Global Market Report - 12 September
The Australian market set for strong open after a solid week for US shares.
Australia
Australian shares are set for a strong open following a strong Friday on Wall Street. Off the back of a strong Friday US shares posted their first weekly gain in a month.
ASX futures were up 79 points or 1.15 per cent to 6963, pointing to a rise at the open.
The S&P 500 was up 1.53% on Friday while the Dow Jones Industrial Average rose 1.19% and the Nasdaq jumped 2.11%. For the week, the Dow rose 2.7%, while the S&P 500 climbed 3.6% and the Nasdaq gained 4.1%.
The ASX 200 was up around 1% last week despite central banks in Australian, the EU and Canada raising interest rates in a prolonged campaign to get inflation under control.
In local bond markets the 2-year government yields were at 2.86% while the 10-year clocked in 3.52%.
Crude oil continues a decline and hit the lowest prices since January with West Texas Intermediate $86.38 and Brent Crude at $92.52. Iron ore rose 3.9% to $US103.65 a tonne and the Aussie Dollar bought 68.46 cents USD.
Asia
China stocks finished the session higher, extending a range-bound trading pattern ahead of a three-day holiday starting Saturday. Focus was on CPI and PPI figures for August, and their implications for the PBOC’s rate trajectory. The benchmark Shanghai Composite Index rose 0.8% to settle at 3262.05, while the Shenzhen Composite Index added 0.7% to 2118.11. The tech-heavy ChiNext Price Index was the top performer, gaining 1.0% to 2548.22. Property-related sectors, including property managers, real-estate developers and home furnishing services providers, led the upturn, amid analysts’ expectations of a meaningful recovery in home sales in the coming months.
Hong Kong’s Hang Seng Index rose 2.7% to 19362.25, snapping a six-session losing streak as China’s softer-than-expected inflation figures for August supported expectations of monetary easing. Most blue-chip stocks strengthened, led by property developers and tech shares, with Country Garden Holdings jumping 17%, Longfor Group adding 7.4% and Meituan up 4.9%. Other notable stock moves included Bilibili, which slid 16% after its 2Q net loss widened more than expected. Tencent Holdings rebounded 1.7% after a 3.1% fall on Thursday, even though its largest shareholder, Prosus, said it sold shares in the tech giant. The HSI lost 0.5% this week.
Japanese shares ended higher, led by gains in shipping and pharmaceutical companies, thanks in part to bargain hunting of stocks hit by the Fed’s tightening. Nippon Yusen gained 3.7% and Shionogi climbed 2.8%. Airlines and tire makers underperformed following gains in crude oil prices. The Nikkei Stock Average rose 0.5% to 28214.75. Crude oil and yen movements are in focus. USD/JPY was at 142.99, down from 144.11 as of Thursday 5 p.m. Eastern Time. The yield on the 10-year Japanese government bond was flat at 0.245%.
Europe
European stocks rose as investors brush aside the European Central Bank’s decision to raise interest rates more aggressively and Federal Reserve Chairman Jerome Powell’s comments about continuing to fight inflation.
The Stoxx Europe 600 rose 1.5%, the German DAX climbed 1.4% and the French CAC 40 added 1.4%. On Thursday, the ECB raised interest rates 75 basis points while Powell said the Fed will continue to raise rates to tame inflation “until the job is done.” “Investors have put the ECB hike and Powell’s warning about more rate increases firmly behind them, and the rally of the past two days has gathered strength,” IG analyst Chris Beauchamp wrote.
The London FTSE 100 index rose 1.5%, as miners and oil stocks gained on the back of rising crude and metal prices. Antofagasta, Anglo American, Glencore, Rio Tinto and BHP were the top blue-chip risers as precious and base-metal prices increased, while BP and Shell both advanced more than 1% as Brent crude climbed 1.5% to $90.51 a barrel. “A tentative recovery in stocks continued into the Asia session, while the U.S. dollar also eased back despite comments from Fed chairman Powell about the need for more rate hikes to fight inflation,” IG analysts said in a note.
North America
The S&P 500 was up 1.53% on Friday while the Dow Jones Industrial Average rose 1.19% and the Nasdaq jumped 2.11%. For the week, the Dow rose 2.7%, while the S&P 500 climbed 3.6% and the Nasdaq gained 4.1%.
This week all eyes turn to US CPI data which will be released on Tuesday morning in the US. The results will be a key input into the interest rate decision the Federal Reserve Open Market Committee will make on September 21st.