Wall St rises on tech bull run, Citi rates Bluescope as buy & holds Pilbara: ASX to rise


The Australian sharemarket is set to lift at the open following Wall St finishing the week with a positive performance. US stocks rose as employers increased hiring and offered more money to compete for workers. In May, 559,000 jobs were added into the economy, more than double April’s figures as the unemployment rate improved to 5.8 per cent with the average hourly earnings, up 0.5 per cent from April. Despite the raise, figures missed economists’ forecasts with the disconnect reflecting companies struggling to fill jobs as prospects weigh up going back to work to unemployment benefits and worries over getting Covid-19. The uptick in numbers boosted confidence with technology shares charging ahead with the likes of Apple, Alphabet and Microsoft rose almost 2 per cent on eased inflation worries. The 10-year bond yield, which tends to rise when market participants expect periods of growth and inflation fell by 7 points along with the US dollar, while Gold rose on the weaker than anticipated jobs report. Over the week the Dow Jones added 0.7 per cent with the S&P 500 up by 0.6 per cent and the Nasdaq edged 0.5 per cent higher. Global oil prices added 1 per cent on OPEC’s commitment amid recovering demand while over the week, iron ore spiked almost 10 per cent.

Figures around the globe

Wall Street closed higher on Friday: The Dow Jones Industrial Average gained 0.5 per cent to close at 34,756 the S&P 500 added 0.9 per cent to close at 4,230 and the NASDAQ closed 1.5 per cent higher at 13,814.

European markets closed higher on Friday: London’s FTSE added 0.1 per cent, Paris gained 0.1 per cent and Frankfurt closed 0.4 per cent higher.

Asian markets closed mixed on Friday: Tokyo’s Nikkei lost 0.4 per cent, Hong Kong’s Hang Seng fell 0.2 per cent and China’s Shanghai Composite closed 0.2 per cent higher.

ASX futures

The SPI futures are pointing to a 0.1 per cent gain.

ASX 200 - Weekly wrap

On Friday the Australian sharemarket closed 0.5 per cent higher at 7,295 as the bulls notched a third straight record close in a week thanks to the big four banks, CSL, Woolworths and Wesfarmers. The best performing stock of the week was Origin Energy (ASX:ORG) soared 15.7 per cent on the back of broker upgrades with Worley (ASX:WOR) just behind, up 15.6 per cent following its positive investor day while the worst performer of the week was investigative analytics company Nuix (ASX:NXL) tumbled 23.2 per cent following the company downgrading their earnings just after a month of releasing it. 

Local economic outlook

The focus this week are the consumer and business surveys and inflation expectations.

Today the ANZ job advertisements report for May is due which are at 12 year highs suggesting strong demand for labor despite the ending of JobKeeper while the Reserve Bank will issue credit and debit lending for April.

On Tuesday ANZ and Roy Morgan are set to issue the weekly consumer sentiment survey while NAB will release the business survey for May.

On Wednesday Westpac and Melbourne Institute will publish their monthly consumer confidence survey while the Reserve Bank Assistant Governor Christopher Kent is pencilled in to deliver an online speech at 9.30am (AEST).

On Thursday, the Melbourne Institute will issue the consumer inflation expectations survey for June.

ASX quarterly rebalancing & AGM/investor days

A couple of other things to note, on Friday the S&P will conduct their quarterly rebalancing as companies that are added or removed from fund managers or ETF providers might affect share prices in the coming weeks.

This week we will also see Aurizon Holdings (ASX:AJZ) hold their investor day on Tuesday at 1pm (EST) while Marley Spoon (ASX:MMM) have pencilled in their AGM on Friday at 5pm (EST).

International economic outlook

The focus this week is the inflation figures to be issued in China and the US plus international trade data.

Across the Atlantic, investors await the release of UK monthly GDP figures while the European Central Bank will hold their policy meeting. Back to the Southern hemisphere, the New Zealand market is closed today

IPOs

Today Trajan Group (ASX:TRJ) is slated to ring the bell today. This company develops and manufactures measuring devices for sciences and FOS Capital (ASX:FOS), an industrial lighting solutions provider is also pencilled in.

On Thursday, Argenica Therapeutics (ASX:AGN) & Salter Brothers Emerging Companies (ASX:SB2) are scheduled. There are three companies slated for Friday, Openn Negotiation (ASX:OPN), Torque Metals (ASX:TOR) and Arcadia Minerals (ASX:AM7).

Broker moves

Citi rates Bluescope Steel (ASX:BSL) as a buy with a target price of $25. The upgrade was following the broker’s observation that prices for both steel and scrap remain in an uptrend. Citi analysts have lifted their earnings per share estimates for BlueScope Steel and Sims "materially". For BlueScope Steel specifically, the broker suggests volume expansion at North Star is expected to add to the business significantly, while their net cash position is building fast which could offset price weakness later. Citi predicts the company will announce large scale capital management within the next 24 months and upgrade its rating to a buy with a raised target price of $25 from $22. Shares in Bluescope (ASX:BSL) closed 2.98 per cent higher at $22.45 on Friday.

Citi rates Pilbara Minerals (ASX:PLS) as a hold with a price target of $1.30. The upgrade from a sell rating follows the strong demand for lithium as noted by the broker’s analysts, with a forecast that the market will likely remain in surplus for quite some time. Citi thinks the price of lithium is likely to remain range-bound over the next 18 months and lifts its price target from $1.10 to $1.30. Shares in Pilbara Minerals (ASX:PLS) closed 1.92 per cent higher to $1.32 on Friday

Ex-Div

ALS Ltd (ASX:ALQ) is paying 14.6 cents 70 per cent franked.
Merchant House (ASX:MHI) is paying 1 cent unfranked.
Oceania Healthcare Ltd (ASX:OCA) is paying 1.65 cents unfranked.

Currencies

One Australian Dollar at 7:50 AM was buying 77.40 US cents, 54.65 Pence Sterling, 84.79 Yen and 63.66 Euro cents.

Commodities

Iron Ore has lost 1.7 per cent to US$207.35
Iron Ore futures suggest a 1.2 per cent gain.
Gold was up $18.70 to US$1892 an ounce.
Silver has added $0.42 to US$27.90 an ounce.
Oil was gained $0.81 to US$69.62 a barrel.