Wall St mixed, RBA cash rate to hold: ASX to rise

Market Reports

by Melissa Darmawan

The Australian sharemarket is set to rise following a mixed lead from the US. The Dow Jones climbed as shares linked to the reopening of the economy rallied with the help of energy and materials shares. The Nasdaq dropped as technology stocks gave back gains as Tesla dragged on the index, closing 3.5 per cent lower along with Amazon down 2.5 per cent. Retailers led the gains with the likes of Macy’s adding 8 percent while the Dillard’s department store climbed 9.7 per cent on the back of a lifting of restrictions. Berkshire Hathaway shares added 1.6 per cent after Warren Buffett’s conglomerate reported a 20 per cent surge in earnings as they continued to buy back into its own shares. European stocks rose after the European Commission proposed to allow entry to the EU for foreign tourists who have been vaccinated against the coronavirus. Oil prices jumped more than 1 per cent as optimism on the recovery in energy demand along with the reopening of economies offset worries on the increasing number of covid-19 cases in the third largest country in oil consumption which is India. Back home, the Aussie dollar rose against the greenback.

Figures from around the globe

Wall Street closed mixed yesterday: the Dow Jones Industrial Average added 0.7 per cent to 34,113, the S&P 500 gained 0.3 per cent to 4,193 and the NASDAQ closed 0.5 per cent lower at 13,895.

European markets: London’s FTSE was closed, Paris gained 0.6 per cent and Frankfurt closed 0.7 per cent higher.

Asian markets: Hong Kong’s Hang Seng fell 1.3 per cent while Tokyo’s Nikkei and China’s Shanghai Composite were closed.

Taking all of this into equation, the SPI futures are pointing to 0.2 per cent gain.

Yesterday, the Australian share market closed flat at 7,029.

Local economic news

Today the Reserve Bank board will hold its monthly meeting where it’s expected that cash rates will remain at record lows of 0.1 per cent despite economic indicators improving above expectations. This will then be followed by its quarterly statement this Friday which will consist of updated economic forecasts. The central bank has reaffirmed its stance that they would not lift rates until inflation is within 2-3 per cent despite the unemployment rate dropping to 5.6 per cent in March as inflation lifted by 0.3 per in the March quarter. Westpac economists forecast a lowered revision to the unemployment rate with no changes to inflation. Also out today is the weekly consumer confidence  by ANZ and Roy Morgan along with the Australian Bureau of Statistics' international trade figures and lending indicators.

Company news

Electronic parts and service software company Infomedia (ASX:IFM) has entered into an agreement to acquire US-based e-commerce platform, SimplePart. The agreement is for an upfront consideration of US$24.5 million plus an earn-out of up to USD $20.5 million over three years. SimplePart is a provider in digital aftersales providing online parts, accessories and service e-commerce solutions to enable automakers and dealers to sell directly to consumers. SimplePart reported a US$10 million revenue in the 12 months to 31 March 2021 and is expected to achieve low double digit growth rates in calendar years 2021 and 2022 before synergies. The completion of the transaction is expected before 30 June this year. Shares in Infomedia (ASX:IFM) closed flat at $1.58 yesterday.

Broker moves

Ord Minnett rates Resmed (ASX:RMD) as a hold with a target price of $26.50. The upgrade follows the company’s third quarter results, which missed the broker’s expectations by 3 per cent led due to a reduced ventilator demand impacting lower global device sales. Despite the softer result, the broker finds the fundamentals of the sleep market attractive. The broker highlights that the wheels have turned outside the US as the company is set to enjoy a boost as their competitor Philips is unable to supply demand due to a pending approval of its new device. Shares in Resmed (ASX:RMD) closed 4.43 per cent lower at $25.01 yesterday.

Ex-Div

Acorn Capital Investment Fund (ASX:ACQ) is paying 4 cents fully franked.
Vitalharvest Freehold Trust (ASX:VTH) is paying 2.5 cents unfranked.
Waterco Limited (ASX:WAT) is paying 3 cents fully franked.

Currencies

One Australian Dollar at 7:50 AM was buying 77.64 US cents, 55.84 Pence Sterling, 84.68 Yen and 64.39 Euro cents.

Commodities

Gold has gained $24.10 to US$1792 an ounce.
Silver has added $1.09 to US$26.96 an ounce.
Oil has gained $0.91 to US$64.49 a barrel.


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