Wall St refresh record highs, iron ore rally continues: ASX to dip


The Australian share market is set to dip despite a strong finish on Wall St. On Friday the Dow Jones and S&P 500 reset record highs after US job figures calmed nerves over the fear of rising inflation and interest rates. The weak job growth numbers in April saw investors buy back into tech stocks. Heavy-weighted growth stocks such as Microsoft, Apple, Netflix and Alphabet all clocked up gains. These interest rate sensitive stocks generally have higher debt levels relying on earnings in the future, so rising interest rates hurts their cash flow which dampens earnings weighs which pulls on their share price. On the back of the job numbers release, we saw treasury yields dip though it did make ground by market close. Energy and materials stocks both hit fresh highs on the backdrop of rising commodity prices. Oil prices rose with iron ore surging over 14 per cent over the week while gold extended its rally adding over 1 per cent to its best week in 6 months. Back home, the Aussie dollar rose against the falling greenback.

Figures around the globe

Wall Street closed higher on Friday, the Dow Jones Industrial Average gained 0.7 per cent to close at 34,778, the S&P 500 added 0.7 per cent to 4,233 and the NASDAQ closed 0.9 per cent higher at 13,752.

European markets closed higher, London’s FTSE gained 0.8 per cent, Paris gained 0.5 per cent and Frankfurt closed 1.3 per cent higher.

Asian markets closed mixed, Nikkei added 0.1 per cent, Hong Kong’s Hang Seng fell 0.1 per cent and China’s Shanghai Composite closed 0.7 per cent lower on Friday.

Back home, the SPI futures are pointing to a 0.1 per cent fall.

ASX 200

On Friday, the Australian share market closed 0.3 per cent higher at 7,081 with the help of materials, energy and financial stocks amid the RBA’s dovish stance. The stock of the week was Resolute Mining (ASX:RSG) soaring 10.3 per cent on the back of rising gold prices and broker upgrades. The worst stock of the week was artificial intelligence company Appen (ASX:APX) tumbling 21 per cent after revealing its reduced data volumes are set to impact the company’s revenue.

Local economic outlook

The focus this week is the Federal Budget which is expected to provide further support for the economy with the aim of full employment.

On the data front, today the NAB business confidence for April is due out along with the Australian Bureau of Statistics’ retail sales numbers for March.

On Tuesday, ANZ and Roy Morgan will publish its weekly consumer sentiment report. Also, the ABS’ weekly payroll figures for the week ending 24 April are to be released. As I said earlier, eyes will be on the release of the Federal Budget also. Most key elements have been released with the event bringing all the data into one publication.

On Thursday, the Melbourne Institute’s May update on consumer inflation will be published.

Local earnings outlook

On the earnings front, Commonwealth Bank is due to release their third quarter results on Wednesday with Pendal, AusNet, CSR, Pushpay, GrainCorp, Orica and Xero also scheduled this week.

Overseas economic outlook

Elsewhere, the US, China and India will release inflation figures for April while in the UK, first-quarter GDP figures are due. US earnings season continues with the likes of Coca-Cola, United Airlines, Netflix and AMEX to release results.

Company news that broke after market close on Friday

Metal detection and mining technology company Codan (ASX:CDA) completed their acquisition of US-based mission critical communication company Zetron for $59 million on Friday. The news comes after their February announcement of a $114 million acquisition of Domo Tactical Communications as part of their strategy to fill a technology gap, transitioning from a voice-only platform with video communication capabilities. The company saw its highest ever half year results with a 36 per cent climb in their net profit after tax of $41.3 million following its strong demand for metal detectors across their gold and recreational markets. Shares in Codan (ASX:CDA) closed 1.18 per cent lower at $16.78 on Friday.

IPOs

It’s a big week for IPOs with six companies set to debut this week. It kicks off on Tuesday with artificial intelligence recruitment company Hiremii (ASX:HMI). On Wednesday, energy efficiency software company EP&T Global (ASX:EPX) and mining exploration Australasian Gold (ASX:A8G) are pencilled in. The rest of the companies are pencilled in to take stage on Friday with headphones and listening devices company, Audeara (ASX:AUA), pathology services provider Australian Clinical Labs (ASX:ACL). This third largest pathology network company raised $408.6 million at $4 a share. Lastly, Juno Minerals (ASX:JNO) following their demerger with Jupiter mines.

Ex-Dividends

ANZ Banking Grp Ltd (ASX:ANZ) is paying 70 cents fully franked
Janus Henderson (ASX:JHG) is paying 48.7429 cents unfranked
Seek Limited (ASX:SEK) is paying 20 cents fully franked

Currencies

One Australian Dollar at 7:40 AM was buying 78.50 US cents, 56.05 Pence Sterling, 85.29 Yen and 64.54 Euro cents.

Commodities

Iron Ore has gained 5.1 per cent to US$212.25
Iron Ore futures suggest a 2.7 per cent gain.
Gold was up $15.60 to US$1831 an ounce.
Silver was flat US$27.48 an ounce.
Oil was up $0.19 to US$64.90 a barrel.

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