Global Market Report - 4 October
Australian shares are set to edge higher at the open after strong overnight trading on Wall Street, where the Dow Jones closed at a record for a second day after US economic data lifted Treasury yields.
Australia
Australian shares are set to edge higher at the open after strong overnight trading on Wall Street, where the Dow Jones closed at a record for a second day after US economic data lifted Treasury yields.
The Australian dollar is buying 71.03 US cents after plunging by more than 1 per cent from Wednesday's close of 71.81 US cents.
The SPI200 futures contract was up 9 points, or 0.15 per cent, to 6152 at 8am Sydney time on Thursday, pointing to a slight rise for the ASX - which closed higher on Wednesday thanks to gains for material and energy stocks.
On Wall Street, the Dow Jones Industrial Average rose 54.45 point, or 0.02 per cent to 26,828.39, while the S&P 500 gained 2.08 points, or 0.07 per cent, to 2925.51 and the Nasdaq Composite added 25.54 points, or 0.32 per cent, to 8025.09.
Out today: August trade data. Westpac expects the surplus to ease back further, down by $0.45bn to a forecast $1.1bn. Export earnings are expected to decline, down 0.8 per cent. Falls are led by coal, fuels and metals (on lower volumes) only partial offset by a rise in iron ore (on prices and volumes).
Asia
Japanese stocks fell on Wednesday as carmakers skidded on a sharp decline in US new car sales last month while other shares, including financials, retreated after a rally over recent weeks.
The Nikkei share average gave up 0.7 per cent to 24,110.96, though it was still holding at 27-year highs.
The weak yen trend paused as the Japanese currency attracted safety bids amid concerns over Italy's budget plan.
Hong Kong's shares closed at their lowest in two weeks on Wednesday, as investors remained on the sidelines during the National Day holiday in China.
However, a rebound in offshore yuan helped the market trim losses after Tuesday's sell-off. China's financial markets are closed for the National Day holiday and will resume trade on October 8.
The Hang Seng Index closed 0.1 per cent lower at 27,091.26, its lowest since September 18. Chinese H-shares listed in Hong Kong ended 0.3 per cent firmer at 10,786.17.
Europe
Italian stocks turned as signs the government would target a lower budget deficit quelled investors' fears of a damaging showdown with the European Commission.
Norsk Hydro will halt production and layoff 4700 people at the world's largest alumina refinery, Brazil's Alunorte, which has been operating at half capacity since March because of an environmental dispute, it said.
The decision to close the plant indefinitely is a major setback for the Norwegian metals maker, which only last month signed two deals with Brazilian authorities that it believed would help it resume full production.
Hydro's shares fell 12 per cent on the news to a 21-month low, making it the worst performer in the European STOXX 600 Index. The price of aluminium, the product made from alumina, climbed 5.5 per cent to its highest since June.
North America
US shares have advanced and the Dow Jones Industrial Average closed at a record for a second day, after American economic data fuelled a rise in Treasury yields, lifting financial stocks.
The ADP National Employment Report showed private payrolls jumped by 230,000 jobs in September, the largest gain since February. A report from the Institute for Supply Management showed services sector activity hit a 21-year high in September.
The data fed expectations for a US Federal Reserve interest rate hike in December. The yield on the 10-year US Treasury note touched its highest level in over seven years at 3.179 per cent and the two-year yield hit its highest in more than a decade.
Rising yields boosted financial shares, putting the S&P 500 within striking distance of a record. Financials were also aided by signs Italy would cut its budget deficit and lower its debt, easing a concern that had pressured global stock markets.
Financials, which have underperformed the broader market this year, rose 0.81 per cent, their biggest daily gain since Sept.19.
Still, major indexes closed well off their earlier highs as the data and recent comments from Fed officials raised concerns the central bank may hike rates too aggressively.
Utilities, off 1.23 per cent and real estate , down 0.98 per cent, were leading decliners, as higher bond yields made shares of high-dividend paying companies less attractive.
General Motors rose 2.1 per cent after Honda Motor said it would invest $US2 billion ($A2.8 billion) over 12 years in the US carmaker’s Cruise self-driving unit.
Michael Kors rose 3.0 per cent after Citi upgraded the stock on expectations its recent purchase of Italian fashion house Versace would boost performance. Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq,a 1.63-to-1 ratio favoured advancers.
The S&P 500 posted 29 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 38 new highs and 67 new lows.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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