Wall St falls, Inflation woes,Transurban $371m shortfall, Iron ore dips: ASX to rise


Major indexes around the globe closed in the red ahead of the earnings season. Asian markets fell as Evergrande’s silence on coupon payments. Transuban closed capital raising with a $371m shortfall while Lovisa’s CEO steps down. Macquarie downgraded Ansell’s rating.

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

U.S. stocks wobbles on caution trade

U.S stocks wobbled throughout the session as investors traded with caution before closing in the red. The major indexes moved from hugging the flatline, peeping up into the green, tripping into the red, ahead of a raft of economic data including the Fed meeting minutes this week. The bond market was back open with the yield ticking lower after it was closed yesterday for Columbus Day and Indigenious People’s Day. This created the space for tech shares to perform, with the Nasdaq shedding the least today.

Stocks traded lower early on the back of concerns on China’s property market, though turned higher after House Speaker Nancy Pelosi suggested reducing the shelf life of several major programs to get the infrastructure spending and the debt ceiling done. As the time is ticking, there may be some major changes announced very soon.

Record high quitters while IMF warns on inflation

Looking at economic news, job openings remained elevated after falling in August according to the Labor department. The jobs opening and turning over survey, JOLTS report showed that a record high of 4.3 million people quit their jobs in August mainly from the food and retail sector. Collectively, job openings dropped to 10.4 million, missing forecasts of 10.9 million. The labor market readings have been mixed, an indicator that the Fed watches closely. If further numbers show a slowdown, they might reset their expectations.

Meanwhile, the International Monetary Fund cut its global growth forecast by 0.1 per cent citing supply chain disruptions impacting larger economies. Momentum has weakened amid increased worries on the impact of delta. The IMF is also concerned about inflation, and that central banks need to prepare themselves to tighten monetary policy if surging prices worsens. The move could trigger off a selldown in global markets, as an uneven recovery amid pricing pressures is poised to challenge efforts.

Earnings season kicks off while inflation data to prevail

Elsewhere, earnings season is set to kick off with banks on the docket to report. JPMorgan Chase is the first cab off the ranks. Bank of America, Wells Fargo, and Citigroup will follow on Thursday.

Investors will also be watching the latest updates on inflation. The Labor department is slated to release its consumer price index report for September tomorrow, giving us an insight into the inflation pressures that Americans are facing. Then we will get a gauge on inflation pressures on the business front, with the producer price index report released on Thursday.

But, it doesn’t stop there as we will then see how consumers are spending amid this as the Commerce department releases retail sales numbers for September at the end of the week. All this on top of the increasing concerns on the energy market, and inflation pressures coming from there. A lot on tap.

Wall St falls & bond yields fall as gold shines

At the closing bell, the Dow Jones lost 0.3 per cent to 34,378, the S&P 500 fell 0.2 per cent to 4,351 while the Nasdaq closed 0.1 per cent lower at 14,466.

The yield on the 10-year treasury note fell 4 basis points to 1.57 per cent, while gold gained on a weaker greenback.

Across the S&P500 sectors, it was a mixed performance. Five winners to six losers. Real estate was the best performer up 1.3 per cent followed by consumer discretionary, and utilities. Communication services was the worst performer, down 1 per cent followed by technology and healthcare.

Square’s rating gets upgraded & MGM soars

In company news, Square shares jumped 2.2 per cent after Atlantic Equities upgraded the stock to overweight from neutral, with a price target of US$300. The analysts believe that the payment giant’s valuation is set for substantial growth due to their business model. Now, given their relationship with Afterpay (ASX:APT) here in the ASX, we might see some movement today with this buy-now pay-later provider. I will also look to continue covering this company moving forward to help us set the day.

In contrast to what we saw recently with Star Entertainment (ASX:SGR), casino operator MGM soared 9.6 per cent after Credit Suisse nearly doubled their price target to US$68. The broker believes that the company is set to be beneficiaries of the improved sentiment and growth in the sports betting industry. Credit Suisse also believes that MGM could benefit from rival Draftking increasing their US$22.4 million bid for MGM’s partner Entain.

European markets falls on inflation woes

Across the Atlantic, European markets closed lower. Paris lost 0.3 per cent, Frankfurt also fell 0.3 per cent, and London’s FTSE shed 0.2 per cent dragged down by miners and travel stocks.

Inflation concerns took investors’ attention after British grocery prices rose by 1.7 per cent in the four weeks to October. Employment data also showed that job vacancies rose to a record high, while the unemployment rate fell to 4.5 per cent in the three months to August.

Miners fell while oil players were mixed in London trade. BHP lost 1.2 per cent, Rio fell 1.9 per cent, BP dropped 0.6 per cent while Shell bucked the trend closing 0.3 per cent higher.

Asian markets falls as Evergrande missed payment

Asian markets fell after Evergrande missed its third coupon payment in three weeks. Tokyo’s Nikkei lost 0.9 per cent on inflation fears, Hong Kong’s Hang Seng fell 1.4 per cent, while China’s Shanghai Composite closed 1.3 per cent lower.

ASX 200 falls as energy rally pauses

Yesterday, the Australian sharemarket closed 0.3 per cent lower at 7,281, declining for its second straight day. The energy rally had a breather as healthcare outperformed bringing consumer staples with them.

Investors also mulled on NAB’s business confidence survey rebounding in September, up 19 points as confidence grew on the reopening roadmaps, as well as the rising vaccination rates.

Technology stocks continued their fall for the second day this week as the worst performer, followed by energy, down 1.1 per cent. Healthcare performed the best, at 0.9 per cent with consumer staples fractionally added 0.1 per cent. The other sectors closed in the red.

The best-performing stock in the S&P/ASX 200 was Sims (ASX:SGM) closing 4.6 per cent higher at $13.59 followed by shares in Perseus Mining (ASX:PRU) and Alumina (ASX:AWC).

The worst-performing stock was Ansell (ASX:ANN) closing 4.6 per cent lower at $32.27 on the back of a broker downgrade which I will cover in broker moves, followed by shares in Appen (ASX:APX) and Corporate Travel Management (ASX:CTD).

In company news, Westpac (ASX:WBC) closed 1.7 per cent lower after flagging to shareholders that their profit for the second half of the financial year will take a $1.3 billion hit. Some of their losses were offset by their $55 million sale of their general insurance business, and a $54 million reversal of previous write-downs. This was associated with the sale of their Pacific business which did not go ahead with Kina Securities.

CSL (ASX:CSL) rose 1.8 per cent after its AGM yesterday. The biotech expects their financial 2022 profit of between US$2.15 billion to US$2.25 billion. It also said it expects revenue growth on a constant currency basis to finish between 2 per cent and 5 per cent.

Local economic news

Australian Bureau of Statistics have slated their building activity report for the June quarter. Westpac and Melbourne Institute are set to release the consumer confidence for October.

Reflecting back in September, consumer sentiment rose by 2 per cent at 106.2 despite the lockdowns in NSW, Victoria, and ACT. The measure has stayed in positive territory above 100, while the vaccination focus has been a major support.

Company news

After 12 years as CEO of jewelry retailer Lovisa (ASX:LOV), Shane Fallscheer has stepped down, as Victor Herrero has been named as global CEO. Mr Herrero spent 13 years with the Zara owner, the Inditex Group. He also has four years experience as CEO of retail brand Guess based in California. Mr Fallscheer will step down as a director as of Thursday this week to allow for Mr Herrera to be appointed to the board. The annual meeting has also been pushed out by 5.5 weeks to Monday 22 November. Shares in Lovisa (ASX:LOV) closed flat at $18.37 yesterday.

Transurban (ASX:TCL) announced after market close that their retail entitlement offer closed at a $371 million shortfall. They wrapped up their $4.23 billion raising launched in September. Shares are slated to be allocated next Monday 18 October. Shares in Transurban (ASX:TCL) closed 1.7 per cent lower at $13.56 yesterday.

Broker moves

Macquarie downgrades Ansell (ASX:ANN) to an underperform with a price target of $32. The broker notes a benefit from price increases primarily related to examination and single-use gloves, which represented around 60 per cent of the increase to gross profit in the financial year 2021. Due to this, and from observations from recent trends, the broker envisages downside risk. Shares closed 4.6 per cent lower at $32.27.

Ex-dividend

Gowing Bros (ASX:GOW) is paying 4 cents fully franked

Dividend-pay

There are eight companies set to pay eligible shareholders dividends.

BlueScope Steel (ASX:BSL)
Countplus (ASX:CUP)
Duratec (ASX:DUR)
Kirkland Lake Gold (ASX:KLA)
NRW Holdings (ASX:NWH)
News Corp (ASX:NWS)
PSC Insurance Group (ASX:PSI)
TPG Telecom (ASX:TPG)

AGM

Today the Commonwealth Bank of Australia (ASX:CBA) is slated to have their AGM.

IPOs

We have one company slated to make their debut on the ASX. Keep an eye out for Equinox Resources (ASX:EQN).

Commodities

Iron ore has lost 4.5 cent to US$129.00. Its futures point to a 0.7 per cent fall.

Gold has gained $5.30 or 0.3 per cent to US$1761 an ounce, silver was down $0.09 or 0.4 per cent to US$22.58 an ounce.

Oil was flat at US$80.52 a barrel.

Currencies

One Australian Dollar at 7:30 AM has strengthened from yesterday, it’s been improving as of late, buying 73.51 US cents, 54.11 Pence Sterling, 83.53 Yen and 63.75 Euro cents.

Investor event

Please join us for our next online investor event on Tuesday 26 October with six companies presenting. From lithium explorers to marketing service providers. Make your way to fnn.com.au to reserve your free online spot.
 

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