Wall St dips amid rising bond yields in a mixed performance today while Asian markets closed lower while ASX closed higher over the week as China's Covid-19 cases continue to climb after reporting its first death. Crude oil rose as outages in Libya triggered concerns on already tight supply.The Australian sharemarket is looking to have a muted start as we resume trade today.
Wall St consolidates on rising bond yieldsUS stocks had a choppy session as bond yields surged to four year highs with growth stocks taking it on the chin.
Why?Investors monitored earnings season, inflation and what this means on the path forward for interest rates or borrowing costs, returning from the long weekend. The major indexes were higher than they were lower and closed almost unchanged, so let’s describe the session as a consolidation.
At the closing bell, the Dow Jones fell 0.1 per cent to 34,412, the S&P 500 closed flat at 4,392 and the Nasdaq lost 0.1 per cent to 13,332.
Across the S&P 500 sectors on a thin trading day, a strong earnings result from Bank of America thanks to their consumer lending business boosted financials, up 0.6 per cent, energy came in as the best performer, gained 1.5 per cent with information tech and consumer discretionary also posting gains. The defensive sectors closed lower led by healthcare, down 1.1 per cent, and consumer staples.
The yield on the 10-year treasury note rose by 3 points to near 2.83 per cent, highest since 2018, gold rose pushing a one month high on a stronger greenback in a flight to safety.
China GDP lags behind bullish annual targetOther than this, what else has been on investor’s minds? They also digested China’s economic growth coming in above expectations, grew 4.8 per cent annually in the first quarter. Though, when you compare this to their target of 5.5 per cent for the year, they’re lagging with its current lockdown far from helping.
Weighing on these figures is their property sector which has seen some reprieve after regulators pledged to provide relief, however, developers are missing their bond payments, so it's not really helping with the growth we're expecting.
If China is behind schedule to their bullish 5.5 per cent annual target, how does this impact Australia?
Firstly, the slowdown in their economy is set to ripple across the world with factories closed amid the already strained supply chain, likely to lead to further inflationary pressures. Secondly, this doesn't help our Aussie dollar which has dropped to a 4-week low as it's vulnerable to economic developments in China given they are our largest trading partner, and lastly it adds to the volatility among our iron ore miners, like BHP as it makes up 12 per cent on the index plus its sector which comprises of 30 per cent.
Rivian CEO flags stormMeanwhile as we grapple with the impact from China, not only are we experiencing a chip shortage, the ingredients for EV batteries are starting to be of concern. EVs represent about 10 per cent of the new cars sold worldwide with demand growing around the globe. EV car maker Rivian expressed concerns about the metals needed to make the batteries amid companies investing in factories and partnering with battery companies.
Last week we talked about Tesla’s concern about the price of lithium and we saw Lake Resources
(ASX:LKE) inking a non-binding offtake deal with Ford reinforcing this story, plus other battery car making miners rallying in the wake of this.
Musk tweets Love Me Tender on Twitter’s poison pillAlong the lines of the EV space, we can’t go past the headlines on Twitter. Tesla's CEO Elon Musk wants to take the social media giant private. On Friday, the board adopted what's called a poison pill to protect itself from the second-biggest shareholder's US$43 billion cash buyout offer. Musk tweeted "Love Me Tender", an Elvis Presley song, a day after Twitter Inc adopted a poison pill.
Figures around the globeEuropean markets were closed.
Asian markets closed lower. Tokyo’s Nikkei lost 1.1 per cent, Hong Kong’s Hang Seng was closed while China’s Shanghai Composite lost 0.5 per cent.
On Thursday, the Australian sharemarket closed 0.6 per cent higher at 7,523. Over the last four trading days, it gained 1.1 per cent.
SPI futuresTaking all of this into the equation, the SPI futures are pointing to a 0.1 per cent gain.
What to look out for todayThe Reserve Bank meeting minutes from earlier this month is due today with eyes on any colour as to when the central bank will hike interest rates after removing its “patient” stance from his post-board meeting statement, citing that inflation and wages growth is now in focus. The bets are on from economists that the first rate rise could be in June after the May federal election.
Energy sector could charge up the local bourse today amid the oil price closing 1.2 per cent higher. Keep an eye out for your oil majors like Woodside Petroleum
(ASX:WPL) and Santos
(ASX:STO).
In terms of broker moves, Canaccord Genuity has downgraded IGO
(ASX:IGO) to hold from buy and raised Nickel Mines
(ASX:NIC) to buy from hold.
Goldman has rated ReadyTech
(ASX:RDY) as a new buy with a price target of $5. Technology One
(ASX:TNE) as a new buy with a price target of $13.90 and Wisetech
(ASX:WTC) as new neutral with a price target of $53.
As for companies, BHP
(ASX:BHP) is on watch after creditors of Samarco Mineração SA, an iron ore producer jointly owned by Vale SA and Grupo BHP, rejected the company’s restructuring plan at a meeting of creditors held on Monday.
Syrah Resources
(ASX:SYR) has been awarded a conditional loan of up to US$107 million from the Biden administration to help finance a US plant expansion. The company already has a four-year offtake agreement with Tesla. Also on watch are fellow lithium miners like Lake Resources
(ASX:LKE), and Liontown Resources
(ASX:LTR).
AMP
(ASX:AMP) amid Apollo Global Management in talks to buy part of AMP capital’s infrastructure equity business, according to Bloomberg while Dexus
(ASX:DXS) is in late stage negotiations to acquire all of AMP Capital's Australian operations, adding about $31 billion in assets to its portfolio, according to the AFR. Several talks with parties about the sale of its assets and businesses.
Also, Hub 24
(ASX:HUB) with its third quarter update today.
Ex-dividendThere is one company set to trade without the right to its dividend.
Kelly Partners Group
(ASX:KPG) is paying 0.363 cents fully franked
Dividend-payThere are 5 companies set to pay eligible shareholders today.
Carsales.Com
(ASX:CAR)Maas Group Holdings
(ASX:MGH)VEEM
(ASX:VEE)VGI Partners Global Investments
(ASX:VG1)VGI Partners Asian Investments
(ASX:VG8)CommoditiesIron ore has gained 0.7 per cent to US$153.85. Its futures point to a 1.2 per cent fall.
Gold has gained $11.50 or 0.6 per cent to US$1986 an ounce. Silver is up $0.45 or 1.8 per cent to US$26.24 an ounce.
Oil has added $1.26 or 1.2 per cent to US$108.21 a barrel.
CurrenciesOne Australian Dollar at 7:45 AM has weakened from Thursday, buying 73.53 US cents (Thu: 74.54 US cents), 56.54 Pence Sterling, 93.40 Yen and 68.21 Euro cents.
Source: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, Reuters, AFR
