Global Market Report - 16 July
The Australian market is likely to open in the green after promising data for a potential covid-19 vaccine helped US markets close higher overnight.
Australia
The Australian market is likely to open in the green after promising data for a potential covid-19 vaccine helped US markets close higher overnight.
The Australian SPI 200 futures contract was up by 22.0 points, or 0.36 per cent, to 6,053.0 points at 8am Sydney time on Thursday.
US markets rose after biotech group Moderna said a small-scale study showed its experimental covid-19 vaccine produced high levels of virus-killing antibodies.
The company's stock price gained and travel companies—which are desperate for an end to the pandemic—also saw their share prices surge.
The US government's adviser on infectious diseases Anthony Fauci estimates the country could have a vaccine by year-end.
Investor enthusiasm was also boosted by a Federal Reserve survey showing an uptick in US business activity in early July as states eased restrictions to contain the virus.
The Dow Jones Industrial Average rose 0.85 per cent to end at 26,870.03 points, while the S&P 500 gained 0.91 per cent to 3,226.55. The Nasdaq Composite climbed 0.59 per cent to 10,550.49.
Oil prices rose 2.0 per cent after a sharp drop in US crude inventories. Brent crude settled up 89 US cents, or 2.1 per cent, at $US43.79 a barrel.
Meanwhile in Australia today, the market will be focused on employment figures for June. Unemployment rose to 7.1 per cent in May, and economists expect it will tick up to 7.2 per cent.
The federal government is also expected to announce its JobTrainer program. The training and skills package will subsidise courses for people struggling to find work.
The Australian dollar was trading at 70.08 US cents at 8am, higher from 70.02 US cents at Wednesday's close.
Asia
China shares ended lower on Wednesday after a volatile session as US actions against Hong Kong dented the market sentiment, but the bull-run-triggered heavy trading kept its momentum.
At the close, the Shanghai Composite index was down 1.56 per cent at 3,361.30, extending losses from the mid-day session.
In Hong Kong, the Hang Seng index was up 3.69 points, or 0.01 per cent, at 25,481.58, reversing earlier losses recorded in the mid-day session. The Hang Seng China Enterprises index fell 0.14 per cent to 10,390.54.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.75 per cent, while Japan’s Nikkei index closed up 1.59 per cent.
Europe
European stocks closed at over a five-week high on Wednesday, with travel stocks surfing a wave of optimism following reports of progress in developing a covid-19 vaccine.
Hard-hit airline stocks like British Airways-owner IAG, Ryanair and Lufthansa rose between 9.7 per cent and 10.7 per cent, while cruise operator Carnival jumped 11.4 per cent.
The travel & leisure index surged 6.1 per cent to lead sectoral gains, but still remains the worst performer in Europe this year with a 33 per cent plunge as the coronavirus pandemic brought global travel to a halt.
The pan-European STOXX 600 rose 1.8 per cent, closing just short of levels last seen in early March, while euro zone blue-chips jumped 1.7 per cent to hit their highest level since 5 March.
Investors were encouraged by an early-stage study on US biotech firm Moderna’s experimental vaccine for covid-19 that provoked immune responses.
Meanwhile, AstraZeneca jumped 5.2 per cent after a report said positive news on the University of Oxford’s potential covid-19 vaccine that has been licensed to the drugmaker could be announced as soon as Thursday.
Expectations were also high among investors heading into an EU summit later this week that leaders will agree on a recovery fund of 750 billion euros ($1.2 billion) for pandemic-hammered economies.
The European Central Bank concludes its policy meeting on Thursday although no major announcements are expected.
Among individual movers, Swedish telecom operator Tele2 AB gained 2.9 per cent as it reaffirmed its 2020 earnings outlook and plans for an extra shareholder payout.
The world’s largest fish farmer Mowi ASA jumped 6.8 per cent as harvest volumes beat its own forecast. Shares in peer Salmar rose 2.2 per cent.
The top gainer on the STOXX 600 was Atlantia, which shot up 26.7 per cent after the Italian infrastructure group and its unit Autostrade made the government new offers to settle their long-running dispute.
Semiconductor equipment maker ASML Holding declined 3.7 per cent as it reported quarterly profit below estimates, but forecast overall growth for 2020.
Swedish bank SEB fell 1.6 per cent after reporting a smaller-than-expected fall in net quarterly profit, but credit loss provisions surged. Handelsbanken also dropped 2.6 per cent.
North America
US stocks ended sharply higher on Wednesday, with the S&P 500 at its highest since early June, following promising early data for a potential covid-19 vaccine and a strong quarterly report from Goldman Sachs.
Moderna rallied 6.9 per cent after a small-scale study showed its experimental covid-19 vaccine produced high levels of virus-killing antibodies.
Travel-related stocks Carnival Corp, Royal Caribbean Cruises, Marriott International and Wynn Resorts surged between 7 per cent and 21 per cent, and the S&P 1500 airlines index rallied over 10 per cent.
The S&P 500 beat the technology-heavy Nasdaq Composite for a fourth straight session, a feat scored only twice since Wall Street launched its massive recovery last March.
Gains for the Nasdaq were capped by online retail giant Amazon.com Inc, video streaming platform Netflix Inc and Microsoft Corp, which slipped after surging to record highs recently.
Adding to investors’ enthusiasm, the Federal Reserve’s Beige Book survey showed US businesses saw an uptick in activity into the beginning of July as states eased restrictions to contain the novel coronavirus pandemic.
A raft of stimulus measures and encouraging economic data have lifted the S&P 500 to about 5 per cent below its record high hit in February.
However, the US has failed to control the coronavirus and there is a high level of uncertainty over how much the pandemic will affect the economy, Philadelphia Federal Reserve Bank President Patrick Harker said, as a number of US sunbelt states reported a surge in covid-19 cases recently.
Near the end of the trading session, US President Donald Trump said his administration had completed a top to bottom overhaul of the infrastructure approval process.
The Dow Jones Industrial Average rose 0.85 per cent to end at 26,870.03 points, while the S&P 500 gained 0.91 per cent to 3,226.55.
The Nasdaq Composite climbed 0.59 per cent to 10,550.49.
Goldman Sachs rose 1.4 per cent after it said its trading revenue doubled in the second quarter, driven by big swings in stock and bond markets since March.
Morgan Stanley and Bank of America gained nearly 2 per cent ahead of their results on Thursday. The broader banking index climbed 2.9 per cent.
UnitedHealth Group Inc fell 1.4 per cent after warning of rising costs later this year as Americans catch up on less urgent surgeries halted by the coronavirus pandemic.