Wall St struggles, Why hold Fortescue & Link as PEXA is set to float: ASX to rise


The Australian share market is set to rise following Wall St’s mixed start to the month. Despite better-than-expected PMI figures, investors continued their rotation out of growth to value stocks which saw flight companies soar higher and cruise shares sail wider with aircraft maker, Boeing up 3.1 per cent and Carnival jumped 2 per cent. Energy stocks fuelled the session as oil prices rose following OPEC’s agreement to return 450,000 barrels per day as travel picks up. Technology and Healthcare offset gains as treasury yields rose, which saw bank stocks advanced while the price of gold slipped, as investors continued to mull on the hotter than expected CPI figures last week. Across the Atlantic, resources led the gains amid positive economic data while in Asia, investors responded to China’s factory activity growth.

Figures from around the globe

Wall Street closed mixed yesterday: The Dow Jones Industrial Average added 0.1 per cent to 34,575, the S&P 500 fell 0.1 per cent to 4,202 and the NASDAQ closed 0.1 per cent lower at 13,736 points.

European markets closed higher: London’s FTSE added 0.8 per cent, Paris gained 0.7 per cent and Frankfurt closed almost 1 per cent higher.

Asian markets closed mixed: Tokyo’s Nikkei lost 0.2 per cent, Hong Kong’s Hang Seng gained 1.1 per cent while and China’s Shanghai Composite closed 0.3 per cent higher.

ASX futures

Taking all of this into equation, the SPI futures are pointing to 0.2 per cent gain.

ASX 200 - Tuesday wrap

The Australian share market closed 0.3 per cent lower at 7,143 as the index pulled back for its second straight day, with all sectors closed in the red except Mining and Energy sectors which advanced. The Reserve Bank kept rates steady as investors digested the raft of economic data as oil stocks rose ahead of the OPEC meeting, while mining stocks jumped following its recent decline as China kept a lid on surging commodity prices. The best-performing sector was Energy up 1.34 per cent while the worst-performing sector was Financials, down 0.72 per cent. The best-performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC), closing 5.71 per cent higher at $1.67 followed by shares in Reece (ASX:REH) and Megaport (ASX:MP1). The worst-performing stock in the S&P/ASX 200 was Blackmores (ASX:BKL), closing 5 per cent lower at $67.37 followed by shares in Lynas Rare Earths (ASX:LYC) and PolyNovo (ASX:PNV).

Local economic news

The Australian Bureau of Statistics is due to publish the national account figures. Westpac economists expect GDP to lift by 1.4 per cent in the March quarter with annual growth at 0.5 per cent driven by policy stimulus, easing of restrictions, a few snap short lockdowns while floods in NSW and QLD setback coal exports. If this lift occurs, GDP would be back at its pre-pandemic high.

Broker moves

Morgans rates Link (ASX:LNK) as hold with a target price of $5.57.The broker believes the signing of an underwriting agreement to list PEXA as an IPO is a positive step as the company will retain its stake in PEXA, while fulfilling the listing at what is considered a strong valuation. The underwritten price of the IPO implies to the broker an enterprise value of $3.3bn and lifts the target price to $5.57 from $5.12. Link Administration (ASX:LNK) closed 0.39 per cent higher at $5.10 yesterday.

UBS rates Fortescue Metals (ASX:FMG) as a hold with a target price of $21.10.The company has increased capital expenditure for the Iron Bridge project of US$3.3-3.5bn compared to US$2.6bn in April 2019 and marginally increased the price target to $21.10 from 20.90. The broker believes the uptick in costs is insufficient to pressure on positive investor sentiment. Fortescue Metals Group (ASX:FMG) closed 1.74 per cent higher at $22.82 yesterday.

Ex-Div

United Malt Group (ASX:UMG) is paying 2 cents unfranked.

Currencies

One Australian Dollar at 7:45 AM was buying 77.57 US cents, 54.83 Pence Sterling, 84.92 Yen and 63.49 Euro cents.

Commodities

Iron Ore has gained 4.9 per cent to US$208.67.
Iron Ore futures suggest a 3.47 per cent gain.
Gold has lost $0.30 to US$1905 an ounce.
Silver has gained $0.09 to US$28.10 an ounce.
Oil has added $1.40 to US$67.72 a barrel.