Wall St mixed, China slashes kids gaming time to 3h a week, Why Alumnia is bullish: ASX to rise

Market Reports

by Melissa Darmawan

Global stocks rallied after the Fed’s symposium over the weekend. Technology names took the spotlight in Wall St while China tightens their grip around the gaming sector. Back home, miners’ gains offset losses across the sectors with a slew of economic news slated today. 

The Australian sharemarket is poised to rise with the SPI futures pointing to a gain of 0.2 per cent.

Record highs for S&P 500, Nasdaq on tech rally

Let’s take a look at Wall St. The S&P 500 and the Nasdaq closed at record highs again as technology names rallied. Apple surged 3 per cent, Amazon and Facebook both jumped over 2 per cent while Microsoft gained 1.3 per cent.

Investors bought into growth stocks which saw the valued Dow dip into the red. The Fed’s dovish view on tapering with no definite timeline soothed nerves around rate hikes. This saw the yield on the 10-year treasury bond dip to 1.28 per cent pressuring bank stocks lower.

Financials performed the worst, down 1.5 per cent while energy closed lower at 1.2 per cent despite the boost in oil prices. Materials and industrials both shed over 0.2 per cent. Technology added 1.1 per cent while real estate was marginally in front at 1.2 per cent.

At the closing bell, the Dow Jones shed 0.2 per cent at 35,400, the S&P 500 gained 0.4 per cent at 4,529 adding to 51 record highs on the board - the fastest doubling of the index since the pandemic lows, while the tech-heavy Nasdaq rose 0.9 per cent at 15,266.

Investors and the Fed eye the jobs report this week

Investors are now looking at the jobs report this Friday as the Fed wants to see “substantial further progress”. This is an indicator as to their moves around tapering their asset purchases program.

As we talked about yesterday, we are ahead of the Fed’s inflation target however, we are not there yet for full employment. There is still 8.7 million Americans unemployed versus 5.7 million before the pandemic. While the unemployment rate is 5.4 per cent versus 3.5 per cent according to the labor department.

European markets as U.K. take a long weekend

Across the Atlantic, European markets closed almost higher. The U.K. markets were closed for the summer bank holiday. Paris added 0.1 per cent while Frankfurt closed 0.2 per cent higher.

Asian markets see a sea of green

Asian shares closed higher after the taper talk from the Fed soothed nerves. Tokyo’s Nikkei and Hong Kong’s Hang Seng both gained 0.5 per cent while China’s Shanghai Composite closed 0.2 per cent higher.

China slashes kids’ gaming time to 3h a week

Let's take a look at some news in China. The government has announced that youth under 18 years old can only be allowed to play video games for up to three hours per week. The rules serve as a way to safeguard the physical and mental health of youth gamers and minimize the harmful addiction to games.

The news comes from recent talks that games have been likened to “spiritual opium”.

Gaming platforms from the likes of Tencent can only offer online gaming to minors from 8 p.m. to 9 pm from Friday to Sunday according to the new rules by China’s National Press and Publication Administration.

There were almost 1.48 billion gamers across Asia, making it the largest market for video gaming worldwide, with Europe coming in second place according to Statistica.

This new rule is not a law but it’s a requirement for the games companies like Tencent to employ technology to make sure the gamers do not exceed these timeframes. The company will be regulated by the government, however, their usage will need to be overseen by their parents. Concerns are on the loopholes around this as kids could log in under an adult profile which would surpass the rule.

These gaming companies have deployed or are looking to deploy AI technology to help with this compliance.

Shares in Tencent closed 0.1 per cent lower yesterday.

ASX 200 rebounds on miners surge

Yesterday, the Australian sharemarket added 0.2 per cent at 7,505 thanks to miners lifting the index. Fortescue Metals (ASX:FMG) surged 6.6 per cent by the close with the heavyweight miners riding the coattails of the rally.

Pure play Fortescue rewarded shareholders with a dividend of more than doubled, after their record year, while BHP and Rio Tinto shares rose by more than two and three per cent respectively.

The miners’ gains offset the losses across the sectors. Energy rose 0.7 per cent while Materials spiked 2.8 per cent. Consumer staples and real estate marginally rose. Consumer discretionary fared the worst, down 1 per cent.

Local economic news

The Australian Bureau of Statistics is set to release the building approvals for July. The balance of payments is also due.

Economists expect another current account surplus for the June quarter, marking the ninth straight month of surplus on the back of higher commodity prices and boosted export earnings.

Net exports have been lagging and this is expected to continue in the June quarter. Westpac group economists expect a lag of 0.7 per cent in the quarter.

Import volumes had a strong recovery over the second half of last year and has continued its momentum into this first half of the year. This is in parallel with the recovery of domestic demand. Westpac group economists expect a lift in imports of 1.8 per cent in the quarter.

On the other hand, export shipments are likely to have dropped 1.4 per cent in the same period. Of note, resource shipments have been impacted by disruptions, including weather and maintenance.

In addition to all of this, the weekly consumer sentiment by ANZ-Roy Morgan is also due.

Stock watch

Our weekly stock to watch this week is Alumina (ASX:AWC). David Thang, Senior Private Wealth Adviser at Sequoia (ASX:SEQ) rates Alumina as a buy. From a technical angle, Alumina is bullish for several reasons.

Support was respected in July at the 61.8 per cent Fibonacci retracement of $1.55 as shown by the horizontal green line and orange arrow.

Over the course of August, follow-through to the upside is evident suggesting buying interest. This is a positive development, and suggestive of higher levels to follow over the medium-term.

Should this ideal scenario come to fruition, then the first upside target is indicated at the 38.2 per cent Fibonacci retracement of $2.02, followed by a longer term target zone between $2.17 and $2.24 as illustrated by the light-blue rectangle.

This zone is made up of an AB = CD harmonic pattern completion and the 50 per cent Fibonacci retracement respectively.

Share in Alumina (ASX:AWC) closed 5.7 per cent higher at $1.77 yesterday.



Ex-dividend

Adacel Technologies (ASX:ADA) is paying 3.25 cents unfranked.
Appen (ASX:APX) is paying 4.5 cents 50 per cent franked.
Carlton Investments (ASX:CIN) is paying 41 cents fully franked.
ECP Emerging Growth (ASX:ECP) is paying 2.75 cents fully franked.
Heartland Group (ASX:HGH) is paying 6.6883 cents unfranked.
HiTech Group Australia (ASX:HIT) is paying 5 cents fully franked.
Link Administration Holdings (ASX:LNK) is paying 5.5 cents fully franked.
Milton Corporation (ASX:MLT) is paying 8 cents fully franked.
Metrics Income Opportunities Trust (ASX:MOT) is paying 0.93 cents unfranked.
Metrics Master Income Trust (ASX:MXT) is paying 0.67 cents unfranked.
NAOS Ex-50 Opportunities Company (ASX:NAC) is paying 1.55 cents fully franked.
NAOS Small Cap Opportunities Company (ASX:NSC) is paying 1.25 cents fully franked.
Partners Group Global Income Fund (ASX:PGG) is paying 0.6833 cents unfranked.
Prime Media Group (ASX:PRT) is paying 2 cents fully franked.
Senex Energy (ASX:SXY) is paying 5 cents unfranked.
Worley (ASX:WOR) is paying 25 cents unfranked.

Commodities

Iron ore has lost 0.6 per cent to US$156.66. Their futures are pointing to 1.2 per cent fall.

Gold has dropped $7.30 or 0.4 per cent to US$1812 an ounce while silver has lost $0.10 or 0.4 per cent to US$24.01 an ounce.

Oil added $0.47 or 0.7 per cent to US$69.21 a barrel amid damage from Hurricane Ida and ahead of theOPEC+ meeting.

Currencies

One Australian Dollar at 7:40 AM has dipped from yesterday buying 72.97 US cents, 53.06 Pence Sterling, 80.22 Yen and 61.86 Euro cents.

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Commentators may hold positions in stocks mentioned. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.

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