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Markets

Global Markets Report - 7 December

ASX set to open lower after broad selloff on Wall Street, US treasuries continue to decline.


Australia

Australian shares are set to open lower, after a broad selloff late in the day on Wall Street.

ASX futures were down 0.5% or 34 point as of 8:30am on Thursday, suggesting a lower open.

US stocks ended broadly lower following an afternoon selloff with big losses across the energy complex and in information technology shares.

The DJIA fell 70 points, or 0.2%, to 36054, the S&P 500 slipped 0.4% to 4549 and the Nasdaq dropped 0.6% to 14146.

In commodity markets, Brent crude oil fell 3.8% to US$74.26 a barrel while gold was up 0.4% to US$2,026.44.

In local bond markets, the yield on Australian 2 Year government bonds was down at 3.97% while the 10 Year yield was also down at 4.28%. US Treasury notes were down, with the 2 Year yield at 4.60% and the 10 Year yield at 4.12%.

The Australian dollar hit 65.52 US cents up from the previous close of 65.49. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 98.39.

Asia

Chinese shares closed mix as lenders declined, while agricultural commodity and food sectors rose. Among the gainers was Tongwei, up 1.5%, Heilongjiang Agriculture, which added 1.0%, and Hunan New Wellful with a 4.7% rise. EV maker BYD meanwhile jumped 2.5% after its chairman announced plans to buy up to CNY200 million shares. Bank stocks led the losses as Agricultural Bank of China fell 2.2%, Industrial & Commercial Bank of China shed 1.3% and Bank of China lost 1.5%. The country's recovery was again in focus, as the Chinese National Development and Reform Commission said the economy is rebounding steadily, after Moody's lowered its credit outlook. The benchmark Shanghai Composite Index slipped 0.1% to 2968.93, the Shenzhen Composite Index added 0.55% and the ChiNext Price Index rose 0.6%.

Hong Kong shares closed higher as sentiment was lifted after several companies announced buyback plans. Swire Pacific jumped 17% after saying it plans to repurchase up to HK$6 billion of shares. Wuxi Biologics ended 1.15% higher after the company's plan to buy back up to US$600 million of shares. Tech hardware stocks were also broadly higher. Lenovo bounced back after a sharp fall in the previous session, rising 10%. Sunny Optical Technology Group was 3.1% higher. Pharmaceutical companies weighed on the market, with Sino Biopharmaceutical down 1.7% and Alibaba Health Information Technology 1.15% lower. The benchmark Hang Seng Index rose 0.8% to 16463.26, snapping a three-session losing streak. The Hang Seng Tech Index gained 1.8%.

Nikkei Stock Average rose 2.0% to close at 33445.90, marking its biggest one-day advance since mid-November. Possible dip-buying interest following Tuesday's moderate decline as well as mild gains in U.S. stock-index futures likely helped to boost local shares. Gains on the benchmark index were broad-based, with Toppan Holdings jumping 11%, Tokyo Electric Power climbing 8.1%, and Nitori Holdings adding 5.5%. The broader Topix index closed 1.9% higher at 2387.20. USD/JPY was at 147.15, compared with 147.02 as of Tuesday's Tokyo stock-market close. The 10-year JGB yield was down 2 bps at 0.645%.

Indian shares closed higher, notching a third straight record close, as fresh U.S. economic data reinforced the prospect of the Fed ending its interest rate increases. Data released Tuesday showed that U.S. job openings in October hit a two-year low, a sign that the labor market is cooling off in response to higher interest rates. Energy and IT stocks led gains. Wipro gained 3.6% and Tata Consultancy Services was 2.1% higher. Hindustan Oil Exploration rose 2.9% and Reliance Industries added 0.95%. Bank stocks weighed on the market, with Axis Bank down 1.05% and ICICI Bank dropping 1.0%. The benchmark Sensex ended 0.5% higher at 69653.73.

Europe

European stocks rose as downbeat economic news fueled hopes of interest-rate cuts next year. The Stoxx Europe 600 gained 0.5%, the FTSE 100 advanced 0.3%, the CAC 40 and DAX climbed 0.7%, with German tour operator TUI and automotive stocks heading higher. Downbeat German factory order data increased speculation about potential European Central Bank interest-rate cuts in early 2024 and the Dow is flat after worse-than-expected US ADP employment data. Oil majors fell as Brent crude slumped 3.8% to $74.26 a barrel. "Oil prices have continued to struggle, with Brent sinking to fresh five-month lows as US producers flood the market with exports set to rise to a record 6M barrels a day," CMC Markets analyst Michael Hewson wrote.

The FTSE 100 closed Wednesday up 0.34% after commodities investors reversed course. The index has had a better day, bouncing back from two days of declines helped by the basic resources sector, CMC Markets UK chief market analyst Michael Hewson said in a research note. This follows Rio Tinto bringing forward the start of production of iron ore at its Simandou project in Guinea, as well as expressing confidence in demand from China, Hewson said. Elsewhere, Weir Group rose after saying its 2026 operating margin target would be 20%, though British American Tobacco fell to 13-year lows, pushing it close to being one of the worst performers year to date due to forecasting a GBP25 billion impairment charge, Hewson noted.

North America

US stocks ended broadly lower following an afternoon selloff with big losses across the energy complex and in information technology shares.

The DJIA fell 70 points, or 0.2%, to 36054, the S&P 500 slipped 0.4% to 4549 and the Nasdaq dropped 0.6% to 14146.

Sliding oil and natural gas prices weighed on fossil fuel producers and equipment companies. Meanwhile airlines and cruise operators outperformed on hopes for lower costs.

Treasury yields continued their recent decline as data showed a decline in private hiring in November ahead of Friday's nonfarm payrolls report.

Utilities and homebuilders got a boost from the drop in borrowing rates.



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