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Markets

Global Markets Report - 5 February

ASX set to open lower, after Meta, Amazon pushed the S&P 500 to another high.


Australia

Australian shares are set to open lower, after Meta, Amazon pushed the S&P 500 to another high.

ASX futures were down 0.7% or 54 points as of 8:30am on Monday, suggesting a lower open.

U.S. stocks recovered from some early weakness to end broadly higher with big gains by Amazon and Meta following robust earnings reports.

DJIA gained 134 points to 38654, the S&P 500 added 1.1% to 4958, both fresh highs and the Nasdaq rose 1.7% to 15628.

In commodity markets, Brent crude oil fell 1.7% to US$77.33 a barrel while gold was down 0.7% to US$2,039.76.

In local bond markets, the yield on Australian 2 Year government bonds was down at 3.66% while the 10 Year yield was also down at 3.97%. US Treasury notes were up, with the 2 Year yield at 4.36% and the 10 Year yield at 4.02%.

The Australian dollar hit 65.11 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 98.36.

Asia

Chinese shares ended the week in negative territory, swinging between gains and losses in a volatile session ahead of the Lunar New Year break. The benchmark Shanghai Composite Index battled to stay above the psychologically important 2700 level, managing to regain ground late in the day to finish at 2730.15 but still 1.5% lower. Maybank analyst Sonija Li reckons investors were likely looking to pare back their positions before the holidays, noting latest stimulus measures failed to lift investor confidence. The Shenzhen Composite Index slid 3.0% and the tech-heavy ChiNext Price Index shed 2.4%. Among the biggest losers was WuXi Apptec, which fell 10% amid fresh concerns about possible U.S. restrictions, while Beijing Kingsoft Office dropped 5.7%. Telcos were among the few gainers, with China Mobile and China Telecom rising 1.0% and 2.1% respectively.

Hong Kong's Hang Seng Index edged 0.2% lower to close at 15533.56, dragged down by renewed concerns over possible U.S. legislation against Chinese biotech firms. Sentiment across the region remains weak due to China's continued economic slowdown, UOB's Global Economics & Markets Research team says in a report. Among the biggest losers were Wuxi AppTec and Wuxi Biologics, which both slumped 21% each. Meanwhile, Landsea Green Management jumped 37% on news of expansion plans by its U.S.-listed unit. Other gainers include carmaker Geely, which added 4.4%, while Tencent rose 2.9% on news of a game approval. The Hang Seng Tech Index closed 0.7% lower at 3043.90.

Japan's Nikkei Stock Average rose 0.4% to close at 36158.02, tracking Wall Street gains overnight. The U.S. ISM manufacturing PMI released Thursday was in a "sweet spot," underscoring economic optimism over hitting the ground running from a soft landing, said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank, in an email. Among the best performers, videogame publisher Nexon jumped 22%, technology equipment and services company Fujitsu climbed 6.0% and semiconductor and electronics company Screen Holdings was up 4.4%. USD/JPY was at 146.43, compared with 146.86 as of Thursday's Tokyo stock-market close. The 10-year JGB yield was down 3 bps at 0.660%.

Indian shares closed higher, with investor sentiment lifted by the country's interim budget announced Thursday. India's disciplined interim budget would likely increase its long-term appeal and pave the way for a strong macroeconomic environment, which could support equity-market sentiment, HSBC analysts said in a research note. Energy and tech stocks led gains. Coal India was up 3.2% and Reliance Industries rose 2.2%. Tata Consultancy Services added 3.0% and Wipro advanced 2.5%. Bank stocks ended broadly lower, with HDFC Bank down 1.3% and Axis Bank dropping 1.4%. India's benchmark Sensex ended 0.6% higher at 72085.63.

Europe

European stocks trimmed gains sharply, with major indexes mostly either flat or slighlty higher after much stronger-than-expected U.S. jobs data left an early Federal Reserve interest-rate cut looking very unlikely. The pan-European Stoxx Europe 600 index closed flat at 483.93, having earlier hit a two-year intraday high of 487.66. The data caused U.S. rate-cut expectations to be pared back to May or even June, sending yields higher, IG senior market analyst Axel Rudolph writes. Offsetting that, however were stellar results from Amazon and Meta late on Thursday which lifted sentiment, he says. Germany's DAX index ended up 0.4% while France's CAC-40 edged up 0.05%.

The FTSE 100 index edged down 0.1% on Friday to 7,615.54 points, dragged in part by oil-and-gas majors slipping on lower oil prices. "Today's laggards on the FTSE 100 have been the oil majors, with Shell and BP slipping back on the account of lower oil prices, reversing the gains of yesterday on the back of Shell's decent earnings numbers," CMC Markets analyst Michael Hewson said in a market comment. Shell's rival BP is due to report on Tuesday. On the upside, Tesco and Sainsbury's jumped after Morgan Stanley upgraded both, seeing the companies likely to benefit from volume growth in 2024.

North America

U.S. stocks recovered from some early weakness to end broadly higher with big gains by Amazon and Meta following robust earnings reports.

DJIA gained 134 points to 38654, the S&P 500 added 1.1% to 4958, both fresh highs and the Nasdaq rose 1.7% to 15628.

Major averages rose for the fourth straight week, with the DJIA and S&P 500 up around 1.4%.

Meta Platforms and Amazon were the top two gainers on the Nasdaq after beating Wall Street expectations by a healthy margin on both the top and bottom lines. Meta jumped 20%, while Amazon rose 7.9%. For Meta investors, the icing on the cake was the company's decision to dole out its first dividend.

A stronger-than-expected January jobs report may mean the Fed will hold off on any rate cuts until later in the year, but does ease worries over an impending recession.

The dollar rose sharply against the yen and euro, while the 10-year Treasury yield climbed to 4.02%.



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