Morning report

Vaccine Push Lifts Equities

Global markets were broadly in the green to start the new week, with positive vaccine updates and a better than expected start to earnings season leading investors to gloss over the continuing surge in new COVID-19 cases. Equities in the US, UK, Europe and Asia Pacific regions were all comfortably higher.

US stocks in the green

The US Food and Drug Administration granted fast track status to a pair of COVID-19 vaccines from Pfizer and Germany's BioNTech (+10.8%). The S&P 500 rose +1.0%, the Dow Jones Industrial jumped +1.6% and the Nasdaq Composite added +0.4%. The S&P 500 is not far from erasing year-to-date losses. Shares of PepsiCo were up +1.6% after its second quarter profit and revenue dropped less than expected thanks to resilient food and beverage sales amid the COVID-19 pandemic. Shares of Pfizer, which surged +5.4% on the positive vaccine news, and Apple, which jumped +2.0% after a broker valued the company at US$2tn, supported strong gains in the Dow Jones. Shares of Tesla continued their meteoric rise early in the day, but come back down to earth to sit +1.2% higher, as expectations grow that it will enter the S&P 500 index. In merger and acquisition news, chip maker Analog Devices (-3.8%) announced it had agreed to acquire Maxim Integrated Products (+10.9%) in a US$21bn deal.

European and UK stocks climb ahead of earnings season

Optimism for a steady second-quarter earnings season in Europe, combined with a strong start to the week in the US, lifted European stocks. The Europe Stoxx 600 closed +1.0% higher, with shares of companies due to report in the next week on the rise, such as Ericsson (+1.6%) and ASML (+1.4%). Ubisoft slumped -5.0% after announcing a shake up in management.

The UK's FTSE 100 climbed +1.3%, tracking gains in European peers as the region gears up for the reporting season. Shares of Mining majors Rio Tinto (+3.1%) and BHP Group (+2.4%) gave a big boost to the blue chip index as the companies prepare to report quarterly production numbers.

Asia Pacific stocks charge higher

Positive expectations for China's April-July economic growth data gave equities in the Asia Pacific region a boost. Shares in China and Japan were particularly strong, with the Nikkei 225 (+2.5%) and Shanghai Composite (+1.8%) surging, while the Kospi climbed +1.6% and the Hang Seng added +0.2%.

Strong gains in the heavyweight Australian banking and mining sectors helped lift the ASX 200 by +1.0%. Treasury Wine Estates surged +4.2% after a broker raised its rating and target price on the stock.

The NZX 50 climbed +0.4%, lifted by gains across Asia as positivity from the US's strong close on Friday spilled over. Chorus recovered +2.8% following Friday's sharp loss when the Commerce Commission indicated a change to how it regulates the telco.

Crude oil and gold prices up

WTI crude oil added +0.2% to US$40.63 while gold added +0.6% to US$1,809.25.

NZ Headlines

Tiwai Point aluminium smelter's signalled wind-down next year has forced Transpower to expedite at least NZ$650m of transmission upgrades to the national grid, with current work now deemed critical.

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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your Authorised Financial Adviser.