Wednesday outlook: ASX headed for a strong start

Market Reports

by David Chau

The Australian share market will open higher this morning, following a strong lead from Wall Street.

In the US, shares in the Materials sector led the charge, and investors digested some positive economic data.  The prevailing sentiment is that the chance of the Federal Reserve raising interest rates in September is low. However, they will be listening intently to what the Fed Chair, Janet Yellen will say in her speech on Friday.

Also, the price of crude oil rose overnight due to speculation that Iran may be prepared to cooperate with other producers to control output.

US economic news

New home sales have reached their highest level in almost 8 years. Last month, they rose 12.4% to a seasonally adjusted annual rate of 654,000 (which exceeded expectations).

Purchasing Managers Index came in at 52.1 this month, which is slightly lower than the July result of 52.9. Any reading above 50 indicates industry expansion. So while there was a solid increase in output, there was slower growth in total new work and employment, and cuts to inventories.

Markets

Wall Street finished higher on Tuesday: The Dow Jones gained 0.1% to close at 18,547, the S&P 500 was up 0.2% at 2,187 and the NASDAQ was up 0.3 per cent to close at 5,260.

European markets finished stronger as well: London’s FTSE was up 0.6%, Paris gained 0.7 percent and Frankfurt rose 0.9 per cent.

Asian markets finished mixed: Tokyo’s Nikkei closed 0.6% lower, Hong Kong’s Hang Seng was flat, and the Shanghai Composite gained 0.2 per cent.

The Australian share market finished higher yesterday: The ASX 200 closed 39 points higher to finish at 5,554. And this morning, the SPI is up 18 points.

Currencies

The Australian Dollar at 7:20AM was buying $US0.7614, 57.71 Pence, 76.33 Yen and 67.37 Euro cents.

Local economic news

Later today, the Australian Bureau of Statistics will release figures on construction work done during the June quarter. In the March quarter, total construction fell 2.6% - so let’s see whether there’s been improvement in today’s result.

Earnings season

We’re still in earnings season right now, and a few companies will release their results today. Some of the big ones are Blackmores, Qantas, Wesfarmers and WorleyParsons.

Company news

Bellamy’s Australia Ltd (ASX:BAL) has more than tripled its full year profit to $38.3 million. The company's revenue, for the twelve months ended 30 June 2016, rose 95%. This result was greatly boosted by sales in China and Hong Kong – where sales skyrocketed 331% to $62.1 million. Shares in Bellamy’s closed 5.29% higher at $14.94.

Ingenia Communities Ltd (ASX:INA) has announced its underlying profit rose 20% to $20.2 million in FY16. However, statutory profit was down 6% to $24.3 million due to a reduction in tax benefits. Nevertheless, Ingenia says it had a strong result which was driven by growing rental income and home settlements. Shares in Ingenia closed 0.35% lower at $2.88.

Ex-dividends

A few companies going ex-dividend today. Some of them include AGL, Lendlease and Telstra.

Commodities

Gold has gained $2.70 to $US1,346 an ounce for the December contract on Comex.
Silver is up $0.07 to $19.07 for September.
Copper is down $0.03 to $2.13 a pound for September.
Oil has gained $0.69 to $US48.10 a barrel for September light crude.

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