US stocks creeps up as inflation worries subdue: ASX to edge higher

Market Reports

by Melissa Darmawan

The Australian share market is set to edge higher following Wall St’s advance. All three indexes closed in positive territory as investors come to grips with the Federal Reserve’s inflation outlook, amid the pace of the economic recovery. The S&P 500 firmed up as stocks linked to the reopening of the economy continued its pace. Energy, consumer discretionary and communication services were the best performers as companies which could pass-down costs to consumers on inflation hikes grew popular. Cruise line operators continued its sail as investors remain optimistic amid the backdrop of the vaccine rollout with Carnival’s share price up 36 per cent in the last 6 months. Big tech names lifted with Tesla up 2.4 per cent and Amazon added 0.2 per cent on plans to buy MGM Studios for US$8.45 billion. Meanwhile, investors have kept an eye on any progress on President Joe Biden’s infrastructure counter offer that could boost the economy further. Over to US bond markets which ticked up 2 points as they move opposite to the stock market. On the commodity front, oil prices rose as a fall in US crude stocks dropped last week to its lowest since March 2020 ahead of peak Summer season, on the backdrop of expected stronger demand as driving season is set to cruise. Gold eased while the iron ore price was unchanged due to a public holiday in Singapore. 

Figures from around the globe

Wall Street closed higher yesterday: The Dow Jones Industrial Average added 0.03 per cent to 34,323, the S&P 500 gained 0.2 per cent to 4,196 and the NASDAQ closed 0.6 per cent higher at 13,738 points.

European markets closed mixed: London’s FTSE lost 0.04 per cent, Paris added 0.02 per cent and Frankfurt closed 0.1 per cent lower.

Asian markets closed higher: Tokyo’s Nikkei added 0.3 per cent, Hong Kong’s Hang Seng gained 0.9 per cent while China’s Shanghai Composite closed 0.3 per cent higher.

ASX futures

Taking all of this into equation, the SPI futures are pointing to 0.04 per cent gain.

ASX 200

Yesterday the Australian share market closed 0.3 per cent lower at 7,093 snapping a four-session winning streak as losses in the resources sector pressured the index. Six out of the 11 sectors advanced with Information Technology as the best performer up 1.1 per cent followed by Communications services while the worst performing sector was Materials down 1.1 per cent with Health Care and Property closing lower. The stand out of the day was lab examiner ALS (ASX:ALQ) soared 12.8 per cent following their full-year results while the outlier of the session was Kogan (ASX:KGN) fell 5.7 per cent as investors continued to mull on their profit warning last week. On the mining front, BHP (ASX:BHP) and Rio Tinto (ASX:RIO) fell over 2.2 per cent with both heavyweights hitting a six-week low. Elsewhere, gold stocks shined with Regis Resources (ASX:RRL) spiked 3.9 per cent while Northern Star (ASX:NST) shined 2.5 per cent higher. Meanwhile building materials producers gained in the wake of the upbeat construction data with James Hardie Industries (ASX:JHX) closed almost 3 per cent higher, Brickworks (ASX:BKW) jumped 1.6 per cent while CSR (ASX:CSR) and Boral (ASX:BLD) added over 1 per cent.

Local economic news

Today the Australian Bureau of Statistics is set to release business investment figures for the March quarter and the business conditions and sentiment report for May is also due.

AGMs

Gold Road Resources (ASX:GOR), Costco (ASX:CGC), Spark Infrastructure (ASX:SKI) and Resolute Mining (ASX:RSG) have their AGM’s scheduled today.

Company news

Sports analytics and wearable company Catapult’s (ASX:CAT) full-year revenue dropped 7.4 per cent to $67.3 million as they managed to limit their losses by their growing subscription service due to pandemic challenges. The company attributed their fall in revenue as they switched from capital sales to software-as-a-service deals though the company had several business upsides to subdue the pandemic effects .Their performance & health subscription revenue up 15.7 per cent along with news that Atlanta Falcons came on board for the company to achieve 100 per cent penetration of teams in the NFL. Shares in Catapult Group International (ASX:CAT) closed 6.35 per cent higher at $2.01 yesterday.

Broker moves

A couple of broker moves in the buy now pay later space.

UBS rates Zip (ASX:Z1P) as a sell but lowered its target price from $6.75 to $5.60 based on a lowered US income margin over the medium term. The broker noted that competition is emerging with a similar offering to Commonwealth Bank's 'Pay in 4' service which is seen as a threat to Zip Co's 'QuadPay anywhere' service in the US. Due to this, the broker has kept its sell rating with a target price of $5.60. Shares in Zip Co (ASX:Z1P) closed 1.80 per cent lower at $7.10 yesterday.

Looking to its tech rival, Afterpay (ASX:APT) where UBS rates as a sell but raised its target price to $37 from $36 which is still a 60 per cent discount to the yesterday’s closing price, the broker acknowledged that the buy now pay later company resonated strongly with consumers and management though believes success was always going to attract competition. Shares in Afterpay (ASX:APT) closed 0.87 per cent higher at $93.54 yesterday.

Ex-Div

Irongate Group (ASX:IAP) is paying 4.53 cents unfranked.

Currencies

One Australian Dollar at 7:45 AM was buying 77.45 US cents, 54.86 Pence Sterling, 84.52 Yen and 63.51 Euro cents.

Commodities

Iron Ore futures suggest a 2.9 per cent fall.
Gold has lost $1.00 to US$1900 an ounce.
Silver has fallen $0.30 to US$27.76 an ounce.
Oil has gained $0.11 to US$66.18 a barrel.