The S&P/ASX200 closed 0.2% higher on Friday, up 16 points at 7,241.2 with energy and finance stocks the big winners.
The market is expected to continue the upward trend in morning trading, despite Wall St finishing lower on Friday due to a sell-off of tech companies and non-farm payrolls missing estimates.
Here’s what we saw to close out the week:
- The Aussie dollar fell from highs near US70.83 cents to lows near US69.94 cents and was near US70.00 cents at the US close.
- Global oil prices saw little movement. Commsec reports, “Earlier in the trading session, crude prices climbed more than US$2 a barrel after OPEC+ said it could review its policy to hike output if demand weakened due to rising COVID-19 cases and lockdowns. The Brent crude price rose by US21 cents or 0.3% to US$69.88 a barrel. But the US Nymex crude price lost US24 cents or 0.4% to US$66.26 a barrel. For the week, Brent fell 3.9% with the Nymex down 2.8%.”
- Base metal prices were mixed.
- Aluminium rose by 0.9% as investors weighed low inventories against softer Chinese demand.
- Copper lost 1.1% with lead 2.2% lower.
- Over the week, tin lifted 0.8% but lead dipped 3.4%.
- The gold futures price rose by US$21.20 or 1.2% to US$1,783.90 an ounce.
- Spot gold was trading near US$1,784 an ounce at the US close.
- For the week, gold lost US$1.60 an ounce or 0.1%.
- Iron ore lifted US15 cents or 0.2% to US$98.50 a tonne.
- Over the week, iron ore rose by US$1.85 a tonne or 1.9%.
Global economic rebound
International Finance Forum (IFF) has released its first 'IFF Global Finance and Development Report', which looks to analyse, outline and forecast global economic outlook, risks and policy priorities.
This report shows that the global economy has seen a rebound thanks to expanding vaccination coverage, continued fiscal stimulus and monetary accommodation.
The IFF estimates that the global economy is forecast to grow 5.9% this year, recovering to a pre-pandemic 2019 level. The global economy staged a strong rebound in the first half of 2021, however the momentum softened in the second half, as more contagious delta variant outbreaks occurred in many parts of the world. The recovery remains on track, though the pace has continued to vary from one country to another.
This strong recovery has caused prices to rise in many countries, with global consumer price inflation projected to reach 4.5% this year, and to moderate to 3.8% in 2022, as demand-supply gaps narrow.
"Despite the momentum of the global economic recovery, there are still significant downside risks in the coming year," chief economist of IFF and former deputy chief economist of the Asian Development Bank Zhuang Juzhong said.
"Slower-than-expected vaccine rollout, especially in the developing world, and more virus mutations could lead to resurgences of outbreaks worldwide, causing governments to reimpose strict containment measures thus slowing down growth."
The IFF estimates that in 2022, the global economy is projected to grow 4.7%, as supported by ongoing fiscal and monetary policies with expanding vaccination coverage. However, higher and more persistent inflation could prompt abrupt adjustments in the direction of monetary policy in advanced countries, IFF warned, adding that geopolitical tensions could also take a toll on the recovery.
The IFF has urged the international community to work together to expedite vaccine uptake, ensure the stability of monetary policies, eliminate trade tensions, boost green finance development and accelerate support for low-income nations.
For the full report, please visit: https://iff.org.cn/uploads/2021GAM/GFAD-report20211202.pdf
Australian markets
The best and worst-performing sectors this week?
The ASX should start the trading week on a positive note, but which sectors will be the winners.
Last week, the best-performing sectors included Materials and Communication Services, both up under 1% and Financials, which was just in the red.
The worst-performing sectors were Information Technology and Energy, both down over 2% followed by Consumer Staples down over 1%.
Best performers in the S&P/ASX top 100 stocks included Lynas Rare Earths Ltd (ASX:LYC, OTC:LYSCF) and Worley, both up over 7%. Altium Ltd was up over 5%.
The worst-performing stocks included TPD Education Ltd down over 10%, Afterpay Ltd (ASX:APT) down over 8% and Northern Star Resources Ltd (ASX:NST) down over 7%.
What’s next for Australian share market?
As we do each week, we asked Wealth Within founder and analyst Dale Gillham his take on what to expect now.
“The most recent all-time high on the All Ordinaries Index was August 13 when it hit 7,902 points. In the 79 trading days since then, the market has exhibited indecision interspersed with periods swinging between being bullish and bearish with the bears slightly more dominant, as the market is currently down over 4.6%.
“While the market has fallen by nearly 6% since the high in August, it also turned bullish rising nearly 5% but is now in danger of further falls. If the Australian stock market continues to fall next week below the low of 7,446 points on September 29, then I would expect continued falls into January. That said, a fall to between 7,000 and 7,200 points is a good thing, as it means the market will be in a better position to rise strongly in 2022.
“Right now, it would pay to err on the side of caution before buying any stocks, and above all, do not dollar cost average as so many have attempted to do over these past few weeks only to lose more. Now is the time for restraint and patience.”
Australian indices (at time of writing)
- ASX 200 rose 0.22% to 7,241.20.
- ASX24 futures rose 0.2% to 7,260.
- S&P/ASX Small Ordinaries fell 0.51% to 3,380.60.
- All Ordinaries rose 0.100% to 7,543.60.
US markets
The US traded down on Friday, following a sell-off of mega cap tech stocks.
Tesla shares dipped 6.4% and Zoom Video was 4.1% lower.
Shares of Apple slid 1.2% on reports that phones of US State Department employees were hacked.
DocuSign shares plunged 42.2% after a disappointing forecast.
Microsoft’s 2% loss was the biggest drag on the Dow Jones index, which closed down 60 points or 0.2%.
Over the week the Dow fell 0.9%, the S&P 500 lost 1.2% and the Nasdaq shed 2.6%.
American digital company BuzzFeed, known for its viral content, will go public this week after it initially raised less money than expected.
Buzzfeed to list on the Nasdaq
BuzzFeed shares are expected to start trading on the Nasdaq this week under the ticker symbol 'BZFD'.
Buzzfeed merged with 890 5th Avenue Partners, a special purpose acquisition company (SPAC), however, it could raise just $US16 million from the SPAC deal, which puts its aim of a $1.5 billion valuation in jeopardy.
BuzzFeed had reported that 890 5th Avenue Partners held about $US288 million in cash. That may have been the case, until the majority of investors withdrew.
Buzzfeed raised $US150 million in debt financing as part of the deal and also acquired Complex Networks, a media company jointly run by Verizon and Hearst.
It has been a tumultuous time for Buzzfeed ahead of its listing with union employees walking out to pressure the company for better pay and conditions.
"We've been bargaining our contract for almost two years, but BuzzFeed won't budge on critical issues like wages — all while preparing to go public and make executives even richer," the union tweeted. "We're walking out to send a reminder that there's no BuzzFeed News without us."
BuzzFeed has offered 1% guaranteed raises per year and a proposed $50,000 salary floor.
In the September quarter, Buzzfeed reported a net loss of $3.6 million, compared to 2.13 million a year ago, however, revenue growth was 30% year-over-year to $90.1 million.
Advertising revenue grew 39% to $50.2 million, while commerce revenue increased 14% to $13.4 million facilitating the growth.
Content revenue decreased 4% to $26.5 million.
Didi to delist from the NYSE, will Alibaba follow?
Chinese ride-sharing giant Didi Chuxing announced last week that it will delist from the New York Stock Exchange after only five months on the exchange.
Since listing, Didi’s shares have plunged 63%.
The stock drop, along with Beijing’s controlling influence has led to the pull-out.
A Chinese regulatory crackdown over major internet firms wielding huge influence on consumers' lives, including Alibaba and Tencent is having a big impact on China’s international stocks, with Alibaba, JD.com and Pinduoduo all falling sharply in Friday's trade.
Alibaba fell to its lowest level in nearly five years as rumours circulated that it may follow Didi out the NYSE door.
Didi Chuxing will move its listing to Hong Kong, however, shareholders of its New York shares will retain their stakes.
US market regulators will now delist foreign companies if they fail to provide information to auditors – a move aimed at Chinese firms requiring them to declare whether they are "owned or controlled" by a government.
Trump gets $1 billion pledge for social media venture
Institutional investors have pledged $US1 billion to former US president Donald Trump's social media venture.
This comes on top of the $US293 million that Digital World Acquisition Corp raised in an initial public offering in September.
Digital World is a SPAC that is set to merge with Trump's startup, Trump Media and Technology Group.
The two companies plan to launch the social media platform 'TRUTH Social' throughout the US in 2022.
US indices
- Dow Jones was down 0.2% to 34,580.08.
- S&P 500 fell 0.8% to 4,538.43.
- Nasdaq fell 1.9% to 15,085.47.
European markets
European shares were lower on Friday.
Inflation in Europe surged, with Germany inflation at its highest in decades. However, the European Central bank maintains its ‘transitory’ inflation stance.
Meanwhile, the European Central Bank (ECB) president Christine Lagarde told Reuters that the ECB could set short-term inflation policy at this month’s meeting given heightened uncertainty.
According to a IHS Markit survey, euro zone business activity accelerated last month, however it is likely this is just a temporary occurrence as demand growth weakened and fears about the Omicron variant put a dent in optimism.
Resources were down 2.5% on Friday as copper and iron ore prices eased, with tech stocks also lower.
In London trade, shares in Rio Tinto fell by 3% and BHP shares slid 2.7%.
European indices
- STOXX 600 fell 0.57% to 462.77.
- German Dax dropped 0.6% to 15,169.98.
- UK FTSE lost 0.1% to 7,122.32.