Global Markets Report - 13 November
ASX set to open higher, after a surge on Wall Street Friday led by tech stocks.
Australia
Australian shares are set to open higher, after a surge on Wall Street Friday led by tech stocks.
ASX futures were up 0.3% or 24 points as of 8:30am on Monday, suggesting a higher open.
U.S. stocks climbed Friday, notching a winning week, led by the Nasdaq Composite's best day in more than five months.
The tech-heavy index jumped 2%, its biggest one-day percentage gain since May 26. The S&P 500 rose 1.6%. The Dow Jones Industrial Average added nearly 400 points, or 1.2%. All three indexes finished the week higher, with the Nasdaq up 2.4%.
All 11 sectors of the S&P 500 advanced Friday, with information-technology stocks rising the most. Chip stocks rallied after Taiwan Semiconductor Manufacturing reported a jump in October sales. Advanced Micro Devices and Nvidia rose. Broadcom clinched a record high.
Friday's gains followed a downbeat Thursday that thwarted the S&P 500's shot at its longest winning streak since 2004. The S&P 500 had risen for eight consecutive sessions, while the Nasdaq had recorded nine straight positive trading days.
In commodity markets, Brent crude oil rose 1.8% to US$81.43 a barrel while gold fell 0.9% to US$1,940.20.
In local bond markets, the yield on Australian 2 Year government bonds was up at 4.29% while the 10 Year yield was up at 4.62%. US Treasury notes were flat, with the 2 Year yield at 5.06% and the 10 Year yield at 4.65%.
The Australian dollar was unchanged at 63.58 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 100.23.
Asia
Chinese shares closed lower, with insurance and auto stocks leading losses. The benchmark Shanghai Composite Index fell 0.5% to 3088.97, but ended the week 0.3% higher. The Shenzhen Composite Index declined 0.4% and the tech-heavy ChiNext Price Index was off 0.65%. China Life Insurance lost 3.4% and Ping An Insurance declined 2.15%. BYD was down 1.0% and Great Wall Motor shed 3.1%. Chip maker SMIC fell 4.6% after 3Q net profit dropped 80% on year. Energy stocks rose broadly, with China Shenhua Energy up 1.2%.
Hong Kong shares closed lower, with the benchmark Hang Seng Index down 1.8% at 17203.26. "It has not been easy this week for the HSI bulls," said IG market strategist Jun Rong Yeap. This week's China economic data hasn't provided much conviction for risk-taking, Yeap added, pointing to the fragility of China's economic recovery. Almost all sectors fell, led by Xinyi Solar's 7.9% drop. Chip maker SMIC lost 6.8% after reporting a 3Q profit decline. Casino stocks fell, with Galaxy Entertainment and Sands China losing 6.5% and 3.5%, respectively. Meanwhile, China Resources Power rose 3.4% and China Resources Mixc Lifestyle Services gained 0.9%.
Japan's Nikkei Stock Average edged 0.2% lower to close at 32568.11 amid concerns of further Fed tightening. There were hawkish remarks from Fed Chair Powell, along with the threat of further hikes, says Matt Simpson, market analyst at City Index and FOREX.com, in an email. SoftBank Group dropped 8.2% after posting 2Q net loss. Sony Group lost 2.0% after 2Q net profit missed analysts' expectations. Olympus Corp. shed 2.0% after it cut its FY net profit view. USD/JPY was at 151.38, compared with 151.03 as of Thursday's Tokyo stock market close.
Indian shares closed higher, in contrast with weakness among its Asian peers. Indian equities may have long-term growth potential after recent robust corporate earnings, ICICI analysts wrote in an email. The benchmark Sensex was 0.1% higher at 64904.68, led by a range of individual stocks and finance sector. Electric utilities company NTPC Ltd. led the gainers as it rose 2.1%. Tech Mahindra rose 1.3% and Avenue Supermarts gained 1.4%. Bank and finance stocks rose in general with Bajaj Finance and Axis Bank up 0.8% and 0.7%, respectively. Bajaj Finserv gained 0.8%. Meanwhile, Mahindra & Mahindra led the losers, dropping 1.9% while Titan Company was down 0.9%. Energy company JSW Energy was down 0.8%.
Europe
European stocks dropped after Asia losses. The Stoxx Europe 600, the CAC 40 fell more than 1% and the DAX retreated 0.9%. Diageo dropped 14% after a profit warning, hitting other European drink makers such as Remy Cointreau and Pernod Ricard. Still, Brent crude gained 1.1% to $80.92 a barrel, boosting oil majors. Sterling dropped after downbeat U.K. trade data. "Economic woes at home and abroad are weighing heavily upon U.K. trade," British Chambers of Commerce head of trade policy William Bain writes. "September saw substantial falls in imports and exports."
The FTSE 100 fell 1% to 7382.06, tracking losses in European stocks after U.S. Federal Reserve Chair Jerome Powell warned policymakers wouldn't hesitate to raise interest rates again if necessary. Alcoholic beverage company Diageo leads fallers after cutting its guidance for both the short and medium term, sliding 13.8%. "It's a rarity to see Diageo issue bad news, yet no business is immune to setbacks and the drinks giant has confirmed that life is not going well," writes AJ Bell investment director Russ Mould. Online grocer Ocado also fell sharply, losing 6.2%, while other losers include property companies and miners. Oil companies bucked the trend as oil prices rose, with Shell and BP up around 1%.
North America
U.S. stocks climbed Friday, notching a winning week, led by the Nasdaq Composite's best day in more than five months.
The tech-heavy index jumped 2%, its biggest one-day percentage gain since May 26. The S&P 500 rose 1.6%. The Dow Jones Industrial Average added nearly 400 points, or 1.2%. All three indexes finished the week higher, with the Nasdaq up 2.4%.
All 11 sectors of the S&P 500 advanced Friday, with information-technology stocks rising the most. Chip stocks rallied after Taiwan Semiconductor Manufacturing reported a jump in October sales. Advanced Micro Devices and Nvidia rose. Broadcom clinched a record high.
Friday's gains followed a downbeat Thursday that thwarted the S&P 500's shot at its longest winning streak since 2004. The S&P 500 had risen for eight consecutive sessions, while the Nasdaq had recorded nine straight positive trading days.
Federal Reserve Chair Jerome Powell on Thursday tapped the brakes on the stock market's run, saying at a conference that it was too early to declare victory against price pressures and leaving the door open for further interest-rate increases. A weak government sale of longer-term debt, meanwhile, pushed up bond yields and weighed on stocks.
The bond market stabilized on Friday, with the benchmark 10-year Treasury yield settling at 4.627%, from 4.629% the day prior.
"Markets will continue to be very choppy until we get better clarity of what the next policy action is," said Amanda Agati, chief investment officer for PNC Asset Management Group.
After Fed officials kept rates unchanged at their policy meeting earlier this month, traders had priced in higher odds that the central bank could start cutting rates early next year, according to CME Group's federal-fund futures. Traders now see a greater probability of the Fed holding rates steady through at least the first half of the year.
"It's a really strange dance between the Fed and the market," said Ronald Temple, chief market strategist at Lazard. "But we should expect that dance to continue,"
Investors brushed off the University of Michigan's preliminary November survey results, released Friday, which showed weak consumer sentiment and higher inflation expectations. At a press conference following the Fed's most-recent meeting, Powell said the University of Michigan survey was just one reading the central bank uses to track inflation expectations.
Earnings reports weighed on some stocks. Shares of News Corp, parent of The Wall Street Journal, fell 1.7% after the company reported a slight revenue gain. Illumina shares sank 8% after the maker of gene-sequencing products offered a gloomier outlook for sales and profit. The Trade Desk dropped 17% after the ad-tech company offered revenue projections that were far lower than analysts expected.
Shares of Plug Power fell more than 40% Friday after the upstart hydrogen producer and fuel-cell maker warned it will struggle to stay afloat in the next year without raising additional cash.