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Global Market Report - 21 August

Lex Hall  |  21 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to edge up as record tech gains boosted Wall Street, overshadowing downbeat data over the US recovery.

The Australian SPI 200 futures contract was up 0.10 points, or 0.16 per cent, to 6,082 points at 8.30am Sydney time on Friday, suggesting a positive start to trading.

Nasdaq ended at a record high on Thursday, with the S&P 500 and Dow also rising, as gains in heavyweight tech stocks outweighed downbeat data that affirmed the Federal Reserve’s view of a difficult road to economic recovery.

The Dow Jones Industrial Average ended up 46.85 points, or 0.17 per cent, to 27,739.73, the S&P 500 gained 10.66 points, or 0.32 per cent, to 3,385.51 and the Nasdaq Composite added 118.49 points, or 1.06 per cent, to 11,264.95.

Locally, insurance group Suncorp has posted a 33 per cent fall in full year cash earnings to $749 million.

The a2 Milk Company has boosted the manufacturing capacity of its infant nutrition business by striking a deal to pay $NZ270 million ($245 million) for a 75 per cent stake in a New Zealand group backed by heavyweight Chinese investors, The Australian reports.

The S&P/ASX200 benchmark index has closed lower by 47.6 points, or 0.77 per cent, to 6,120.0 points on Thursday. The All Ordinaries index fell 42.4 points, or 0.67 per cent, at 6,271.7.

Gold was up 1.2 per cent to $US1,952.74 an ounce; Brent oil was down 1.0 per cent to $US44.93 a barrel; iron ore  was up 0.2 per cent to $US129.32 a tonne.

Meanwhile, the Australian dollar was buying 71.93 US cents at 8.30am, up from 71.71 US cents at Thursday’s close.

Asia

The Shanghai stock market dropped the most in four weeks on Thursday after the country kept a key interest rate steady and as expectations of further policy support from Beijing dwindled. 

The Shanghai Composite index fell 1.3 per cent to close at 3,363.90, marking its worst day since 24 July. The blue-chip CSI300 index also fell 1.3 per cent, with its financial sector sub-index down 1.3 per cent, the real estate index down 0.3 per cent and the healthcare sub-index down 0.8 per cent.

Hong Kong shares fell the most in nearly two weeks on Thursday, as hopes of further Chinese stimulus faded and poor corporate earnings and simmering Sino-US tensions weighed on sentiment.

The Hang Seng index closed down 1.5 per cent at 24,791.39, marking its biggest daily percentage fall since 7 August. The Hang Seng China Enterprises index also fell 1.5 per cent.

Around the region, MSCI’s Asia ex-Japan stock index fell 1.8 per cent, while Japan’s Nikkei index lost 1 per cent.

Europe

Miners and banks led declines in European stocks, hit by a wave of selling across global markets on Thursday after the US Federal Reserve signalled a long path of recovery for the world’s largest economy.

The pan-European STOXX 600 index fell 1.1 per cent to hit a 10-day low, with economically sensitive sectors such as miners, banks, automakers and oil and gas falling between 1.6 per cent and 2.9 per cent.

The Fed minutes showed that policymakers were doubtful of a quick economic rebound and may stick with aggressive stimulus measures for a much longer period, driving Wall Street indexes off their record highs.

A rise in US weekly jobless claims to above 1 million also added to the downbeat sentiment.

Meanwhile in Europe, worries over a pick-up in coronavirus cases kept investors on edge. Britain recorded its second-highest daily total of new virus cases since 21 June, while Germany has also seen cases accelerating in recent weeks.

A preliminary survey of European purchasing managers is due to be released on Friday. The numbers are likely to show the pick-up in business activity stagnated in August after a rebound in July.

A full bounceback from the euro zone’s deepest recession on record will take two years or more, a Reuters poll showed, with economists saying there is a high risk of the job recovery reversing by the end of 2020.

Among individual stocks, Chilean miner Antofagasta fell 5.6 per cent after it posted a 22.4 per cent plunge in first-half core earnings on lower copper sales, but said it would pay an interim dividend.

Payments processor Adyen, which has doubled in value in the past year, slipped 2.7 per cent as it reported slower earnings growth.

Intercontinental Hotels Group rose 0.9 per cent and France’s Accor gained 2.3 per cent after a French newspaper reported the hotel operators had examined a merger.

German real estate firm Tag Immobilien jumped 6.9 per cent as it confirmed its guidance for 2020 and said raising it during the year was a possibility.

North America

Gains in Apple Inc—the only publicly listed US company to cross the US$2 trillion ($2.78 trillion) market value milestone—Amazon.com Inc and Microsoft Corp underpinned the three main indexes’ gains as investors bet they would ride out the economic crisis.

Stocks had opened lower on data that showed jobless claims rose unexpectedly back above the 1 million mark last week after slipping below that level for the first time since the start of the pandemic.

Separate data from the Philadelphia Fed showed a business conditions index fell more than expected in August.

The volatility in jobless claims followed the lapse of an extra $600 weekly unemployment benefit at the end of July and came as Democrats in Congress have failed to reach an agreement with the White House on extending it.

Nasdaq clocked its 19th record closing high since early June, when it confirmed its recovery from the coronavirus sell-off. Thursday’s record close was its 35th so far this year compared with 31 record closing highs in 2019 and 29 in 2018.

Despite signs that parts of the economy are still far away from pre-pandemic levels, the benchmark S&P 500 index completed its fastest recovery from a bear market this week, joining the Nasdaq in scaling new peaks. It also confirmed a bull market for the S&P 500.

The S&P 500 and Nasdaq retreated on Wednesday after minutes from the Fed’s latest policy meeting gave a sombre assessment of the US economy as it grapples with the pandemic but ruled out, for now, more dovish easing policy measures.

Economically sensitive financial and energy sectors were some of the biggest percentage losers among the major S&P sectors.

Nvidia Corp was little changed at US$485.64 after posting better than expected quarterly sales forecast.

Intel Corp rose 1.7 per cent to US$9.17 after announcing a $10 billion share buyback plan.

Shares of Tesla surged past the US$2000 mark on Thursday for the first time as the electric car maker extended its recent rally ahead of an upcoming share split.

L Brands Inc advanced 3.8 per cent to US$29.57 after reporting a surprise quarterly profit, boosted by strong demand for Bath & Body Works’ products as well as higher online sales of Victoria’s Secret lingerie.

is content editor for Morningstar Australia

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