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Markets

Global Markets Report - 1 February

ASX set to open lower, after US stocks fell overnight.


Australia

Australian shares are set to open lower, after US stocks fell overnight.

ASX futures were down 1.1% or 84 points as of 8:30am on Thursday, suggesting a lower open.

U.S. stocks settled lower after the Fed held rates steady as expected but wouldn't commit to cuts until it is confident that inflation is headed down to its 2% target.

DJIA fell 317 points to 38150, the S&P 500 lost 1.6% to 4845 and the Nasdaq slid 2.2% to 15164.

In commodity markets, Brent crude oil fell 1.4% to US$81.71 a barrel while gold was up 0.04% to US$2,037.74.

In local bond markets, the yield on Australian 2 Year government bonds was down at 3.67% while the 10 Year yield was also down at 4.01%. US Treasury notes were down, with the 2 Year yield at 4.22% and the 10 Year yield at 3.93%.

The Australian dollar hit 65.57 US cents down from its previous close of 66.00. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 97.86.

Asia

Chinese shares closed lower with investor sentiment weighed by weak domestic factory activity. A bearish tone has resurged as key economic indicators continued to disappoint, Oanda analyst Kelvin Wong said in a note. Even if the U.S. Fed issues a dovish monetary guidance Chinese markets may not be able to benefit from it until the deflationary risk is removed, he added. Software and consumer services stocks led the session's losses. Beijing Kingsoft Office Software dropped 6.65%, iFlytek was 6.7% lower and China Tourism Group Duty Free lost 3.0%. The Shanghai Composite Index declined 1.5% to 2788.55, the Shenzhen Composite Index was 3.0% lower and the tech-heavy ChiNext Price Index fell 0.7%.

Hong Kong's Hang Seng Index fell 1.4% to close at 15485.07, weighed by the retail and technology sectors. The benchmark index was dragged by China's official manufacturing PMI gauge released earlier, which signaled continuing economic weakness. Among the biggest losers, Sunny Optical Technology slid 11.7% after guiding for lower 2023 net profit. Wuxi Biologics dropped 8.3%, and Anta Sports Products lost 5.1%. Meanwhile, among gainers, Shenzhou International Group rose 2.65%, and Citic Group gained 2.2%. The Hang Seng Tech Index closed down 3.0% at 3005.80.

Japan's Nikkei Stock Average rose 0.6% to close at 36286.71, reversing earlier losses amid possible position adjustments ahead of the FOMC decision later today. While it would be surprising if the Fed were to signal a rate cut in March, the central bank might well open the door to a rate cut in 2Q, says Michael Hewson, chief market analyst at CMC Markets, in an email. Komatsu climbed 8.6% after its 3Q net profit beat analysts' expectations, and Canon rose 7.85% after it projected higher revenue and net profit for 2024. USD/JPY was at 147.72, up from 147.60 as of Tuesday 5 p.m. Eastern Time. The 10-year JGB yield was up 2.5bps at 0.730%.

Indian shares ended higher, lifted by auto and bank stocks. Maruti Suzuki India rose 2.3% after reporting a 33% net profit gain on year in 3Q. Tata Motors added 2.9%. IndusInd Bank was 1.1% higher and Axis Bank put on 1.3%. Sun Pharmaceutical Industries was the best performer of this session on the benchmark index, rising 3.4% on solid 3Q results. Larsen & Toubro lost 4.2%. Investors are eyeing the Fed's monetary-policy decision and comments on the timeline of rate cuts due later. India's Sensex index ended 0.9% higher at 71752.11.

Europe

European markets mostly rose after preliminary 4Q GDP showed the eurozone narrowly avoiding recession. The Stoxx Europe 600 and DAX advanced 0.2%, the FTSE 100 gained 0.4% and the CAC 40 advanced 0.5%, with banks among the biggest risers. Oil shares traded mixed as Brent crude fell 1.4% to $81.71 a barrel. Zero economic growth in the single-currency area between October and December last year followed a 0.1% contraction in 3Q, according to official data. "European stock indices ended the day on a positive note as the IMF raised its 2024 growth forecast, despite it lowering Germany's from 0.9% to 0.5% this year and Eurozone sentiment weakening slightly," IG analyst Axel Rudolph wrote.

The FTSE 100 closed 0.4% higher at 7,666.31 points, a three-week high, after drinks-maker Diageo shrugged off an initial share drop following a disappointing set of results. "With the shares slipping close to this month's three-year lows it could be argued that today's initial sell-off may have brought out some bargain hunters," CMC Markets analyst Michael Hewson said in a market comment. Diageo's shares ended up 0.7% after briefly touching their highest levels in two months. Elsewhere, advertising agency WPP was among the top risers, gaining 1.9%, after lifting its medium-term guidance.

North America

U.S. stocks settled lower after the Fed held rates steady as expected but wouldn't commit to cuts until it is confident that inflation is headed down to its 2% target.

DJIA fell 317 points to 38150, the S&P 500 lost 1.6% to 4845 and the Nasdaq slid 2.2% to 15164.

Big tech shares led the declines following earnings from Microsoft and Alphabet after the close on Tuesday.

The major indexes still ended the month with solid gains, led by the S&P 500's 1.6% advance.

The dollar strengthened following Powell's press conference, while the 10-year Treasury yield slipped to 3.93%.



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