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Positive Sentiment Continued on Friday


Friday saw investors around the globe buying the dip after strong inflation data had spooked the market. The buying wasn’t

enough to counter earlier losses, however, and major US and European indices still closed the week in the red.

US stocks continue Thursday’s rally

Wall Street saw another day in the green as investors bought the dip caused by higher-than-expected inflation data released on Tuesday night. The 10-year Treasury Bond yield dropped 4bp to 1.63%, despite import and export prices continuing to increase. Retail sales were disappointingly flat in April, while rising inflation expectations dampened consumer sentiment in May. Major US indices continued Thursday’s gains, with the S&P 500 up +1.5%, the Dow Jones adding +1.1% and the Nasdaq closing +2.3% higher. But Thursday's and Friday's gains weren’t enough to offset Wednesday’s losses, and all three major indices closed the week below where they started (S&P 500: -1.4%, Dow Jones: -1.1%, Nasdaq: -2.3%). All equity sectors rose with the energy sector (+3.2%) leading Friday’s gains, while the technology sector (+2.1%) benefitted from falling rates. Walt Disney tumbled -2.6% after Disney+ subscriber growth missed expectations. Airbnb jumped +4.0% following its earnings result, which showed an increase in revenue driven by higher vacation demand as more people get vaccinated against COVID-19. DoorDash jumped +21.7% after its result.

Europe upbeat amid Wall Street gains

The Stoxx 600 increased +1.2% on Friday (closing the week down just -0.5%) as investors reacted to the positive sentiment across the Atlantic. Germany’s DAX rose +1.4%. Minutes from the European Central Bank's April meeting showed it planned to assess its stimulus levels at its 10 June meeting. Winners for the day included Lufthansa (+3.7%) , Siemens (+3.0%) and Volkswagen (+2.8%). The FTSE 100 gained +1.2%, with shares in Scottish Mortgage (+2.8%), Shell (+2.7%) and JD Sports (+2.7%) closing higher while miners Rio Tinto (-2.8%) and BHP (-1.3%) slid on falling metals prices.

Asia ends the week on a positive note

China’s CSI 300 increased +2.4%, the Shanghai Composite added +1.8%, Hong Kong’s Hang Seng rose +1.1%, Japan’s Nikkei climbed +2.3% and South Korea's KOSPI rose 1.0%, all supported by calming US inflation worries.

The ASX 200 added +0.5%, buoyed by gains in the financial, consumer and energy sectors. Major banks ANZ and National Australia Bank (both up +1.0%), Westpac (+0.9%) and Commonwealth Bank (+0.6%) all rose. Retailers Harvey Norman (+2.6%) and JB Hi-Fi (+1.9%) rose amid easing inflation fears. Despite lower oil prices, the energy sector rose 1.7% per cent. Materials was the only sector to drag as mining stocks Fortescue Metals (-2.8%), Rio Tinto (-2.0%) and BHP (-1.6%) pulled back after their recent iron-ore pricefuelled run-up as the iron ore price came off Wednesday's record high. The NZX 50 shed -0.5% amid mixed performances from its constituents, as declines in F&P Healthcare (-1.9%), Mainfreight (-1.2%), Auckland Airport (-0.7%) and Ryman Healthcare (-0.7%) more than offset gains in a2 Milk (+1.2%), Kathmandu (+1.3%), EBOS (+1.0%), Mercury NZ (+1.2%) and Z Energy (+1.1%).

WTI crude and gold up, iron ore down

WTI crude inched up +0.2% to US$65.51/bbl and gold added +3.1% to US$1,843.80/oz. Iron ore shed -2.9% to US$212.05/MT.

NZ Headlines

Synlait (SML) chief financial officer Angela Dixon has resigned just two weeks after the departure of chief executive Leon Clement.


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