. US Treasury notes were down, with the 2 Year yield at 4.59% and the 10 Year yield at 4.18%.

The Australian dollar hit 65.53 US cents down from the previous close of 66.19. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 98.26.

Asia

Chinese shares closed lower as the country's economic growth remained an overhang for investors despite recent government-led efforts to support markets. Investors await more monthly economic data due later this week to gauge the health of the world's second-largest economy. The benchmark Shanghai Composite Index declined 1.7% to 2972.30, ending below the key 3000 level again. The Shenzhen Composite Index was 1.95% lower and the tech-heavy ChiNext Price Index was off by 2.0%. All the sectors ended in the red, with software and hardware stocks among the worst performers. Beijing Kingsoft Office Software declined 2.65% and iFlytek was down 3.85%. Hangzhou Hikvision Digital Technology shed 3.15% and Foxconn Industrial Internet was 4.3% lower.

Hong Kong shares closed lower, in line with losses among Chinese mainland equities markets. Investors are likely cautious ahead of upcoming U.S. jobs data, particularly as the market "party" mood on speculation of more aggressive Fed rate cuts has deflated, Natixis economist Gary Ng says. Rate-sensitive sectors like tech and finance were among the day's worst performers in Hong Kong, Ng said. PC giant Lenovo led the losses, falling 10%, while internet company Netease shed 5.2%. Wuxi Biologics' slump continued, with the contract drugmaker dropping 8.45% as analysts cut forecasts on lowered guidance. Among the few gainers was retailer Li Ning, which rose 2.7%, and JD Health, up 1.5%. The benchmark Hang Seng Index fell 1.9% to 16327.86; the Hang Seng Tech Index lost 2.05%.

Japanese shares fell, with the Nikkei Stock Average down 1.4% to close at 32775.82, dragged by technology stocks following the overnight drop in the tech-focused Nasdaq Composite. The tech-led rally seems to have lost steam, as equity markets may have been overbought, says Tina Teng, markets analyst at CMC Markets, in an email. The worst performers on the Japanese benchmark index included Advantest, which slid 6.0%, Disco Corp., which slipped 5.6%, and Screen Holdings, which dropped 5.4%. USD/JPY was at 147.02, up from 146.78 as of Monday's Tokyo stock market close. The 10-year JGB yield was down 2bps at 0.670%.

Indian shares closed higher for a sixth straight session, bucking losses in regional markets as investor sentiment continued to be buoyed by state election results. Meanwhile, India's strong economic expansion has been a key aspect of its appeal among global investors, with the solid 3Q GDP growth data further consolidating that, ANZ analysts Dhiraj Nim and Sanjay Mathur say in a research note. Shares of Adani Group companies jumped after Adani Green Energy secured a $1.36 billion loan and a report that a U.S. agency wasn't concerned about a short seller's negative report about the conglomerate. Adani Green and Adani Energy Solutions surged 20% each. Among the stocks on the benchmark index, Power Grid Corp. of India was the best performer, rising 4.5%. India's Sensex closed 0.6% higher at 69296.14.

Europe

European stocks mostly rose, though losses for miners limited gains amid uncertainty about China's economic outlook. The Stoxx Europe 600 gained 0.4%, the CAC 40 advanced 0.7% and the DAX rallied 0.8%, though the FTSE 100 dropped 0.3% as Fresnillo, Anglo American, Antofagasta, Glencore and other miners fell. Oil shares traded mixed as Brent crude rose 0.3% to $78.25 a barrel. "European markets are taking a more constructive view following an Asian session with sharp declines across China-related stocks," Scope Markets analyst Joshua Mahony wrote. "A Moody's decision to cut the Chinese credit outlook raised concerns over the sustainability of the country's fiscal pathway. The shift onto a 'negative' outlook highlights concerns that its current fiscal spending habits pose a risk to the economy."

The FTSE 100 index fell 0.3% to 7,489.84, underperforming higher European indexes as heavyweight mining stocks fell amid lower base-metal prices, while banks dropped after a report that Qatar Investment Authority is cutting its stake in Barclays. U.K. equipment rental company Ashtead dropped 3.8% after an earnings update amid concerns about the outlook for its U.S. operations. Barclays fell 2.2% after the FT reported that Qatar is selling around GBP510 million pounds ($644.3 million) worth of shares. Peers followed suit, with HSBC down 1% and Lloyds down 0.5%. Among miners, Anglo American lost 1.5% and Rio Tinto 0.6%. Gainers included house builders, retailers and utility stocks.

North America

U.S. stocks finished mostly lower on Tuesday, with the Dow logging back-to-back losses for the first time in nearly a month, while a rally in megacap technology stocks helped boost the Nasdaq.

The S&P 500 fell by 2.60 points, or 0.1%, to 4,567.18, according to preliminary closing data from FactSet. The Dow Jones Industrial Average fell by 79.88 points, or 0.2%, to 36,124.56. Meanwhile, the Nasdaq Composite gained 44.42 points, or 0.3%, to 14,229.91.

Apple Inc.'s (AAPL) gains on Tuesday saw it end the session with a market capitalization north of $3 trillion for the first time since early August, according to Dow Jones Market Data.

Asana Inc.'s (ASAN) stock dropped 6% in extended trading Tuesday after the software company reported quarterly results.

U.S. stocks rallied hard in November, with the S&P 500 rising more than 11% for its best monthly gain of the year, and one of its best monthly advances over the past decade. But markets have pulled back early this week, raising questions about whether the rally can continue, market strategists said.



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