US stocks closed mixed after a choppy session on investors climbed the wall of worries ahead of the inflation data on Friday. Australians spent big in the December quarter. Macquarie Group (ASX:MQG) to unveil trading update.
The Australian sharemarket is set to dip after Wall St closed little unchanged.Cautious trading ahead of inflation data on Friday
US stocks closed mixed after a choppy session as investors look to earnings and the inflation data at the end of this week. All this ahead of the Federal Reserve meeting next month where it’s expected that the central bank will unveil its first interest rate hike. There’s a lot of focus on consumer price index data on Friday, with expectations that inflation is set to rise above the current 7 per cent mark.
Markets are also digesting the idea that yes, there are likely rate hikes this year. This has contributed to the volatility we have seen, but not just that, investors are also dissecting what it means to change gears from quantitative easing to quantitative tightening, the impact it could have on broader markets, in particular within the bond market. Given this consideration set, we have seen a rotation into value stocks as investors review companies with strong balance sheets and pricing power. That means, the ability to pass on price increases to customers, and it can go the other way, reducing prices too.Wall of worries continue
Additionally, investors are also climbing the wall of worries on what it means to hike interest rates and have quantitative tightening happening at the same time, and questioning if this will actually address inflation. There’s the law of supply and demand, economics 101. Rising interest rates can assist in cooling off demand, but what also drives a lot of the pricing pressures are on the supply side.
So there are variables that impact inflation outside of the central bank mandate like the coronavirus and how the virus plays havoc on companies and lives. Also, the consumer choices are a variable as to where they choose to buy goods versus services amid this.
Now, as economies continue to reopen, we are seeing people want to get out and about. That’s helping your airline stocks, like in yesterday’s session on the ASX, which I will cover shortly, as this will start to help ease the supply chain disruptions, and help the job market as companies will need to hire workers to service those who want more services. This is also one of the contributors as to why we have seen the so called “stay-at home” stocks declined like Zoom on Wall St, Adairs (ASX:ADH)
which we talked about yesterday, Temple & Webster (ASX:TPW)
which is down 24 per cent for the year.
Also, hence why inflation could be seen as "transitory" as there is no defined time series in the definition of "transitory". If supply chains ease and inflation is set to abate, the period could be considered "transitory" in the bigger scheme of things.Australians spends big in the December quarter
Meanwhile, our Aussie dollar got a nice boost yesterday after the strong December quarter retail sales. Spending rose 8.2 per cent, its strongest quarterly rise on record, following a 4.4 per cent fall in the September quarter, seasonally adjusted as per the Australian Bureau of Statistics. The boost in consumer spending has cemented analyst’s expectations that the RBA will unveil interest rate lift off in August this year or the second half of the year.
With all the volatility that is happening, markets are more hawkish than the central banks as they try to be one step ahead of the next move.Numbers on Wall St
At the closing bell, the value-index Dow Jones eked out a gain by 1 point at 35,091, the S&P 500 lost 0.4 per cent to 4,484 while the Nasdaq fell 0.6 per cent to 14,016.
Across the S&P 500 sectors, energy was the best performer, up 1.3 per cent followed by financials, consumer staples and industrials eking out a gain. The worst performer was communication services and information technology, with selling pressure continuing on Facebook owner, Meta. The rest closed lower.
The yield on the 10-year treasury note closed steady at 1.92 per cent, so consolidating during the session, gold rose on a weaker greenback.Figures around the globe
Across the Atlantic, European markets closed higher. Paris added 0.8 per cent, Frankfurt gained 0.7 per cent and London’s FTSE added 0.8 per cent led by banks and commodity majors with Rio gaining 2.8 per cent, BP added 0.7 per cent while Shell rose 1.2 per cent.
Asian markets closed mixed. Tokyo’s Nikkei lost 0.7 per cent, Hong Kong’s Hang Seng closed flat, up 0.03 per cent and China’s Shanghai Composite gained over 2 per cent, playing catch up.ASX starts on a weak note
Yesterday, the Australian sharemarket closed 0.1 per cent lower at 7,111 with travel stocks taking off on travel news. The federal government is set to reopen international borders to double-vaccinated visa holders and tourists from Monday, 21 February. The gains in energy, materials and information technology weren’t enough to lift the local bourse higher as the other sectors closed lower, led by property and healthcare.
ANZ Bank (ASX:ANZ)
fell 1.9 per cent to $26.57 after reporting a net interest margin of 1.57 per cent for the first quarter of financial year 2022, down 8 basis points, or 5 basis points underlying in the second half of 2021, below the consensus of 1.62 per cent. This has been a trend with the major banks amid a highly competitive landscape. Though with rising interest rates on the horizon, the potential tailwinds could drive margin stabilisation.
Macquarie Group (ASX:MQG)
gained 0.9 per cent at $194.02, Westpac (ASX:WBC)
added 0.2 per cent at $21.56 while National Australia Bank bucked the trend, (ASX:NAB)
closing 1.2 per cent lower at $27.57, while Commonwealth (ASX:CBA)
shed 0.1 per cent at $94.
guided to financial year 2022 operating earnings to be 45 to 63 per cent higher compared to the year prior, thanks to strong demand for Australian grain and oilseeds. They were the best performer, closing 12.3 per cent higher at $8.10. It was followed by shares in Flight Centre Travel Group (ASX:FLT)
and Corporate Travel Management (ASX:CTD)
There were some double digit percentage jumps by Regional Express (ASX:REX)
, soaring 14.3 per cent to $1.39, Helloworld Travel (ASX:HTW)
jumped 11.3 per cent to $2.56, Webjet (ASX:WEB)
rose 6.2 per cent to $5.51, while Qantas (ASX:QAN)
closed 4.6 per cent higher to $5.43.
The worst-performing stock in the S&P/ASX 200 was Magellan Financial Group (ASX:MFG)
after co-founder Hamish Douglass stepped down for medical leave, closing 11.2 per cent lower at $16.43. It was followed by shares in Appen (ASX:APX)
and Unibail-Rodamco-Westfield (ASX:URW)
Energy stocks rallied amid multi-year high crude prices with Beach Energy (ASX:BPT)
, up 2 per cent at $1.53, Woodside Petroleum (ASX:WPL)
gained 1.9 per cent at $26.76 and Santos (ASX:STO)
closed 1.6 per cent higher at $7.57
Heavyweight miners finished higher led by BHP (ASX:BHP)
up 1.2 per cent at $47.39, Fortescue Metals (ASX:FMG)
rose 0.9 per cent at $21.53 and Rio Tinto (ASX:RIO)
eked out a 0.07 per cent gain at $114.69.
Gold stocks closed lower with Northern Star (ASX:NST)
down 1.8 per cent at $8.39, Evolution Mining (ASX:EVN)
fell 0.6 per cent at $3.62 and Newcrest Mining (ASX:NCM)
closed 0.3 per cent lower at $22.48.SPI futures
Taking all of this into the equation, the SPI futures are pointing to a 0.2 per cent fall.Local economic news
Today’s focus is set to be on consumer and business sentiment and how Omicron has played a role in the economy. ANZ and Roy Morgan are set to release their weekly consumer confidence report, while NAB’s business survey for January is also in the calendar today.Company news
Suncorp Group (ASX:SUN)
has trimmed its interim dividend after profit fell 20.8 per cent to $388 million during the first six months of the 2022 financial year. Keep an eye out for more updates. Shares in Suncorp Group (ASX:SUN)
closed 1.2 per cent higher at $11.40 yesterday.Dividend-pay
There are four companies set to pay eligible shareholders today
Advanced Share Registry (ASX:ASW)
Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)Trading updates
Macquarie Group (ASX:MQG)
G.U.D. Holdings Limited (ASX:GUD)
Shopping Centres Australasia Property Group (ASX:SCP)
Suncorp Group Limited (ASX:SUN)Commodities
Iron ore has gained 1.9 per cent to US$149.40. Its futures point to a 3.3 per cent gain.
Gold has gained $14.50 or 0.8 per cent to US$1822 an ounce. Silver is up $0.56 or 2.5 per cent to US$23.04 an ounce.
Oil has lost $0.89 or almost 1 per cent to US$91.42 a barrel.Currencies
One Australian Dollar at 8:20 AM has strengthened since Monday (70.82 US cents), buying 71.25 US cents, 52.64 Pence Sterling, 81.97 Yen and 62.28 Euro cents.Register - Investor event
Our first investor event for the year is on Tuesday 22 February, a fortnight away at 12.30 AEST with Shaw & Partner’s market strategist Martin Crabb, and three CEOs presenting. Make your way to fnn.com.au to register
for your free online spot.