Wall St extends relief-rally, Oil prices surge, BoE hikes rate: ASX to rise

Market Reports

by Melissa Darmawan

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Wall St's relief rally continues buoyed on news that Russian bond payments were processed by JP Morgan to Citi. The Kremlin downplayed that peace talks were progressing, sending oil prices higher. The Bank of England raised its interest rate to 0.75%. Asian shares continued to rebound strongly amid Beijing’s support for equity markets.

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Good morning. The relief rally continues. I’m Melissa Darmawan for Finance News. This is your market outlook.

The Australian sharemarket is set to rally after a rather optimistic session on Wall St.

Wall St extends gain for 3rd day on oil surge

US stocks rose for its third straight day, its best winning streak since January this year, keeping its post-rally advance as investors continue to monitor headlines about the peace talks between Russia and Ukraine.

Leaders from the group of seven of the world's top economies have come together in solidarity, condemning Russia's actions in Ukraine, describing them as “indiscriminate attacks on civilians”.

JP Morgan processed Russia bond payments

However, a catalyst that saw stocks close at session highs were reports by Bloomberg that JP Morgan processed Russia’s US$117 million bond payments to CitiBank, who are representing the bond holders. The ability for the process to continue buoyed investor’s optimism amid the US Treasury saying that they were not going to stop the facilitation of payments.

Investors were concerned that the current financial sanctions meant that Russia would be open to a default. Despite the payment set to be received by the bondholders, the questions lie if it will be paid in the greenback or in rubbles as this will determine if it’s considered a default or not.

Investors are watching the next move from President Biden and his call with China’s President Xi. If Washington can influence China to refrain from providing support to the Russians, optimism is set to grow that a ceasefire could happen sooner rather than later.

Oil prices rise after its sinks for 3-days

Oil prices rose as warnings grew louder about supply shortages due to the war. The International Energy Agency warned of a potential oil supply shortfall of three million barrels a day of oil next month which helped lift oil prices, sending energy stocks back to the winner’s seat.

Nickel trading limit increases to 12%

Elsewhere, we continue to monitor the moves of nickel trading on the London Metal Exchange (LME). Yesterday we saw trade for around four minutes before it immediately hit its 8 per cent limit. Now that the LME is open, nickel prices are moving in the opposite direction, down. Given what has happened, the problem is we can only move so far down or up by 8 per cent and this seems to be the biggest outcry among traders.

So why is it moving down? Did you know that nickel futures are also traded over in Shanghai? The Shanghai futures price of nickel is at a certain level and the LME market is trading back down to that level which is somewhat paradoxical. During this saga, Shanghai continued to trade during the halt by the LME in a bid to restore order to the market. One thing to know is that it’s not the same type of liquidity like you get with equities or even gold, so in a situation where the bid ask spread is so far apart, you can see why we are in this situation.

Nickel futures on the exchange have dropped 58 per cent from the high reached on 8 March in an illiquid market as there are no buyers at the limit-down price of US$41,945 a ton.

Let’s see how it trades today after the limit has been increased to 12 per cent from 8 per cent until further notice.

Elsewhere, there was a docket of strong economic data pointing to a tight labour market, strong housing market with manufacturing looking strong.

What to keep an eye out for

Looking ahead, no local economic news so keep an eye out energy stocks as they eye to claim back its crown from tech shares, mining stocks amid support in the rise in the underlying commodity price, the index could also be sprinkled higher from over 21 companies set to pay eligible shareholders their dividends as we look to close off the week on a positive note.

Figures around the globe

At the closing bell, the Dow Jones gained 1.2 per cent to 34,481, the S&P 500 added 1.2 per cent to 4,412 while the Nasdaq closed 1.3 per cent higher at 13,615.

Across the S&P 500 sectors, energy was back in front as the best performer, up 3.5 per cent, followed by materials up almost 2 per cent, the consumer discretionary. Gains across the board with utilities adding the least.

The yield on the 10-year treasury note rose by 1 point to near 2.19 per cent as prices rose, gold rose on a weaker greenback.

Across the Atlantic, European markets closed mixed. Electricite de France rose over 5 per cent as French President Macron unveils his plans for nationalising parts of the energy sector to increase energy independence.

This saw Paris CAC close 0.4 per cent higher, Frankfurt fell 0.4 per cent and London’s FTSE gained 1.3 per cent amid a falling pound. It helped boost UK multinationals companies after the Bank of England struck a less hawkish tone, raising its interest rate from 0.5 per cent to 0.75 per cent, flagging that inflation could hit 8 per cent in April.

On the London Stock Exchange, Rio gained 3.3 per cent, BP added 2.1 per cent and Shell rose 3.3 per cent.

Asian markets closed higher as momentum continued after Beijing’s show of support to stabilise its equity market. Tokyo’s Nikkei gained 3.5 per cent, Hong Kong’s Hang Seng jumped over 7 per cent, pulled higher by the likes of Alibaba, soaring 12.5 per cent, Ping An Insurance, up 10.5 per cent and Tencent closing 6.3 per cent higher. China’s Shanghai Composite added 1.4 per cent.

Yesterday, the Australian sharemarket closed 1.1 per cent higher at 7,251, rallying for its second straight day, powered up by technology shares in an almost broad-based rally with consumer staples and utilities, edging lower.

For yesterday's action, join me here for "ASX 24 triggers outage woes from 2020, Tech stars as global rally continue".

SPI futures

Taking all of this into the equation, the SPI futures are pointing to a 0.5 per cent gain.

Ex-dividend

There are a number of companies going ex-dividend today.

Carsales.Com (ASX:CAR) is paying 25.5 cents fully franked
HUB24 (ASX:HUB) is paying 7.5 cents fully franked
Vita Life Science (ASX:VLS) is paying 3 cents fully franked

Dividend-pay

There are 21 companies set to pay eligible shareholders today.

Auswide Bank (ASX:ABA)
Appen (ASX:APX)
Australian United Investment Company (ASX:AUI)
Centrepoint Alliance (ASX:CAF)
Diversified United Investment (ASX:DUI)
Ebos Group (ASX:EBO)
Engenco (ASX:EGN)
Estia Health (ASX:EHE)
Finbar Group (ASX:FRI)
Hitech Group Australia (ASX:HIT)
IGO (ASX:IGO)
IPH (ASX:IPH)
Iress (ASX:IRE)
Jumbo Interactive (ASX:JIN)
Mcpherson's (ASX:MCP)
Platinum Asia Investments (ASX:PAI)
Probiotec (ASX:PBP)
Platinum Capital (ASX:PMC)
Pinnacle Investment Management Group (ASX:PNI)
Platinum Asset Management (ASX:PTM)
Shape Australia Corporation (ASX:SHA)

IPO

There is one company set to make its debut on the ASX today. Keep an eye out for Stelar Metals (ASX:SLB) after raising $7,000,000 at 20 cents per share.

Commodities

Iron ore has added 1 per cent to US$146.90. Its futures point to a 2.7 per cent gain.

Gold has gained $27.90 or 1.5 per cent to US$1,937 an ounce. Silver is up $0.74 or 3 per cent to US$25.45 an ounce.

Oil has jumped $8.32 or 8.8 per cent to US$103.36 a barrel.

Currencies

One Australian Dollar at 7:45 AM has strengthened from yesterday, buying 73.79 US cents (Thu: 72.90 US cents), 56.11 Pence Sterling, 87.50 Yen and 66.52 Euro cents.
 

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