Wall St loses momentum, gold climbs near 4-month high: ASX to fall

Market Reports

by Melissa Darmawan

The Australian share market is set to fall following Wall St closing in the red as all three indexes reversed their gains. The S&P 500 dipped as the Energy sector pressured the index while the Dow Jones snapped its three-day winning streak as gains in leisure and travel stocks continued its ascend. Cruise line operators sailed higher adding over 3 per cent while airline companies flew over 1 per cent. Investors also digested several housing data figures with new home sales down by 5.9 per cent in April as prices surged amid a tight supply, while they also weighed up data on the US consumer confidence front, as the index faded in May after its gain in April. Amid the easing of inflation nerves on Monday which saw Wall St close in the black, there has been a tug-of-war between growth and value stocks amid bond yields and inflation figures. Despite the central bank’s reaffirmation on their dovish stance, investors await moves from the Federal Reserve on the next phase of the economy. Elsewhere in China, the Shanghai Composite jumped 2.4 per cent, its biggest one-day gain since October as it notched its highest point in three months. The nation’s currency rose 0.2 per cent against the greenback which its exchange rate has been the strongest in the past two years. On the commodity side, oil prices remained steady while iron ore lifted. Meanwhile, gold prices climbed to a near four-month high as the precious metal continues to hedge against inflation.

Figures from around the globe

Wall Street closed lower yesterday: The Dow Jones Industrial Average fell 0.2 per cent to 34,312. The S&P 500 also fell 0.2 per cent to close at 4188. The Nasdaq closed 0.03 per cent lower to 13,657.

European markets closed mixed, London’s FTSE lost 0.3 per cent, Paris also lost 0.3 per cent and Frankfurt closed 0.2 per cent higher.

Asian markets closed higher, Tokyo’s Nikkei added 0.7 per cent, Hong Kong’s Hang Seng gained 1.8 per cent and China’s Shanghai Composite closed 2.4 per cent higher.

Taking all of this into equation, the SPI futures are pointing to a 0.5 per cent loss.

ASX 200

Yesterday the Australian share market closed almost 1 per cent higher at 7,115 as mining giants and major banks extended its rally from last week’s sell-down. Investor’s nerves eased on inflation as the index advanced for its fourth straight day. Heavyweight miners rebounded despite a slip in iron ore prices with Rio Tinto (ASX:RIO), Fortescue Metals (ASX:FMG) and BHP (ASX:BHP) all advanced by over 1 per cent while Materials also climbed after four days of losses. All sectors paced higher with Utilities as the only sector to close in the red. Meanwhile, Airtasker (ASX:ART) spiked 12 per cent after it came out of a trading halt following its $20 million capital raise from institutional investors to fund a US-based marketplace while in the banks, Commonwealth Bank (ASX:CBA) reset their record high. On the earnings front, software provider TechnologyOne (ASX:TNE) lifted more than 1 per cent following the enterprise software company's half-year results though provided caution that its full-year results may not be as strong. Meanwhile Pepper Money (ASX:PPM) closed down by 9.69 per cent following its debut after its fluttering session.

Local economic outlook

The Australian Bureau of Statistics will publish the construction data for the March quarter today and Westpac is set to release its leading index for April.

Earnings season & AGMs

Today testing, inspection & environmental monitoring company ALS (ASX:ALQ) and biotech company Mesoblast (ASX:MSB) are due to publish profit results while Viva Energy (ASX:VEA) has their AGM pencilled in today.

Broker moves

Morgan Stanley rates infant milk formula specialist Synlait Milk (ASX:SM1) as a hold with a price target of $2.55. Despite FY21 lowered profit guidance, the broker believes the issues the company is facing will be largely confined to FY21. Morgans explained that the lowered guidance was due to ongoing shipping delays and lower-than-expected ingredient prices due to sales phasing and volume pressure. Additionally, the company has adopted a conservative approach to year-end inventory volume and valuation and therefore upgrades its rating to a hold while its target price falls from $2.58 to $2.55. Shares in Synlait Milk (ASX:SM1) closed 0.71 per cent higher at $2.84 yesterday.

Ex – Div

Whitefield (ASX:WHF) is paying 10.25 cents fully franked.

Currencies

One Australian Dollar at 7:40 AM was buying 77.56 US cents, 54.81 Pence Sterling, 84.40 Yen and 63.32 Euro cents.

Commodities

Iron Ore has added 0.2 per cent to US$192.87.
Iron Ore futures are pointing to 0.3 per cent gain.
Gold has added $13.80 to US$1901 an ounce.
Silver has gained $0.15 to US$28.06 an ounce.
Oil was up $0.02 to US$66.07 a barrel.