Wall St slides, US housing starts drops: ASX to fall


The Australian share market is to drop following Wall St closing in the red as technology shares reversed their gains and energy stocks ran out of fuel as oil prices fell. The data on housing starts in April tumbled 9.5 per cent as the industry faced into soaring prices in lumber and materials which also weighed on investor’s optimism amid the final stretch of earnings season. Oil prices tumbled from its two-month high on reports that the US and Iran are progressing on a deal which would restrict Iran’s nuclear weapons development which if successful, would boost global oil shipments. On the eve of the minutes from the US Federal Reserve, investors continued their rotation out of technology shares and into companies linked to the reopening to the economy as they brace themselves on possible clues on inflation. Across the Atlantic, investors digested the Eurozone’s GDP numbers which dropped 0.6 per cent in the first quarter with unemployment figures down 0.3 per cent in the same period. Elsewhere, in Japan the Nikkei jumped 2 per cent as investors shrugged off figures which showed the economy shrank more than expected in the first quarter and picked up cheap value stocks. Back home investors await earnings results from Webjet (ASX:WEB) and United Malt (ASX:UMG) while crossing their fingers that EML Payments (ASX:EML) will return from its trading halt.

Figures around the globe

Wall Street closed lower yesterday, the Dow Jones Industrial Average fell 0.8 per cent to 34,061. The S&P 500 lost 0.9 per cent to close at 4,128. The Nasdaq closed 0.6 per cent lower to 13,304.

European markets closed mixed, London’s FTSE added 0.02 per cent, Paris fell 0.2 per cent and Frankfurt closed 0.1 per cent lower.

Asian markets closed higher, Japan’s Nikkei gained 2.1 per cent, Hong Kong’s Hang Seng added 1.4 per cent while and China’s Shanghai Composite closed 0.3 per cent higher.

Taking all of this into equation, the SPI futures are pointing to a 1.1 per cent fall.

ASX 200

Yesterday, the Australian share market closed 0.6 per cent higher at 7,066 led by Energy and Materials sectors thanks to a rise in commodity prices. Heavyweight miners bolstered the index with Rio Tinto (ASX:RIO) and Fortescue Metals (ASX:FMG) jumped over 2 per cent while gold stocks continued to shine with Northern Star (ASX:NST) advanced by 2.1 per cent as the precious metal rallied to near four month highs.Taking the prize of the best performing stock was forensic data software company Nuix (ASX:NXL) up 11.5 per cent after presenting at their investor day, while the worst performing stock was gold explorer St Barbara (ASX:SBM) fell 9 per cent after lowering their production guidance with rising costs forecast for the year. On a rosier note, technology stocks recovered while CBA (ASX:CBA) reset record highs.

Local economic news

The Australian Bureau of Statistics is to release the wages price figures for the March quarter along with the May consumer confidence index by Westpac and the Melbourne Institute. St George economists forecast a 0.6 per cent rise in wages for the quarter taking the annual figure to 1.5 per cent. RBA policymakers estimate that wage growth won’t hit 3 per cent before 2024.

Broker Moves

Morgan Stanley rates Carsales.com.au (ASX:CAR) as an add with a target price of $20.82. The upgrade from a hold follows the recent acquisition of Trader Interactive which the broker believes will boost revenue. Additionally Morgans sees the company providing the best growth to valuation trade-off in comparison to its domestic peers lifting its target price from $19.45 to $20.82. Shares in Carsales.com.au (ASX:CAR) closed 0.76 per cent lower at $17.07 yesterday.

Citi rates Suncorp (ASX:SUN) as a buy with a target price of $11.80. The broker sees a medium-term upside in the company if it can deliver on some of its FY23 targets. Citi continues to believe the potential for the share price rise is more medium term versus short. Led by the recent share price fall, Citi upgrades its rating from a neutral to a buy. Shares in Suncorp (ASX:SUN) closed 3.51 per cent higher at $10.61 yesterday.

IPOs

Lithium Energy (ASX:LEL) is pencilled in to fuel their debut today.

Currencies

One Australian Dollar at 7:40 AM was buying 77.91 US cents, 54.95 Pence Sterling, 84.86 Yen and 63.76 Euro cents.

Commodities

Iron Ore has gained 3.1 per cent to US$224.44.
Iron Ore futures are pointing to 1.0 per cent fall.
Gold has added $0.40 to US$1868 an ounce.
Silver has gained $0.06 to US$28.33 an ounce.
Oil was down $0.78 to US$65.49 a barrel.