Wall St mixed, Inflation woes on Fed minutes, JP Morgan dips, Lovisa rated overweight: ASX to rise

Global market closed mixed after earnings season kicked off. Inflation concerns and the Fed meeting minutes weighed on investors' sentiment amid choppy trade. Lovisa's broker rating is overweight despite the CEO stepping down. ABS slated to release the jobs report for September while RBA Governor is set to virtually speak this morning at the CFA conference.

The Australian sharemarket is set to rise with the SPI futures pointing to a gain of 0.7 per cent.

U.S. stocks closes mixed after choppy session

Wall St closed mixed after a choppy session as investors digested news amid concerns on the economic recovery.

The Nasdaq outperformed the major indexes after bond yields dipped, creating space for tech shares to rise. Investors shrugged off hotter-than-expected inflation figures, and the Fed’s plan to likely start reducing its bond-buying program this year.

Inflation pressures remain elevated as FOMC releases minutes

Last month, consumer prices rose more than expected driven by energy and gas prices. They both rose over 1 per cent, while food items increased by 0.9 per cent as per the Bureau of Labor Statistics.

Inflation modestly rose with the consumer price index (CPI) up 0.4 per cent, after rising 0.3 per cent in August. On an annual basis, CPI increased 5.4 per cent, before seasonal adjustment.

Despite the tick up, market participants anticipate that a formal announcement will be made in November. The Fed meeting minutes showed that their taper program will be gradual, so no surprise there. They also believe that inflation is transitory, and that more people need to come back to work to help push prices down.

JP Morgan falls on profit results

Investors also digested earnings figures from JPMorgan Chase which fell 2.6 per cent. The company beat expectations on profit of US$4.74 a share versus an estimate of US$3 a share. Revenue came in US$30.4 billion, above expectations for US$29.8 billion. However, they had an impairment of US$2.1 billion for poor credit. Its peers Wells Fargo, Bank of America and Citigroup fell ahead of their earnings results.

With numbers showing signs of improvement, investors are keen to see if inflation is in check and how it will affect the central bank’s support. Curiosity lingers if higher costs for raw materials and energy is set to trim back third quarter earnings. We will wait and see.

Wall St mixed, bond yields fall as gold shines

At the closing bell, the Dow Jones closed flat at 34,378, the S&P 500 added 0.3 per cent to 4,364 while the Nasdaq closed 0.7 per cent higher at 14,572.

The yield on the 10-year treasury note fell four basis points to 1.54 per cent, while gold rose on a weakened greenback.

Across the S&P 500 sectors, financials and energy were the only losers down 0.6 and 0.1 per cent respectively. Utilities rose 1.1 per cent as the best performer, followed by materials and consumer discretionary.

Square gains, Apple falls, Delta falls on energy woes

Taking a brief look at some stocks, payment giant Square continued to rally 2.2 per cent today. Keep an eye out for Afterpay (ASX:APT) today.

Apple fell 0.4 per cent on news that they will cut iPhone13 production due to component shortages as per Bloomberg.

Investment manager BlackRock jumped 3.4 per cent after strong earnings, while Delta Air Lines tumbled 5.8 per cent on news that high fuel prices could lead to a fourth quarter loss.

European markets gains on inflation data

Across the Atlantic, European markets closed higher. Paris added 0.8 per cent, Frankfurt gained 0.7 per cent and London’s FTSE closed 0.2 per cent higher. British investors digested data on build cost inflation. It is expected to be in the range of 4 to 5 per cent with no significant disruption due to supply chain issues.

Miners and oil fell. Shares in Rio Tinto and BHP both fell by 1.5 per cent while BP and Shell both lost over 0.6 per cent.

Asian markets mixed on record exports in China

Asian markets closed mixed. Tokyo’s Nikkei lost 0.3 per cent, Hong Kong’s Hang Seng was closed due to a typhoon while China’s Shanghai Composite added 0.4 per cent on record Chinese exports in September.

Exports jumped 28 per cent year-on-year to a record of US$305 billion, better than the 25.6 per cent rise in August.

ASX 200 falls for 3rd day

Yesterday, the Australian sharemarket fell for the third straight day, down 0.1 per cent lower at 7,273 with only miners and banks falling behind after iron ore prices retreated.

The gains were almost across the board with property as the best performer, up 1.6 per cent followed by consumer staples and technology.

Iron ore sank on speculation of further cuts to steel production in China, pushing local miners of the steel-making ingredient lower.

Fortescue Metals (ASX:FMG) sank 5.3 per cent, Rio Tinto (ASX:RIO) fell 3.2 per cent while BHP (ASX:BHP) dipped 1 per cent.

Bank of Queensland (ASX:BOQ) slumped 4.3 per cent after disappointing financial year 2022 cost guidance overshadowed earnings that came in above expectations.

The best-performing stock in the S&P/ASX 200 was The A2 Milk Company (ASX:A2M), closing 13.5 per cent higher at $6.58. This was on the back of rival Bubs Australia Ltd (ASX:BUB) surprising first quarter update released ahead of its usual release date. This was followed by shares in GUD Holdings (ASX:GUD) and The Star Ent Group (ASX:SGR).

The worst-performing stock in the S&P/ASX 200 was Fortescue Metals Group (ASX:FMG), closing 5.3 per cent lower at $14.00. It was followed by shares in Mineral Resources (ASX:MIN) and Bank of Queensland (ASX:BOQ).

Local economic news

Today the Australian Bureau of Statistics is set to release the September jobs report.

Also, RBA governor Guy Debelle is pencilled in to give an online speech at the CFA investment conference this morning. The agenda is on “Climate Risks and the Australian Financial System”.

In August, the number of jobs fell 146,300 against the expectation of a fall of 80,000. During September, the Victoria lockdown deepened while NSW was showing signs of improvement.

Payrolls fell by 0.7 per cent in the fortnight to the 11th of September following a larger fall of 1.5 per cent in the two weeks prior, for a total fall of 2.2 per cent through the four weeks.Comparing the first two weeks in September to the first two weeks in August, payrolls fell 2.0 per cent.

Westpac group economists forecast a fall of 200,000 jobs with the unemployment rate at 4.7 per cent.

Broker moves

Morgan Stanley rates Lovisa (ASX:LOV) as overweight with a price target of $21. The broker believes Shane Fallscheer’s step down as CEO will likely spark an adverse market reaction. However, they suspect that execution risk for global growth could be minimized in the longer term given the new CEO’s strong global retail background.

Shares in Lovisa (ASX:LOV) closed 3.2 per cent higher at $18.96 yesterday.

Ex-dividend

Clime Investment Management (ASX:CIW) is paying 1.5 cents fully franked
Duxton Water Ltd (ASX:D2O) is paying 3.1 cents fully franked
Imperial Pacific Ltd (ASX:IPC) is paying 6.25 cents fully franked
London City Equities Ltd (ASX:LCE) is paying 1.375 cents fully franked

Dividend-pay

There are 11 companies set to pay eligible shareholders this dividend today.

Briscoe Group Australasia (ASX:BGP)
Brambles (ASX:BXB)
Cash Converters International (ASX:CCV)
IVE Group (ASX:IGL)
Kkr Credit Income Fund (ASX:KKC)
Latitude Group Holdings (ASX:LFS)
Money3 Corporation (ASX:MNY)
Mastermyne Group (ASX:MYE)
Over The Wire Holdings (ASX:OTW)
PM Capital Asian Opportunities Fund (ASX:PAF)
PM Capital Global Opportunities Fund (ASX:PGF)

AGMs

ARB Corporation (ASX:ARB)
Australian United Investment Company (ASX:AUI)
Diversified United Investment (ASX:DUI)

Commodities

Iron ore has lost 3.7 cent to US$124.17. Its futures point to a 4.5 per cent fall.

Gold has gained $34.30 or almost 2 per cent to US$1794 an ounce, silver was up $0.58 or 2.6 per cent to US$23.09 an ounce.

Oil was down $0.09 or 0.1 per cent to US$80.55 a barrel after OPEC's estimate for global oil demand growth this year was reduced from 5.96 million barrels a day to 5.8 million barrels a day.

Currencies

One Australian Dollar at 7:30 AM has continued to strengthened from yesterday buying 73.85 US cents, 54.06 Pence Sterling, 83.62 Yen and 63.67 Euro cents.

Investor event

Please join us for our next online investor event on Tuesday 26 October with six companies presenting. From lithium explorers to marketing service providers. Make your way to fnn.com.au to reserve your free online spot.