Wall St edge higher, Why Woolies is a buy as Scentre is a hold: ASX to rise


The Australian share market is set to rise after Wall St edged higher ahead of employment figures due out tomorrow. Investors tread lightly as inflation worries linger with the indexes struggling to gain momentum for the start of June. The tug of war between growth and value stocks continued on concerns that an accelerated economic growth with a rebound in the labour market, could spark the US Federal Reserve to change gears and tighten monetary policy. Energy stocks outperformed the session amid travel stocks taking off. Meme stocks took the spotlight, so these are shares which gets attention through social media hype with AMC Entertainment bolstered up by 100.2 per cent as its surge was led by a group of retail investors from forums like Reddit's WallStreetBets. Meanwhile iron ore gained, global oil prices rose while gold strengthened against the dip in bond yields.

Figures from around the globe

Wall Street closed higher yesterday: The Dow Jones Industrial Average gained 0.1 per cent to 34,600. The S&P 500 gained 0.1 per cent to close at 4208. The Nasdaq closed 0.1 per cent higher to 13,756.

European markets closed higher, London’s FTSE added 0.4 per cent, Paris gained 0.5 per cent and Frankfurt closed 0.2 per cent higher.

Asian markets closed mixed, Tokyo’s Nikkei gained 0.5 per cent, Hong Kong’s Hang Seng fell 0.6 per cent and China’s Shanghai Composite closed 0.8 per cent lower.

ASX futures

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

ASX 200 - Wednesday wrap

Yesterday the Australian share market closed 1.1 per cent higher at 7,218 fuelled by mining heavyweights and energy stocks, as the index wiped records to reach the highest ever close in history. Boosted by better-than-expected GDP figures, the economy is back to pre-pandemic levels. The news came after the start of a big economic data week with the RBA, who gave clues on changes to their bond buying program. This saw a rotation out of growth to valued stocks with Technology being the worst performer, down 1.09 per cent while the winning sector of the session was Energy up 4.05 per cent.

The best-performing stock in the S&P/ASX 200 was Inghams Group (ASX:ING) soared 6.55 per cent at $3.74 followed by shares in Santos (ASX:STO) and Worley (ASX:WOR). The worst-performing stock in the S&P/ASX 200 was Megaport (ASX:MP1) down 4.72 per cent at $14.72 followed by shares in Nanosonics (ASX:NAN) and Regis Resources (ASX:RRL).

Local economic news

Today the Australian Bureau of Statistics will publish the retail trade report for April. Westpac economists expect a 1.1 per cent growth after a 1.3 per cent jump in March as retail sales had a mixed start to the year following snap lockdowns with “catch-up” spending easing.

Broker moves

UBS rates Scentre Group (ASX:SCG) as a hold with a price target of $2.65. The upgrade from a sell is following the company’s recent underperformance of the stock and improved valuation support and operating measures. The company’s re-setting of rents is now reflected in the price of the stock with a manageable vacancy profile. Shares in Scentre Group (ASX:SCG) closed 4.09 per cent higher at $2.80 yesterday.

Macquarie rates Woolworths (ASX:WOW) as a buy with a price target of $44.50. The broker notes the Retail sector had the highest earnings per share upgrades of 29.4 per cent year-on-year in May while in the Staples space, downgrades persist. The Discretionary sector was the best performer, up 3.4 per cent for May. The broker prefers Woolworths (ASX:WOW) over Coles Group (ASX:COL) and Metcash (ASX:MTS) ahead of the Endeavour Group demerger set for 24th June. Shares in Woolworths (ASX:WOW) closed 1.29 per cent higher at $42.30 yesterday.

IPOs

Torque Metals (ASX:TOR) is scheduled in today.

Currencies

One Australian Dollar at 7:40 AM was buying 77.53 US cents, 54.72 Pence Sterling, 84.93 Yen and 63.47 Euro cents.

Commodities

Iron Ore futures are pointing to 0.93 per cent gain.
Gold has gained $4.90 to US$1910 an ounce.
Silver has gained $0.10 to US$28.20 an ounce.
Oil was up $1.11 to US$68.83 a barrel.