Wall St snaps 5-day winning streak, China's regulatory crackdown continues, Why Nine Entertainment is a buy: ASX to fall


The Australian sharemarket is set to fall with the SPI futures pointing to a 0.3 per cent dip.

Global stocks fell as worries on China’s regulatory crackdown continues. Investors await an outcome tomorrow from the Federal Reserve meeting. U.S tech titans fell ahead of earnings results. Miners thrived with heavyweight giants pushing the ASX into new positive territory.

U.S investors concerned if earnings boost will maintain, bonds slide

Wall St closed lower after selling was seen across the major indexes. The market was down for its first day after posting 5-straight record highs as concerns about the strength of the economic recovery, the spreading of the delta-variant and heavy selling in Chinese stocks played on investor’s minds, spilling over into technology names and even semi-conductors stocks as well.

We saw the blue-chip Dow Jones dip 0.2 per cent to 35,059, the S&P 500 lost 0.5 per cent at 4,402 while the tech-heavy Nasdaq slid 1.2 per cent at 14,661.

The yield on the 10-year treasury note fell to 1.24 per cent which did not see a usual boost to tech shares, more the opposite as caution prevails.

Defensive mode on across S&P 500

Across the S&P 500, investors moved into defensive mode with Utilities adding 1.7 per cent followed by Real Estate, up 0.8 per cent while Consumer Discretionary, Communication Services and Technology all fell over 1 per cent.

As mentioned on Monday, Communication Services saw a boost on Twitter’s earnings growth as tech titans are looking to play in that space diversifying earnings from device sales into the streaming arena.

Alphabet, Microsoft, Apple reports earnings

American Airlines reported that they’re struggling to keep up with demand on shortage in jet fuel. The fuel delays is due to the lack of truck drivers. Shares fell 2.9 per cent.

UPS fell sharply by 7 per cent after posting solid record results beating expectations. Their revenue was helped by an increase in eCommerce delivery and shipping of healthcare products like the Covid-19 vaccine.

Alphabet, Google’s parent company saw their YouTube revenue grow 83 per cent year-on-year, posting over US$7 billion. Comparing to Netflix, their quarterly revenue was US$7.34 billion so one section of Google is making close to the equivalent of Netflix’s total quarterly earnings. Shares popped over 3 per cent after market close.

Microsoft fell over 2 per cent lower despite reporting their office commercial products and cloud service revenue increasing by 20 per cent. The titan reported a US$60 billion in profit ahead of expectations.

Apple closed 1.5 per cent and fell more than 2 per cent after market close after reporting strong earnings across their device sales. Their sales were up 36 per cent from the June quarter last year with iPhone sales up, over 50 per cent year on year.

European closes lower, Reckitt slums while Daily Mirror gains

Across the Atlantic, European markets closed lower as investor’s monitor their company earnings. Paris lost 0.7 per cent and Frankfurt closed 0.6 per cent lower.

London’s FTSE fell 0.4 per cent pressured down by Consumer Staples. Rio Tinto dropped 1.1 per cent while BHP fell 0.5 per cent.

Reckitt shares slumped, they provide consumer goods dived 8.1 per cent as rising costs hit their margins.

Daily Mirror-owner Reach jumped 6.7 per cent as the newspaper company reports strong earnings.

Asian markets closes mixed on China's regulatory crackdown 

Tokyo’s Nikkei gained 0.5 per cent, Hong Kong’s Hang Seng dropped 4.2 per cent and China’s Shanghai Composite lost 2.5 per cent as China's regulatory crackdown continues in the tech, education and property sector.

The Hang Seng notched its third day of straight losses. It has plummeted over 2,000 points in two days and has dived more than fifteen percent in the past 3 trading sessions as Chinese government’s unpredictable moves led to a retreat in bonds.

ASX 200 hit new highs again, miners boost

Yesterday, the Australian sharemarket closed 0.5 per cent at 7,431 posting another record-breaking day as investors bought into mining stocks ahead of earnings results. 

Materials added 1.6 per cent as mining giants played in record high territory. Energy shares was next best, up 1.3 per cent on higher oil prices while Technology lagged 1 per cent.

Local economic news

Today the Australian Bureau of Statistics is set to publish the June quarter inflation figures.

AMP group economists expect the headline consumer price index to rise by 0.8 per cent in the quarter reflecting a surge in petrol and higher electricity prices as well as a pick up in dwelling purchase prices and rents. 

Company news

Virgin Money UK (ASX:VUK) posts growth for their third quarter with a 0.7 per cent rise to $110 billion (£58.7bn) in their mortgage lending book reflecting buoyant market conditions.

Personal lending spiked 2.5 per cent higher at $9.7 billion (£5.2bn) as the British spend on their credit card as the economy continues to reopen.

Meanwhile, their business lending fell 2.4 per cent with their business as usual book falling 2.2 per cent due to lower market activity. Their outlook is looking optimistic after the bank expects this to improve later in the calendar year.

Shares in Virgin Money UK (ASX:VUK) closed 4.3 per cent higher at $3.64 yesterday.

Broker moves

UBS rates Nine Entertainment (ASX:NEC) as a buy with a price target of $3.10. After assessing traditional media names, the broker believes they are conservatively priced and at an advantage to the current macro environment. 

UBS also believes that they’re likely to benefit from any improvement in inflation. The impact of the pandemic is expected to drive material growth in traditional media with potential upside if strong macro conditions occur in FY2022.

The broker upgrades its rating to a buy raising its target price to $3.10 from $3.00. ??Shares in Nine Entertainment (ASX:NEC) closed 1.4 per cent higher at $2.85 yesterday.

Ex-div

Mirrabooka Investments (ASX: MIR) is paying 8.5 cents fully franked.

Commodities

Iron Ore has lost 17 cents to US$202.57.
Iron Ore futures are pointing to 0.5 per cent fall.
Gold has gained $0.60 to US$1804 an ounce.
Silver has lost $0.67 to US$24.65 an ounce.
Oil was down $0.26 to US$71.65 a barrel.

Currencies

One Australian Dollar at 7:45 AM has softened against the greenback buying 73.61 US cents, 53.05 Pence Sterling, 80.81 Yen and 62.29 Euro cents. 

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