Wall St rallies for 2nd day, clarity on Chinese-listed stocks Why Charter Hall is a buy: ASX to rise


Global stocks almost closed higher on news around the Covid-19 vaccine and regulatory clarity around the U.S. Chinese listed stocks. Commodity prices are back in the back boosting energy and material stocks. 

The Australian sharemarket is set to rally with the SPI futures pointing to an increase of 0.2 per cent.

Record close for S&P 500, Nasdaq

U.S stocks closed in the black for their second day with record highs seen by the S&P 500 and the Nasdaq. The rally continued from the enthusiasm yesterday after the FDA granted full approval of the adult use of Pfizer. The momentum seen on the major benchmarks are ahead of Fed Chair’s Jerome Powell’s speech at the annual conference in Jackson Hole at the end of the week. Investors are bracing themselves for any clues on when they will start tapering their asset purchases program, in a bid to get a grip on the inflation and interest rate outlook.

Flight stocks take off, Chinese-listed stocks rocket higher

Optimism was seen in reopening stocks with American and United Airlines taking-off for their second day. Both stocks added over 3.5 per cent.

Investors' optimism also grew on U.S traded Chinese stocks sending them higher. Alibaba surged over 6 per cent while e-commerce titan Pinduoduo rocketed over 20 per cent.

According to the sources at Bloomberg, the U.S. Securities and Exchange Commission said it plans to demand U.S.-traded Chinese companies to disclose political and regulatory risks to investors. This is an extension of recently imposed requirements for companies looking to float on Wall St. Companies could start including the enhanced disclosures in their annual reports as early as next year.

Meanwhile, meme stocks also rallied with GameStop catapulting 27.6 per cent while AMC jumped 20.5 per cent.

Investors also digested economic news amid this.

Sales of new homes jumps in July, home prices surge

New home sales rose 1 per cent in July but prices jumped higher according to the U.S. Commerce Department. Sales of new homes rose to an annual rate of 708,000 last month from 676,000. This comes after three straight months of decline. The surging lumber prices and labour shortages saw a climb in prices. The median price climbed 18.4 per cent to US$390,500 from a year ago.

Comparing this to the sales of existing homes from yesterday, previously occupied homes rose 2 per cent last month according to the National Association of Realtors.
 
Wall St closes higher

At the closing bell, the Dow Jones added 0.1 per cent to 35,366, the S&P 500 rose 0.2 per cent to 4,486 and the Nasdaq tipped over by 0.5 per cent to 15,020 points. The first time we have seen that index spill over the 15,000 mark.

Across the S&P 500 sectors, oil prices rebounded boosting the Energy sector higher as the best performer, up 1.6 per cent. Healthcare and Technology closed marginally in the red, with defensives leading the decline. Consumer Staples and Real Estate shed over 0.7 per cent.

The yield on the 10-year treasury note added 4 points to almost 1.30 per cent.

European markets takes a cautious approach

Across the Atlantic, European markets closed mixed as investors took more of a cautious step. Paris fell 0.3 per cent while Frankfurt added 0.3 per cent. In London, the FTSE closed 0.2 per cent higher buoyed by heavyweight mining stocks.

Rio Tinto jumped 3.0 per cent after the miner announced a restart to their South Africa operations due to a shutdown in July. BHP added 1.3 per cent.

Meanwhile, AstraZeneca fell for their second day by over 1 per cent.

Asian markets rise as China's central bank vows to boost credit support

Asian markets echoed the lead from the U.S. closing higher. Tokyo’s Nikkei added 0.9 per cent, Hong Kong’s Hang Seng surged 2.5 per cent and China’s Shanghai Composite jumped 1.1 per cent. Clarity on Chinese regulation of technology firms boosted investor confidence.

Alibaba rocketed 9.5 per cent while Tencent rose 8.8 per cent higher.

Also in focus, the People's Bank of China said that they will improve credit support for small businesses in an effort to stabilize credit growth.

ASX 200 gains momentum for a 2nd day

Yesterday, the Australian sharemarket continued their rally to close 0.2 per cent higher at 7,503. The modest gains were helped after mining giants gained ground after the iron price plummeted last week.

Flight and travel stocks took-off as NSW hit a milestone on news that six million people have had the jab,with at least one dose of the Covid-19 vaccine. The news followed from Pfizer receiving full FDA approval in the U.S.

Across the sectors, six companies gained. Energy led 2.8 per cent higher while Consumer Staples and Technology dragged by over 1 per cent.

Corporate news saw the pendulum swing in both directions as investors continued to digest earnings results.

Building materials producer Boral (ASX:BLD) fell 5.6 per cent after posting a decline in their FY21 revenue attributed to challenging market conditions. They reported a 6.7 per cent fall in revenue at $5.3 billion. On a rosier note, their net profit after tax came in at $640 million compared to a loss of $1.1 billion from a year before.

Westfield owner Scentre Group (ASX:SCG) closed 6.7 per cent higher after rent collections for the half-year rose 37 per cent, to $1.2 billion despite the numerous lockdowns. They celebrated occupancy of 98.8 per cent of their portfolio at the end of June.

Infection prevention company Nanosonics (ASX:NAN) rocketed 22 per cent after revenue popped 3 per cent higher for the full-year. The company had a significant recovery in the second half as market conditions improved to pre-covid-19 levels. They saw a 20 per cent surge for the installation of their automated disinfection technology.

Online retailer Kogan (ASX:KGN) tumbled 15.8 per cent after posting disappointing results. They posted a 86.8 per cent plunge in their net profit after tax to $3.5 million, underpinned by rising storage and marketing costs. Supply chain interruptions plus the $12.8 million spree to buy more shares in kiwi online retailer Mighty Ape didn’t help.

Monadelphous (ASX:MND) dived 14.4 per cent after they posted a bleak outlook for FY22. Despite a 29 per cent increase in their net profit after tax, the engineering company flagged that several projects are set to complete in the coming six months. Combined with ongoing labour pressures and the lag between new projects, these variables are likely set to weigh on their revenue outlook.

Local economic news

Today the Australian Bureau of Statistics is set to release preliminary estimates of the total value of construction work done for the June quarter. Commonwealth Bank economists expects a 1 per cent rise.
Also the Reserve Bank deputy head, Ellis Connolly is slated to speak at the Risk Australia virtual conference today.

Reporting season

There are over 17 companies reporting today. Keep an eye out for your buy-now pay-later stocks Afterpay and ZipCo set to report. 

Joining them are Adbri (ASX:ABC) APA Group (ASX:APA), Dalrymple Bay Infrastructure (ASX:DBI), Growthpoint Properties Australia (ASX:GOZ), IDP (ASX:IEL), Iluka (ASX:ILU), Lovisa (ASX:LOV), Medibank Private (ASX:MPL), Nine (ASX:NEC), Rural Funds Group (ASX:RFF), Universal Store (ASX:UNI), Wagners (ASX:WGN), Whispir (ASX:WSP), WiseTech (ASX:WTC) and Worley (ASX:WOR).

Broker moves

Citi rates Charter Hall (ASX:CHC) as a buy with a price target of $21. The company’s FY21 beat Citi's earnings per share forecast by 4 per cent to total 61.0 cents per share. The company is now guiding to FY22 earnings of no less than 75.0 cents per share.

The broker notes the company's funds under management growth outlook for FY22 appears strong. Citi believes the drivers of their earnings per share increase will be underpinned by higher development earnings and performance fees in the coming year.

The buy rating is retained and the target price increases to $21.00 from $18.39. Shares in Charter Hall (ASX:CHC) closed 1.47 per cent lower at $18.10.

IPOs

We have one company set to make their debut on the ASX today. Clarity Pharmaceuticals (ASX:CU6). They are a radiopharmaceutical company developing next-generation theranostic (therapy and imaging) products based on its platform SAR Technology.

Ex-dividend

AGL Energy Limited (ASX:AGL) is paying 34 cents unfranked.
Blackwall Limited (ASX:BWF) is paying 2.6 cents fully franked.
Codan Limited (ASX:CDA) is paying 16.5 cents fully franked.
Downer EDI Limited (ASX:DOW) is paying 12 cents unfranked.
Ht&E Limited (ASX:HT1) is paying 3.5 cents fully franked.
MyState Limited (ASX:MYS) is paying 13 cents fully franked.
Navigator Global Ltd (ASX:NGI) is paying 8.2656 cents unfranked.
SG Fleet Group Ltd (ASX:SGF) is paying 5.393 cents fully franked.
TABCORP Holdings Ltd (ASX:TAH) is paying 7 cents fully franked.
Telstra Corporation (ASX:TLS) is paying 8 cents fully franked.
 
Commodities

Iron ore has jumped 6.8 per cent to US$146.13. Their futures are pointing to 4.8 per cent gain.

Gold has gained $2.20 or 0.12 per cent to US$1809 an ounce while silver has added $0.23 or 0.99 per cent to US$23.94 an ounce.

Oil gained for the second day adding $1.90 or 2.89 per cent to US$67.54 a barrel.

Currencies

One Australian Dollar at 7:40 AM has strengthened from yesterday buying 72.59 US cents, 52.88 Pence Sterling, 79.59 Yen and 61.74 Euro cents.
 

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