Wall St rebounds as tech stocks jump: ASX to open higher

Market Reports

by Melissa Darmawan

The Australian share market is set to rise following Wall St closing its second straight session in the black. The week ended with a broad-based rally which followed a heavy sell-off led by technology shares as inflation fears outweighed the signs of a recovering economy. As investors’ sentiment pivoted from fear to confidence following the drop in weekly jobless claims, tech stocks made a comeback on Friday with Facebook up 3.5 per cent, Google-parent Alphabet and Microsoft rose over 2 per cent followed by Apple, Amazon and Netflix all advancing. Despite its rebound, over the week all three indexes closed over 1 per cent lower. Across the globe, markets followed the US with European and Asian markets closing higher. On the commodities front, on Friday the price of iron ore plunged over 10 per cent ending the week 1.6 per lower as officials in China look to moderate prices while oil prices rebounded as for gold, it rose 0.4 per cent over the week. Back home, investors are keeping an eye out for earnings results from Elders (ASX:ELD) and Incitec Pivot (ASX:IPL) today.

Figures around the globe

Wall Street closed higher on Friday, the Dow Jones Industrial Average gained 1.1 per cent to close at 34,382, the S&P 500 added 1.5 per cent to 4,174 and the NASDAQ closed 2.3 per cent higher at 13,430.

European markets closed higher, London’s FTSE gained 1.2 per cent, Paris added 1.5 per cent and Frankfurt closed 1.4 per cent higher.

Asian markets closed higher, Nikkei gained 2.3 per cent, Hong Kong’s Hang Seng added 1.1 per cent and China’s Shanghai Composite closed 1.8 per cent higher on Friday.

Back home, the SPI futures are pointing to a 0.7 per cent gain.

ASX 200

Over the week, the Australian share market closed 0.95 per cent lower to 7,014. The index saw a selldown over three straight sessions as investors turn their attention towards the rotation out of technology shares into companies linked to the reopening of the economy following the rise in the US inflation rate. Ignoring the central bank’s view that inflation rises would be temporary, investor’s fears of an interest rate hike saw the technology sector tumble 7.4 per cent over the week. Amid this, investors digested the Federal Budget as they pondered on companies and service providers which might benefit from the funding with the likes of aged care and infrastructure stocks getting a look over, Australian fund managers and banks also received a glance as well as consumer discretionary shares following the super incentives and proposed tax breaks. Over the week, we saw the likes of Japara Healthcare (ASX:JHC) and Boral (ASX:BLD) soar over 5 percent. Supported by positive company announcements, over the week, CBA (ASX:CBA) jumped 2.4 per cent and Pendal (ASX:PDL) soared over 7 per cent following its proposal to acquire a US company for $190 million.  

Local economic outlook

Focus is on the labour force figures scheduled on Thursday following the end of JobKeeper as well as the minutes from the RBA. We will also see the consumer sentiment report on Tuesday by ANZ and Roy Morgan with the Australian Bureau of Statistics to release wages and retail trade data this week.

Overseas economic outlook

Attention will be directed on the US Federal Reserve set to release their minutes on Wednesday. Today in China, there are several economic reports that could move the needle with the unemployment rate, industrial production figures, retail sales, fixed asset investment and house prices for April to be released from lunchtime onwards. On Tuesday, the Eurozone Q1 GDP is due while on Wednesday, the US building permits, and housing data is scheduled followed by the jobless claims report on Thursday. On Friday, the flash IHS Purchasing Managing Index surveys is due covering the state of the world’s economy.

Company news that broke after market closed on Friday

Beacon lighting (ASX:BLX) is set to acquire its fourth property in Sydney for $11.2 million as part of establishing a new subfund. The property on Parramatta Road in Auburn, New South Wales consists of three tenancies and 43 car spaces. It is proposed that two out of the three tenancies will be leased to other businesses with the remaining tenancy to be leased back to the company. A new store is expected to open in August this year and will be joined by Bunnings, Costco, Harvey Norman and Domayne. Shares in Beacon lighting (ASX:BLX) closed 2.14 per cent lower at $1.83 on Friday.

IPOs

On Tuesday, headphones and listening devices company, Audeara (ASX:AUA) is set to make their debut followed by Lithium Energy (ASX:LEL) on Wednesday and Flynn Gold (ASX:FG1) on Thursday.

Ex-Dividends

Macquarie Group Ltd (ASX:MQG) is paying $3.35 (40 per cent franked).
Qv Equities Limited (ASX:QVE) is paying 1.1 cents fully franked.
Sandon Capital Ltd (ASX:SNC) is paying 2.5 cents fully franked.

Currencies

One Australian Dollar at 7:40 AM was buying 77.75 US cents, 55.16 Pence Sterling, 85.07 Yen and 64.04 Euro cents.

Commodities

Iron Ore has dropped 10.2 per cent to US$209.35.
Iron Ore futures suggest a 1.3 per cent fall.
Gold gained $14.10 to US$1838 an ounce.
Silver was up $0.31 to US$27.37 an ounce.
Oil added $1.55 to US$65.37 a barrel.
 

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