S&P 500 trips as Wall St banks kick off earnings season: ASX to open lower


The Australian share market is set to open lower following mixed trade on Wall St. The S&P 500 slipped from record high while the Dow Jones rose as banks on Wall St kicked off reporting season. JPMorgan, Goldman Sachs and Wells Fargo reported better than expected earnings boosting investor sentiment. News that broke during the session was the US Federal Reserve announcing a change in their bond buying program along with their release of the Beige Book report. This report is a compilation of anecdotes from business and market sources on the current economic conditions. The report stated that the economic activity accelerated to a moderate pace from late February to early April. This is due to the pace of the vaccination, business reopening and federal stimulus funds, as consumers spend on travel and discretionary goods and services. On the bond buying program front, the Federal Reserve said that the central bank will likely reduce its bond purchases “well before” it increases interest rates. Amid this, Wall St saw a sell-off in technology shares while investors mull on the latest vaccine developments. Meanwhile, European markets closed mixed as the US news transcended over the Atlantic as investors shift their focus to corporate earnings and vaccine developments. French luxury goods company Moët Hennessy Louis Vuitton reported a sharp rebound in first quarter earnings after market close. Their earnings was boosted by Chinese and American demand for Louis Vuitton. Meanwhile in Asia, technology stocks rebounded after 12 companies reported compliance with the antitrust laws. On the commodity front, oil prices rose about 5 per cent, their largest gain in a month. This was in response to the weekly US inventory data and the positive report from the International Energy Agency. Energy shares rose on the optimism that demand remains firm. Back home, the Aussie dollar rose.

Figures from around the globe

Wall Street closed mixed yesterday: The Dow Jones Industrial Average added 0.2 per cent to close at 33,731, the S&P 500 lost 0.4 per cent to 4,125 and the NASDAQ closed almost 1 per cent lower at 13,858.

European markets closed mixed: London’s FTSE added 0.7 per cent, Paris gained 0.4 per cent and Frankfurt closed 0.2 per cent lower.

Asian markets closed mixed: Tokyo’s Nikkei fell 0.4 per cent. Hong Kong’s Hang Seng gained 1.4 per cent and China’s Shanghai Composite closed 0.6 per cent higher..

Yesterday, the ASX closed 46.2 points or 0.7 per cent higher to 7,023 points setting a new record high. The tech and mining sectors ballooned to a new 13-month high. BHP and Rio Tinto spearheaded the mining charge while precious metals miners Resolute and Perseus Mining among the star performers of the gold miners’ rally.

Looking ahead, the SPI futures are pointing to 0.5 per cent fall.

Local economic news

Today, the unemployment data for March is on the agenda from the Australian Bureau of Statistics through their Labour force report. The February figures showed an uplift of 88,700 new jobs added to the economy with the unemployment rate improving to 5.8 per cent. The participation rate stayed flat at 66.1 per cent. It is expected that the unemployment rate could drop to 5.7 per cent with another 35,000 jobs added to the economy as per Trading Economics. The Melbourne Institute will also release their consumer inflation report for April. In March, inflation expectations increased to 4.1 from 3.7 per cent.

In company news that broke after market close yesterday

Buy now pay later company Zip Co (ASX:Z1P) launched an offer to raise $400 million through a senior unsecured convertible note offer due in 2025. The funds will be used to accelerate their global expansion and general corporate purposes. This follows the completion of a $120 million placement in December last year to fund growth in the US, UK and new markets. The company went into a trading halt yesterday afternoon pending the announcement. Share in Zip Co (ASX:Z1P) closed 1.23 per cent lower at $9.61 yesterday.

Ex-Div

Duxton Water Ltd (ASX:D2O) is paying 3 cents fully franked.
Plato Income Maximiser Ltd (ASX:PL8) is paying 0.4 cents fully franked.

Currencies

One Australian Dollar at 7:30 AM was buying 77.25 US cents, 56.07 Pence Sterling, 84.14 Yen and 64.47 Euro cents.

Commodities

Iron Ore has gained 0.2 per cent to US$173.54.
Iron Ore futures suggest a 1.6 per cent gain.
Gold has lost $11.30 to US$1736 an ounce.
Silver has added $0.10 to US$25.52 an ounce.
Oil has gained $2.97 to US$63.15 a barrel. 

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