Nasdaq gains as tech stocks jump, why Universal Biosensors is a buy: ASX to lift


The Australian sharemarket is set to lift following Wall St’s mixed performance as investors look ahead to the Federal Reserve meeting for clues on its inflation outlook. Despite the central bank’s reassurance that any spike in inflation would be transitory, policymakers might begin talks on tapering their bond buying program in their two-day meeting this week.

The indexes were helped along by technology shares as rotation into growth stocks saw the likes of Apple and Netflix up by over 2.3 per cent.

The S&P 500 added 0.2 per cent after a breakout in buying occurred in the final 10 minutes of trade to notch a new record high. The tech heavy Nasdaq rose 0.7 per cent to an all-time high while the 30-stock Dow Jones shed 0.3 per cent on its retreat.

The S&P sectors closed mixed with Technology and Communication Services as the winners while Materials and Financials were the underperformers. Among the decliners was JP Morgan, down 1.7 per cent as treasury yields rose on the fall in bond prices.

Across the Atlantic, Rio Tinto and BHP fell over 0.4 per cent.

On the oil front, prices ended mostly unchanged after hitting 2-year highs while gold slipped.

Figures from around the globe

Wall Street was closed mixed yesterday: The Dow Jones Industrial Average fell 0.3 per cent to 34,394, the S&P 500 gained 0.2 per cent to 4,255 and the NASDAQ closed 0.7 per cent higher at 14,174 points.

European markets closed mixed: London’s FTSE added 0.2 per cent, Paris gained 0.2 per cent and Frankfurt closed 0.1 per cent lower.

Asian markets: Tokyo’s Nikkei added 0.7 per cent while Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.

ASX futures

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

ASX 200

On Friday, the Australian sharemarket closed 0.1 per cent at 7,312. Over the week, it gained 17 points or 0.23 per cent as the index reset its highs for its fourth straight week.

Despite a new record high, the index had a modest rise thanks to technology stocks after playing catch-up from a few declining weeks.

Heavyweight miners rose as the price of iron ore climbed while on the flipside a crackdown by financial law enforcement agency AUSTRAC saw National Australia Bank (ASX:NAB) and casino operators come under pressure as they probed into financial crime controls.

Travel stocks had a rough take-off on news that the federal government extended the international travel ban for another three months.

Local economic outlook

The focus this week are the RBA events and the jobs report.

Today the RBA meeting minutes are due with investors looking for any colour ahead of the July decision on their bond buying program. The Board last month dropped a hint that it will be winding back the pace of its $100 billion quantitative easing program.

ANZ and Roy Morgan are set to release the weekly consumer sentiment survey today while the Australian Bureau of Statistics is to release the house price index for the March quarter that is likely to show a 5 per cent increase as per Trading Economics.

On Thursday the Australian Bureau of Statistics is to issue the May employment data. Investors will look for any delayed impact due to the end of JobKeeper. Westpac Bank economists forecast a gain of 30,000 in employment with unemployment at 5.7 per cent.

Investor days, ASX indices rebalancing, Airport traffic numbers

Something to watch out for are a number of investor and strategy days with Challenger (ASX:CGF), Coles (ASX:COL) slated this week while Auckland International (ASX:AIA) and Sydney Airport (ASX:SYD) are set to release monthly traffic numbers.

On Friday, an EGM for Woolworths (ASX:WOW) will be held for investors to vote on the Endeavour demerger.

To note, quarterly rebalancing is effective on Friday for ASX indices which might bring some volatility this week as fund managers and ETF providers switch in and out of positions.

International economic outlook

Overseas, the focus is on the central banks in the US and in Japan.

The US Federal Reserve is expected to leave monetary policy on hold with eyes turning to policymaker Jerome Powell for hints on inflation after the recent surge.

The Bank of Japan will meet on Friday with their stance expected to remain dovish with core inflation to stay low in May at -0.2 per cent year on year.

Elsewhere in China, May data for industrial production, retail sales, investment, unemployment are likely to show another month of slowing growth. As the economy settles back to pre pandemic growth rates, investors are likely to see an impact to production as the manufacturing and export of Guangdong province has been put on hold due to recent covid-19 outbreaks. Also their house price index is due to be published.

Stockwatch

Our weekly stock to watch this week is diagnostic device maker Universal Biosensors (ASX:UBI). David Thang, Senior Private Wealth Adviser at Sequoia (ASX:SEQ) rates Universal Biosensors as a buy. From a technical angle, Universal Biosensors is bullish on a number of grounds.

A zone of support was respected between $0.585 and $0.615 as shown by the orange rectangle during the first week of June. This area of support is significant for a number of reasons, being structural support in early January as shown by the horizontal-dashed grey line and the 50 per cent Fibonacci retracement.

After the first week of trading in June, a bullish doji formed, which is suggestive of a resurgence in positive sentiment. Upward momentum has gathered traction over the second week of June, along with an increase in trading volume (lower pane), in combination signals a likely continuation of the long-term uptrend in place since mid-2020. Should this bullish scenario come to fruition, then near term resistance (i.e. target level) is evident at the April 2021 high of $0.845. A sustained break above this level, would likely lead to further gains over the broader horizon.

Shares in Universal Biosensors (ASX:UBI) closed 5.93 per cent higher at $0.72 on Friday.



IPOs for the week

This week we have eight companies slated to make their debut.

Ex-Div

Plato Income Maximiser (ASX:PL8) is paying 0.4 cents fully franked.

Currencies

One Australian Dollar at 7:45 AM was buying 77.16 US cents, 54.69 Pence Sterling, 84.91 Yen and 63.64 Euro cents.

Commodities

Iron Ore has gained 0.68 per cent to US$220.77
Gold has lost $13.70 to US$1866 an ounce.
Silver has fallen $0.11 to US$28.04 an ounce.
Oil was down $0.03 to US$70.88 a barrel.
 

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