Wall St retreats ahead of inflation figures and earnings season: ASX to edge higher


The Australian share market is to edge higher this morning. The S&P 500 and the Dow Jones indexes retreated from their record high, as investors prepare themselves for the start of the earnings reporting season and the release of the inflation report this week. The US bond yields lifted higher though eased from 14-month high calming investor’s nerves. This has helped technology shares advanced on Wall St in recent times as growth shares like technology are impacted by rising yields and inflation. On the back of this, nerves rise as profits dip on future earnings yet this opens a buying opportunity to acquire them at lower prices. On the other hand, financial stocks thrive from this condition as higher income is received on cash. As for the sectors in the S&P 500, communication services and energy shares were the biggest decliners while consumer discretionary led the gains. Energy stocks slipped as oil prices retreated as investors mull on the pace of the vaccination versus restrictions that could threaten energy demand. Meanwhile, gold dipped with the US dollar.

International markets

Wall Street closed lower yesterday: The Dow Jones Industrial Average lost 0.2 per cent to close at 33,745, the S&P 500 fell 0.02 per cent to 4,128 and the NASDAQ closed 0.4 per cent lower at 13,850.

European markets closed lower: London’s FTSE fell 0.4 per cent, Paris lost 0.1 per cent and Frankfurt closed 0.1 per cent lower.

Asian markets closed lower: Tokyo’s Nikkei fell 0.8 per cent. Hong Kong’s Hang Seng lost 0.9 per cent and China’s Shanghai Composite closed 1.1 per cent lower.

Yesterday the Australian share market closed 0.3 per cent lower at 6,974 extending its losing run for the second day

Looking ahead, the SPI futures are pointing to 0.2 per cent gain.

Local economic news due out today

The NAB business conditions and confidence report is due out today.
  • The confidence index rose in February to its highest level in 11 years.
  • For business conditions, the index rose to its highest level in 3 years.
This is on the back of the improving economic conditions and the start of the vaccine rollout which likely stimulated a positive mood of businesses. The phasing out of government support and the snap lockdowns in certain areas of the country seem to have little impact on optimism. These figures are an important indicator for capital expenditure and hiring as a boost is necessary for sustainable economic growth. It's expected by analysts to show continued strength.

The Australian Bureau of Statistics will release the payroll jobs and wages data for the second half of March with figures indicating that they're mainly back to pre-pandemic levels. Leading indicators of employment, like payroll and job advertisements all point to a continued strong demand for labour.

Company news

Credit rating agency Fitch ratings has upgraded ANZ Group (ASX:ANZ) from a negative to stable yesterday for their Australian and New Zealand banking business. Fitch says the “Stable Outlook reflects our view that ANZ has sufficient headroom in its financial metrics to maintain the current rating, even in a scenario that is moderately weaker than our base case”. Shares in ANZ closed 0.45 per cent higher at $28.87 yesterday.

Currencies

One Australian Dollar at 7:20 AM was buying 76.25 US cents, 55.48 Pence Sterling, 83.44 Yen and 64.00 Euro cents.

Commodities

Iron Ore has gained 0.6 per cent to US$174.57.
Iron Ore futures suggest a 2.6 per cent gain.
Gold has lost $12.80 to US$1732 an ounce.
Silver has fallen $0.49 to US$24.84 an ounce.
Oil has gained $0.32 to US$59.64 a barrel.