Aussie shares to slide as COVID-19 cases rise- SPI futures point to 1.3% fall


The local bourse looks set to start the new week lower following mixed leads from Wall Street. In the US on Friday stocks had a rollercoaster session with the Dow Jones and S&P ending lower while the Nasdaq ended ever so slightly higher. All three major averages posted modest weekly gains with the tech-heavy Nasdaq outperforming rising 3.7 per cent for the week. Negative headlines saw stocks dip to session lows early in Friday’s trade with Apple announcing it will reclose 11 stores in several states. Shares of the tech giant ended down 0.5%. Cruise line operators also took a hit after the Cruise Lines International Association announced suspension of cruise operations from U.S. ports due to the pandemic. Arizona and Florida also reported record spikes in confirmed COVID-19 cases. While California said on Thursday it had more than 4000 new cases in a single day. Trading was also highly volatile due to the S&P500’s first rebalancing of 2020. Looking ahead this week we can expect US GDP figures for the March quarter. Investors will also be watching COVID-19 cases closely as the US prepares for a second wave.

Markets

Wall Street closed mixed on Friday: The Dow Jones Industrial Average lost 0.8 per cent to close at 25,871, the S&P 500 fell 0.6 per cent to close at 3098 and the NASDAQ closed almost flat adding 0.03 per cent to 9946.

European markets closed higher. London’s FTSE added 1.1 per cent, Paris gained 0.4 per cent while Frankfurt closed 0.4 per cent higher.

Asian markets closed higher, Nikkei added 0.6 per cent, Hong Kong’s Hang Seng gained 0.7 per cent and China’s Shanghai Composite closed almost 1 per cent higher.

Taking all of this into equation, the SPI futures are pointing to 1.3 per cent fall.

On Friday, the Australian share market added 6 points (0.1 per cent) to close at 5943.

Aussie stocks posted a 1.6 per cent gain for the week. The index has now posted gains for seven out of the last eight weeks. On Friday preliminary retail sales figures showed a 16.3 per cent rise in retail spending for the month of May. The highest increase in the index’s 38 year history. The result saw the consumer discretionary sector rise and shares of Nick Scali and Adairs soared 19.7 and 10.5 per cent respectively after the positive retail read and as both posted upbeat trading updates. Tech stocks charged into the close with the sector the best performing over the week rising 7.8 per cent. WAAX names Appen Afterpay and Xero all posted solid gains. Healius was another standout for the week after announcing a $500 million sale of its medical centres and dental clinics to private equity group BGH Capital on Monday.Resources was the only sector to lose steam over the course of the week as investors moved to risk on trades which saw gold miners stocks decline. Northern Star and Evolution Mining were both down close to 5 per cent for the week.

Local economic news

The week kicks off today when Reserve Bank Governor Philip Lowe participates in a panel discussion at the ANU “Global Economy and COVID-19.” On Tuesday regular ANZ-Roy Morgan weekly reading on consumer confidence is due as well as preliminary May data on exports of goods and services. On Wednesday, the ABS issues another special COVID-19 report and the Department of Employment issues the May data on skilled vacancies
And On Thursday, the ABS issues three publications: the March quarter “Finance and Wealth”; job vacancies for May; and detailed Labour Force figures, also for May.

Company news

Building materials company James Hardie has raised its North American earnings margin guidance for the first quarter of the 2021 financial year to between 27 per cent and 29 per cent on a rebound in housing activity in the US. Shares in James Hardie Shares in James Hardie Industries (ASX:JHX) closed 1.02 per cent higher at $26.70 on Friday.

Ex-Dividends

Harvey Norman (ASX:HVN) is paying 6 cents fully franked

Currencies

One Australian Dollar at 7:45 AM was buying 68.22 US cents, 55.23 Pence Sterling, 72.87 Yen and 61.01 Euro cents.

Commodities

Iron Ore is flat at US$102.42.
Iron Ore futures suggest a 0.3 per cent fall.
Gold has gained $21.90 to US$1753 an ounce.
Silver was up $0.35 cents to US$18.02 an ounce.
Oil has gained $0.91 to US$39.75 a barrel.