Global Markets Report - 19 December
ASX set to open higher, with US benchmarks continuing their seven-week winning streak.
Australia
Australian shares are set to open higher, with US benchmarks continuing their seven-week winning streak.
ASX futures were up 0.1 or 6 points as of 8:30am on Tuesday, suggesting a higher open.
U.S. stocks rose again to start the week with the Dow Industrials gaining a fraction of a point to record yet another all-time high.
DJIA gained 0.9 point to 37306, the S&P 500 climbed 0.5% to 4740 and the Nasdaq rose 0.6% to 14904.
In commodity markets, Brent crude oil rose 2.1% to US$78.17 a barrel while gold was up 0.3% to US$2,026.51.
In local bond markets, the yield on Australian 2 Year government bonds was down at 3.80% while the 10 Year yield was also down at 4.05%. US Treasury notes were up, with the 2 Year yield at 4.46% and the 10 Year yield at 3.94%.
The Australian dollar hit 66.96 US cents down from the previous close of 67.04. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 96.91.
Asia
Chinese shares closed lower, dragged by semiconductor and telecom-related sectors. Sentiment remains cautious amid a weaker China economic outlook for 2024. Semiconductor sector shares led the losses with LONGi Green Energy Technology falling 2.4% and Will Semiconductor Co. down 2.05%. Telecommunication-equipment stocks also declined with Wingtech Technology losing 2.3% and China Spacesat falling 1.1%. Meanwhile, shipping companies gained. Cosco Shipping rose 6.0% and Ningbo Zhoushan Port added 0.8%. The benchmark Shanghai Composite Index closed 0.4% lower at 2930.80, the Shenzhen Composite Index declined 1.25% while the ChiNext Price Index fell 1.5%.
Hong Kong shares closed lower, dragged by semiconductor and consumer sectors. Investors are awaiting signs of more stimulus from Beijing amid weak sentiment toward the outlook for the world's second-largest economy. Xinyi Solar led the losses, dropping 5.95%. Haidilao International and China Mengniu Dairy shed 3.7% and 3.5%, respectively. SenseTime lost 11% after news that its founder Xiao'ou Tang died on Dec. 15. Among the few gainers was Orient Overseas (International), which rose 4.2%, and Techtronic Industries, up 3.6%. Alibaba gained 0.6%. The benchmark Hang Seng Index closed 1.0% lower at 16629.23 and the Hang Seng Tech Index was down 1.3% at 3730.66.
Japan's Nikkei Stock Average closed 0.6% lower at 32758.98 as investors looked to book profit after the index's rally in the past few sessions. Consumer-related and financial stocks weighed in today's session with Sony down 2.2%, and Marubeni and Mitsui falling 0.6% and 0.8%, respectively. SMFG closed 1.8% lower and Mizuho Financial declined 1.3%. Some auto stocks gained with Toyota Motor adding 0.7%, Nissan Motor rising 1.5%, and Suzuki Motor up 0.2%. Investors will now be watching for the Bank of Japan monetary policy meeting decision due Tuesday.
Indian shares fell, ending a three-session winning streak as they tracked losses in most regional markets. Despite the declines, Jefferies analysts expect Indian equities to notch new highs in 2024, given the strong domestic flows. Solid corporate earnings growth alongside margin improvement and expected political continuity after BJP's recent state wins could also prop up the market next year, the analysts say in a research note. Banks and utility stocks led declines. ICICI Bank fell 1.6% and Axis Bank was 0.8% lower. Power Grid Corp. of India shed 2.3% and Orient Green Power was off by 2.0%. Sun Pharmaceutical Industries was the benchmark index's best performer, gaining 1.25%. India's Sensex ended 0.2% lower at 71315.09.
Europe
European stocks mostly dropped, though oil shares rose as crude prices gained amid concerns about potential supply disruption from attacks on ships in the Red Sea. The Stoxx Europe 600 dropped 0.3% and the CAC 40 and DAX retreated 0.4% and 0.6% respectively, with semi-conductor stocks among the biggest losers. Still the FTSE 100 rose 0.5% as a 2.4% gain in Brent crude to $78.36 a barrel boosted BP and Shell. "The FTSE 100 is the only major European stock index to remain in the green as it benefits from rapidly rising oil and gas prices due to intensifying Houthi military attacks on commercial vessels," IG analyst Axel Rudolph writes. "These have caused major shipping companies to halt shipments through the Suez Canal and Red Sea."
The FTSE 100 rose 0.5% to 7,614.48, outperforming European indexes that were mostly lower, buoyed by significant gains for telecoms company Vodafone and rises for heavyweight oil and mining stocks. Vodafone jumped 6.2% after Iliad Group presented a proposal to merge their Italian businesses, while Vodafone said it was exploring options with several parties over its Italian business. Oil giant BP and copper miner Antofagasta both rose 1%, but chemicals company Croda International fell 2.1% after saying 2023 pretax profit would be at the lower end of guidance. Trade is quiet ahead of the year-end holidays, with traders still cautious after the Bank of England and the European Central Bank last week avoided discussing interest-rate cuts.
North America
U.S. stocks rose again to start the week with the Dow Industrials gaining a fraction of a point to record yet another all-time high.
DJIA gained 0.9 point to 37306, the S&P 500 climbed 0.5% to 4740 and the Nasdaq rose 0.6% to 14904.
The Nasdaq rose for the eighth straight time and outperformed the other indexes behind strength in communication services and tech shares.
The major averages are on a seven-week winning streak on expectations the Fed will start cutting rates next year.
U.S. Steel shares jumped 26% after agreeing to be bought by Japan's Nippon Steel, while Adobe gained 2.5% after its proposed $20 billion acquisition of Figma fell apart.