Global Markets Report - 21 February
ASX set to open lower, after falls on Wall Street led by declines in technology stocks.
Australia
Australian shares are set to open lower, after falls on Wall Street led by declines in technology stocks.
ASX futures were down 0.3% or 21 points as of 8:30am on Wednesday, suggesting a lower open.
U.S. stocks ended lower Tuesday as investors await earnings results from AI darling Nvidia on Wednesday, as well as new clues from Federal Reserve officials on interest rates after last week's inflation data.
The Dow Jones Industrial Average DJIA ended down 0.2%, according to preliminary closing data from FactSet. The S&P 500 SPX finished 0.6% lower. The Nasdaq Composite COMP closed 0.9% lower.
In commodity markets, Brent crude oil fell 1.3% to US$82.51 a barrel, while gold was up 0.4% to US$2,024.46.
In local bond markets, the yield on Australian 2 Year government bonds was down at 3.83% while the 10 Year yield was up at 4.18%. US Treasury notes were down, with the 2 Year yield at 4.61% and the 10 Year yield at 4.28%.
The Australian dollar hit 65.51 US cents up from its previous close of 65.38. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 98.52.
Asia
Chinese shares closed higher, reversing their earlier losses. The People's Bank of China's 25bp cut of a key lending rate surprised markets, showing its continued commitment to bolster economic growth and stability, OCBC head of greater China research Tommy Xie said. The PBOC's move, together with Chinese securities regulator's recent meeting with market participants addressing capital markets concerns, have lifted market sentiment. The benchmark Shanghai Composite Index closed 0.4% higher at 2922.73, Shenzhen Composite Index rose 0.5%. Semiconductor and securities stocks led gains. Ingenic Semiconductor and Giga Device Semiconductor advanced 20% and 4.8%, respectively. China Galaxy Securities was up 5.5% and Cinda Securities rose 5.1%. Auto sector led losses with Chongqing Changan Automobile down 2.8%. BYD Company lost 2.4% and Great Wall Motor shed 2.1%.
Hong Kong shares ended higher, led by tech and property stocks. Sentiment may have gotten a boost from China's central bank cutting its 5-year loan prime rate, which is used to price mortgages. However investors are wondering if the move can boost property sector effectively in the long term, says Maybank's head of retail research, Sonija Li. Among developers, Longfor Group and China Hongqiao Group rose 3.0% and 1.7%, respectively. In health tech, Alibaba Health rose 4.2% and JD Health gained 3.4%. Among the top decliners, BYD lost 2.25% after launching a lower-priced EV model. Lenovo shed 1.55% ahead of fiscal 3Q earnings due Thursday. The benchmark Hang Seng Index closed 0.6% higher at 16247.51 and the Hang Seng Tech Index gained 0.35%.
Japanese stocks ended slightly lower, dragged by falls in financial stocks and trading houses as some profit-taking kicked in following the benchmark's recent surge to 34-year highs. Resona Holdings dropped 2.2% and Mitsui & Co. lost 2.2%. The Nikkei Stock Average fell 0.3% to 38363.61. The 10-year Japanese government bond yield stays flat at 0.725%, while the 30-year yield declines 3 basis points to 1.745%. Investors are focusing on economic data and their implications for monetary policy, now that the earnings season is over. USD/JPY is at 150.41, compared with 150.13 as of Monday 5 p.m. Eastern Time.
Indian shares ended higher, extending gains for the sixth straight session. Investors cheered on robust corporate results, as the earnings season comes to an end in India. Several major companies, including Reliance Industries, Bajaj Auto and HCL Technologies, surpassed expectations, said Naveen Kulkarni, chief investment officer at Axis Securities. The market will likely continue to deliver healthy returns in 2024, thanks to consistent earnings growth, he added. Banks and power stocks led gains this session. HDFC Bank rose 2.6% and Axis Bank was 2.3% higher. Power Grid Corp. of India advanced 4.2%. Tech stocks fell, with HCL Technologies and Tata Consultancy Services falling 0.9% and 1.75%, respectively. India's benchmark Sensex rose 0.5% to 73057.40.
Europe
The pan-European Stoxx Europe 600 index closed down 0.1% at 491.90, pulled lower by falls in U.S. equities as traders awaited Wednesday's release of U.S. Federal Reserve minutes. "Following Monday's U.S. holiday, European stock indices have been dragged down by their U.S. counterparts as they brace themselves for Wednesday's FOMC minutes, Nvidia earnings and comments by several Fed officials," says Axel Rudolph, senior market analyst at online trading platform IG, in a note. Germany's DAX index and the U.K.'s FTSE 100 ended down 0.1%. France's CAC 40 index outperformed, rising 0.3%, helped by an 8.2% jump in Air Liquide shares after the industrial-gases company reported solid results and raised its mid-term operating margin target.
The FTSE 100 was down 0.1% at 7,719.21 as gains for Barclays and other banks following the announcement of earnings and a strategic plan were offset by falls for heavyweight miners. Barclays rose 4.2% after announcing a three-year plan to boost returns and give shareholders GBP10 billion in dividends and buybacks, while its peers followed suit, with HSBC up 0.7% and NatWest up 0.4%. InterContinental Hotels also rose 2.1% after saying it expects to return up to $1 billion to shareholders via a share buyback program and dividends as its hotels and resorts growth strategy pays off. Miners fell broadly, with Anglo American, Rio Tinto and Glencore all down more than 2%. Copper miner Antofagasta fell 0.6% after announcing a fall in full-year profit.
North America
U.S. stocks ended lower Tuesday as investors await earnings results from AI darling Nvidia on Wednesday, as well as new clues from Federal Reserve officials on interest rates after last week's inflation data.
The Dow Jones Industrial Average DJIA ended down 0.2%, according to preliminary closing data from FactSet. The S&P 500 SPX finished 0.6% lower. The Nasdaq Composite COMP closed 0.9% lower.