Wall St rebounds, Treasury yields bounces after dip in U.S. building permits, Why Stockland is a hold: ASX poised to rise


The Australian sharemarket is set to bounce back with the SPI futures pointing to a 0.7 per cent rise.

Global stocks bounces back from Monday’s sell-off

Wall St, European and UK indexes staged a comeback after Monday’s profit taking as investors buy the dip. Asian stocks edged lower echoing fears from the U.S on the rising delta variant cases.

Wall Street regained ground as economically sensitive stocks rebounded following yesterday’s broad selloff.

The jump almost clawed back losses after worries spooked investors around the highly contagious variant of Covid-19. It sent them second guessing the performance of the economic recovery that sent markets soaring this year. The growing concern was attributed to the handbrake in the pandemic rebound after the Centers for Disease Control said an estimated 83 per cent of cases in the U.S. are tied to the delta variant of the virus.

Dow rebounds 550 points, recoups losses

The S&P 500 added 1.5 per cent at 4323 erasing its loss from its biggest dive since May. The Dow Jones Industrial Average followed suit up 1.6 per cent to 34,512 while the Nasdaq also jumped 1.6 per cent to close at 14,499.

Airlines, cruise liners and companies that tumbled at the start of the week, took the winner’s corner. Industrials, Financials and Technology powered up the gains climbing over 1.5 per cent. Healthcare failed to advance while Consumer Staples continued to decline for its second day, down 1 percent.

Treasury yields bounces after U.S. building permits data

The yield on the 10-year treasury note dipped as low as 1.14 per cent after data showed building permits unexpectedly fell 5.1 per cent month on month in June, but clawed back its losses up to 1.22 per cent, from 1.19 per cent the day before. A week ago it was trading at 1.42 per cent while in March, it’s been around the 1.8 per cent mark.
 
Building permits fell to lowest level in 8 mths as home starts jumps

U.S. homebuilding increased by 6.3 per cent but future homebuilding permits fell to their lowest level in eight months. Economists believe the cautiousness is on the back rising material costs.

HCA Health surges, $1.1bn settlement on opioid dealers

HCA Healthcare surged 14.4 per cent after the hospital operator raised its earnings forecast with patients return to hospitals.

Oil and gas producer Halliburton rose 3.7 per cent reported a 33.5 per cent jump in earnings for the quarter as a rebound in crude prices bumped demand for oilfield services.

Cardinal Health, McKesson and Amerisource rose over 3 per cent after the drug distributors agreed to a US$1.1 billion settlement of claims over their role in the opioid epidemic.

Europe buoyed by miners

Across the Atlantic, London’s FTSE recovered 0.5 per cent, bolstered by BHP up 1.9 per cent and Rio Tinto added 1.4 per cent. Paris gained 0.8 per cent and Frankfurt closed 0.6 per cent higher.

Asia closes lower as China holds benchmark lending rate

Tokyo’s Nikkei lost almost 1 per cent, Hong Kong’s Hang Seng fell 0.8 per cent and China’s Shanghai Composite closed 0.1 per cent lower. China kept its benchmark lending rate unchanged on Tuesday, with the one-year loan prime rate steady at 3.85 per cent while their five year held at 4.65 per cent.

ASX dips further in sea of red on Monday

Yesterday, the Australian sharemarket closed 0.5 per cent lower at 7,252 ending its second day in the red as nerves grew on tightening restrictions.

Investors last week were celebrating jobs data figures for June, where the unemployment rate fell to 4.9 per cent for the first time in ten years. But with the highly contagious delta strain and rising cases, it was overwhelmed by Victoria's fifth lockdown and extended restrictions in Sydney as uncertainty plays on their mind.

Defensive and growth sectors such as Healthcare, Technology and Consumer staples advanced as the main winners. Protective products maker Ansell (ASX:ANN) rose over 2 per cent while Biotech giant CSL (ASX:CSL) added over 1.3 per cent.

Cyclical sectors including Materials, Utilities and Energy were the worst performers with BHP (ASX:BHP) and Rio Tinto (ASX:RIO) down over 2.5 per cent. BHP reported a slip in their fourth quarter iron ore production along with its other divisions.

Local economic news

Today the Australian Bureau of Statistics has scheduled the retail trade for June.

Westpac group economists expect retail sales to show a 0.2 per cent decline as the full impact of Victoria’s restrictions is likely to appear in the figures. They have noted that lockdowns tend to see an increase in sectors like basic food which make up 40 per cent of total retail sales.

Local trading updates and earnings season

Today half year results are slated by Cimic Group (ASX:CIM) while we have trading updates also worth highlighting.

There is a quarterly update expected by Syrah (ASX:SYR).

Quarterly results and Q4 2021 production release by South32 (ASX:S32).

Q2 2021 sales and revenue release plus a trading update by Atlas Arteria (ASX:ALX) on the table today.

Broker moves

Citi rates Stockland Group (ASX:SGP) as a neutral with a raised target price at $4.68 from $4.64. The broker sees the $620 million Halcyon acquisition as a positive move accelerating the group’s strategy. This segment is considered attractive due to structural tailwinds.

The broker retains its neutral rating awaiting further information on the direction of the business under a new CEO.

Stockland Corporation (ASX:SGP) closed 1.4 per cent lower at $4.30 yesterday.

IPOs

There are three companies from diverse industries pencilled in today to make their debut on the ASX.

Life insurance provider NobleOak Life (ASX:NOL) is slated after a capital raise of $62.2 million at $1.95 per share.

Real estate payment solutions Openn Negotiation (ASX:OPN) and BCAL Diagnostics (ASX:BDX) are scheduled. They are a biotech company focused on breast cancer testing.

Ex-Dividend

Kelly Partners Group (ASX:KPG) is paying 0.363 cents fully franked.

Commodities

Iron Ore futures are pointing to 1.1 per cent gain.

Safe haven gold rose $2.20 to US$1811 an ounce while silver dipped $0.15 to US$25.00 an ounce.

Oil added $1.00 to US$67.42 a barrel rose by around 1.5 per cent after the 7 per cent tumble on Monday.

Currencies

One Australian Dollar at 7:45 AM was buying 73.33 US cents, 53.83 Pence Sterling, 80.56 Yen and 62.23 Euro cents. 

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