Wall St rises, US carmakers rise, Why GUD Holding's price target got cut: ASX to open flat

Major indexes around the globe closed mixed ahead of the U.S. jobs report and earnings results. U.K. markets were little changed after the Bank of England left rates unchanged and in Asia, Chinese gaming stocks came under pressure.

The Australian sharemarket is set to open flat with the SPI futures, up 0.04 per cent.

Wall St rallies on travel stock rebound and employment data

Wall St ended higher with a record close by the S&P 500 and the Nasdaq after travel stocks rebounded following their last week’s struggle due to concerns on the highly infectious delta Covid-19 variant.

Investors also digested first time unemployment claims ahead of the major jobs report tomorrow amid a backdrop of rising imports in June flagging strength in the economy.

Every week, we take a look at the jobless claims and last week 385,000 Americans filed for first time unemployment benefits, in line with expectations but still at a higher range, with the numbers marking a 14,000 decline from the week prior as per the labor department.

Tomorrow, we will have a better look at the employment situation which I will cover with you on Monday, though one thing to note is that it will miss the last 3 weeks where the cases of Covid-19 have climbed but it will give us clues on the Fed’s potential next steps.

S&P 500, Nasdaq posts record close

This saw the Dow Jones gained 0.8 per cent to 35,064, the S&P 500 up 0.6 per cent to 4,429 and the Nasdaq added 0.8 per cent like the Dow at 14,895.

To bond markets, the 10-year treasury note rose to 1.22 per cent from 1.18 per cent yesterday.

Across the S&P 500 sectors, gains were across the board with Healthcare and Materials as the only sectors in the red, down marginally 0.4 per cent and 0.1 per cent respectively. Energy and Financials climbed over 1.2 per cent followed by Utilities, Industrials and Technology added the least at 0.5 per cent.

Ford & GM shares jump on EV goals by President Biden

Several automakers' shares rose ahead of President Joe Biden’s announcement on new electric vehicle goals today. The President is set to sign an executive order calling for electric vehicles to make up 40 to 50 per cent of new vehicle sales by 2030, that is nine years away so not too far in the scheme of things, along with new standards for cars fuelled by petrol. The funding commitment from the Biden Administration helped Ford and GM shares jump over 3 per cent ahead of the announcement. It won’t be long where you can go for a long drive in America and charge at a public charging station.

Virgin takes-off while Robinhood slumps

Virgin Galactic shares jumped over 4 per cent after hours on second-quarter results and announced that it will reopen ticket sales for space travel with pricing starting at US$450,000 per seat. The company reported an adjusted EBITDA loss of US$56 million in the second quarter, just above the loss of US$55.9 million in the prior quarter after generating US$571,000 of revenue in the second quarter from the scientific research experiments onboard the May spaceflight test.

Robinhood slumped 29 per cent after 4 straight days of gains after a regulatory filing from the company including a venture capital firm that they are looking to sell 98 million shares after going public on the Nasdaq under a week ago. This stock has had a rollercoaster ride claiming the worst ever IPO of its size and only yesterday, it climbed for its second day surging more than 50 per cent.

Europe closes mixed as BoE leaves rate unchanged

Across the Atlantic Paris gained 0.5 per cent, Frankfurt closed 0.3 per cent higher while London’s FTSE didn’t manage to keep up, closed 0.1 per cent lower. A strengthening pound weighed on multinationals after the Bank of England flagged "modest tightening" over the next two years with inflation forecast to peak around 4 per cent. For the meantime, they have kept rates unchanged. Miners tanked as China’s demand softens. Rio Tinto down 4.2 per cent and BHP closed 3.8 per cent lower.

Asian markets deals with Covid-19 outbreak, gaming shares under pressure again

Asian markets closed mixed as the region deals with an outbreak of Covid-19. Tokyo’s Nikkei added 0.5 per cent, Hong Kong’s Hang Seng fell 0.8 per cent and China’s Shanghai Composite slipped 0.3 per cent lower.

Tencent shares fell over 4 per cent after the state run media published an article arguing that gaming companies should have their preferential tax measures revoked after it was introduced as an incentive to grow the local software market, now that the gaming industry has evolved. It said that the gaming sector should share the same tax policies as other industries and gave warning to be “mentally prepared for this.”

ASX 200 hits new record high for a 2nd day

Yesterday, the Australian sharemarket closed 0.1 per cent high at 7,511 to post another record high for its second straight day.

A slide in Materials pressured lower by iron ore prices notched the day as the worst performer, down 1.3 per cent. Energy wasn’t any better falling in tandem with crude oil prices just a nip behind falling 1.2 per cent. Utilities dropped 0.3 per cent while Industrials just edged lower at 0.1 per cent.

Gains by Property, companies that rely on direct consumer spending, Financials helped keep the losses in check with Technology and Communication Services adding the least by 0.3 and 0.1 per cent respectively.

After the monster splurge announcement from U.S. payment giant Square to buy out Afterpay (ASX:APT) for $39 million, buy-now-pay-later stocks are in the red for its second day as investors mull on the details of the offer. Afterpay fell 1.1 per cent after gaining over 18 per cent by Tuesday while Zip Co (ASX:Z1P) dropped 2.1 per cent.

Local economic news

Today the RBA will take the spotlight again today in a different fashion. They are set to release its Statement on Monetary Policy with all eyes on the updated forecasts for economic growth, inflation and the labour market.

Also the RBA governor Lowe is set to provide a testimony to the House of Representatives Standing Committee on Economics at 9.00am (AEST).

Reporting season

Today we have News Corp (ASX:NWS), REA Group (ASX:REA), ResMed (ASX:RMD) slated to report profit results today.

Broker moves

Credit Suisse rates automotive parts company GUD (ASX:GUD) as outperform with a price target of $13.90. The broker observes industry tailwinds with FY21 results in line with expectations. Credit Suisse believes the rising costs are temporary although freight costs may take time to normalise.

The broker upgrades revenue forecasts to largely reflect the flow-through of higher base estimates. Although the lockdowns bring about caution, the broker believes a 5.2 per cent revenue growth forecast for the automotive segment in FY22 is not overly ambitious. Target price drops to $13.90 from $14.00. Shares in GUD (ASX:GUD) closed 0.5 per cent higher at $11.76 yesterday.

IPOs

Today Gold 50 (ASX:G50) is set to make its debut on the ASX at lunchtime today after raising $10 million at an issue price of $0.25.

Ex-Dividends

BKI Investment (ASX:BKI) is paying 3 cents fully franked.
Janus Henderson (ASX:JHG) is paying 51.4696 cents unfranked.
Ozgrowth Limited (ASX:OZG) is paying 0.35 cents fully franked.
Westoz Inv (ASX:WIC) is paying 3 cents fully franked.

Commodities

Iron Ore has lost 6.6 per cent to US$171.55.
Iron Ore futures are pointing to 2.7 per cent fall.
Gold has lost $5.60 to US$1808.90 an ounce.
Silver has lost $0.17 to US$25.29 an ounce.
Oil was up $0.94 to US$69.09 a barrel.

Currencies

One Australian Dollar at 7:50 AM has soften from yesterday buying 74.05, US cents, 53.15 Pence Sterling, 81.27 Yen and 62.55 Euro cents.

Investor Event

Please join us at our next online investor event on Tuesday 24 August at 12.30pm with CEOs presenting from 5 different companies from resources to healthcare. Make your way to fnn.com.au to register for your free spot.