Wall St recoup losses on rebound, NAB, Atlas Arteria, Premier, Uniti on watch today: ASX to rise

Market Reports

by Melissa Darmawan

Wall St rebounded, Europe and Asia was mixed after the ASX rallied for its third day in a row as western leaders met in a medley of talks in Brussels to discuss further means to end Putin's war on Ukraine. The US expanded its sanctions on Russia, targeting the members of the country’s parliament and the gold reserves. Washington warned it would enforce export controls if Russia imports chips from China. 

Good morning. A healthy rebound. I’m Melissa Darmawan for Finance News. This is your market outlook.

The Australian sharemarket is set to rise after we saw Wall St recoup its losses.

Wall St erase losses from prior session

US stocks closed higher as tech shares rebound on a choppy week. Investors continue to watch stocks close at session lows, then to session highs like today. Though traders look past the war in Ukraine as well as comments from Fed Chair Jerome Powell earlier this week. The US central bank said that they could take a more aggressive stance to fight persistent and multi-year high inflation.

Comments from President Biden appeared to have taken the spotlight, lifting sentiment. Mr Biden spoke from Brussels in Europe after meeting with NATO allies, saying that NATO, the European Union and a group of seven of the world's biggest economies are working closer than ever in solidarity for Ukraine. It's been exactly a month now since Russia’s incursion into that country.

US expands Russian sanctions

The US expanded sanctions on Russia to include members of Parliament, while the Ukrainian President called on world leaders for more aid for his country's defence against Russian forces.

Oil prices slipped on news that the US and allies may release more oil from its strategic reserves. US secretary of energy Jennifer Granholm said at a news conference that “all tools are certainly on the table”.

The International Energy Agency confirmed that its countries are working as a pack to attempt to cut imports of oil and gas from Russia. With the geopolitical risk not abating anytime soon, along with the time it takes for non-OPEC producers to hike production, the retreat in oil prices could be short lived.

Gold hits 1-week high on expanded Russian sanctions

The price of gold hit a one week high as investors watch the impact of the latest round of US sanctions, preventing Russian sanctioned entities from transacting gold. Russia has spent years building the fifth biggest stockpile of gold in the world. Now it’s being targeted because sales of it could help the ruble. So that means that the Russians on this list will not be able to sell their gold holdings. Amid this, the week of talks from central bankers indicating a more aggressive stance in rate hikes also bodes well for the price of this inflation hedge to rally.

Strong labour market

In economic news, the jobless claims fell to a 53-year low, flagging a strong labour market. US durable goods orders fell more than expected on supply chain woes. Market participants expect factory orders to grow at a slower pace given its strength over the year.

Russia’s stock exchange opens for 1st time in a month

Elsewhere, Russia's stock exchange opened, closing 5.4 per cent higher after being closed for a month. There were several measures in place to limit a renewed sell-off with only 33 stocks out of the 50 listed that were allowed to trade. Foreigners were prohibited to sell equities in a ban scheduled to last until April 1 and short selling was off the table.

Meanwhile, flash readings of manufacturing costs back home here in Australia soared in March. Price pressures mounted with both input cost and output price hitting records, though sentiment remained positive - good sign for now. Costs for fuel and raw materials, as well as wages, were higher, reflecting both the Ukraine conflict and flooding in Australia, according to S&P Global.

Figures around the globe

As we wrap up our week back home and with one more session on Wall Street, it will be interesting to see how investors will assess the current strength of the economy as we move deeper into the quantitative tightening phase, growing financial sanctions on Russia amid the volatility in the oil prices, and how long the war in Ukraine will be.

At the closing bell, the Dow Jones gained over 1 per cent to 34,708, the S&P 500 added 1.4 per cent to 4,520, it hit the 4,500 level, let’s see if it it can find it can consolidate and provide some resistance here, and the Nasdaq advanced 1.9 per cent to 14,192.

Across the S&P 500 sectors, we saw a broad based rally. Info tech led the way, up 2.7 per cent, followed by materials, and communication services. Energy added the least, up 0.1 per cent.

The yield on the 10-year treasury note rose by 1 point to near 2.13 per cent, prices fell as they bought into gold, which rose on a weaker greenback

Across the Atlantic, European markets closed mixed. Paris fell 0.4 per cent, Frankfurt dipped 0.1 per cent while London’s FTSE added 0.1 per cent after a business survey posted a steep rise in prices charged by UK companies since at least 1999, while consumer sentiment hit its lowest level in almost a year and a half.

On the London Stock Exchange, Rio added almost 1 per cent, BP gained 0.3 per cent and Shell fell 0.2 per cent.

Asian markets closed mixed. Japan’s Nikkei rose 0.3 per cent to a fresh nine-week high and amid a weaker yen, after March’s manufacturing data showed a monthly improvement. Hong Kong's Hang Seng fell almost 1 per cent while China's Shanghai Composite closed 0.6 per cent lower.

ASX wrap up

Yesterday, the Australian sharemarket rose 0.1 per cent higher to 7,387, rallying for its third straight day lifted higher by resources and utilities stocks while tech shares lagged.

Crown Resorts (ASX:CWN) has been deemed unsuitable to hold a gaming licence for its Perth casino however it will be allowed to continue operating. The findings come from the final report of the Perth Casino Royal Commission. Shares closed 0.2 per cent lower to $12.50.

From the list of stocks we were watching, amid a broker upgrade from Barrenjoey, AGL Energy (ASX:AGL) closed 2.9 per cent higher to $7.48 while Origin Energy (ASX:ORG) rose 3 per cent to $6.29.

Nickel Mines’ (ASX:NIC) share price sunk 3.4 per cent lower to $1.29 after investors digested Moody’s revised rating outlook to negative from stable, reflecting the increased risk and uncertainty for the company’s ongoing credit profile, given the recent issues facing its sole offtaker, Tsingshan.

Uniti Group (ASX:UWL) is combing through an offer from Macquarie Infrastructure and Real Assets and Public Sector Pension Investment Board to takeover the the company for $5 a share. Shares resumed trade after it soared almost 11 per cent before going into a trading halt. Shares were up 0.5 per cent earlier in the session but lost seam, closers 0.6 per cent lower to $4.64.

National Australia Bank (ASX:NAB) has popped a dual announcement on share buy-backs. On completing the $2.5 billion buy-back unveiled last July, the nation’s third largest bank has launched another buy-back worth $2.5 billion, subject to market conditions. The new round is set to start, following the bank’s half year results on 5 May. Shares closed 0.2 per cent higher at $31.79.

A 12 per cent increase on Washington H. Soul Pattinson (ASX:SOL)’s interim fully-franked dividend of 29 cents per share has been attributed to merger with Milton. Despite first half earnings plunging to a loss of $643.1 million, attributable to a one-off goodwill impairment of $954 million due to the merger, excluding this transaction, the company’s regular profit after tax surged 281 per cent to $343.7 million. Its revenue came in higher by 117 per cent to $1.28 billion compared to $589 million in the same period last year. Shares closed 1.3 per cent higher to $27.

Meanwhile, the nation’s largest brickmaking giant Brickworks (ASX:BKW) benefited from improved production efficiencies and price hikes despite the supply chain woes in a high inflationary environment. The company unveiled its record statutory half-year of $581 million in net after-tax profits for six months to the end of January, up 720 per cent from the prior corresponding period. The result was boosted by a significant one-off profit in relation to the deemed disposal of Washington H Soul Pattinson (ASX:SOL) shares upon its merger with Milton during the half. A fully franked interim dividend of 22 cents per share, an increase of 1 cent from the prior period, is set to be paid on 3 May. Shares leapt 5 per cent to $22.87.

JB Hi-Fi’s (ASX:JBH) financial year 2022 year-to-date sales growth for Australia is at 1.5 per cent, 1 per cent for The Good Guys, however its New Zealand operations were behind by 2.5 per cent. On a quarterly basis, its third quarter results reflect heightened customer demand amid a $250 million off-market buyback. For the third quarter, Aussie operations rose 10.5 per cent, the Good Guys business was up 5.1 per cent, while its Kiwi operations tracked higher by 2.9 per cent. As customer demand grew alongside disciplined cost control and stock availability, this has boosted its performance for the period. Shares surged 4.3 per cent to $52.90.

SPI futures

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

What to keep an out eye out for

With the zig zag performance, tech shares could be on the rebound today. Amid the gold and nickel price rally, these mining stocks could be in favour. 

National Australia Bank (ASX:NAB) could be on the rebound today as Bell Potter has hiked its price target to $34.50. Yesterday, we found out that the bank launched another buy-back worth $2.5 billion, subject to market conditions.

Morgans has downgraded its rating for Atlas Arteria (ASX:ALX) to a hold from an add with a price target of $6.41, a 4.6 per cent cut from yesterday’s closing price.

On the earnings front, the owner of Peter Alexander and several brands, Premier Investments Limited (ASX:PMV) is set to release its half year results. The retail clothing giant guided to half year EBIT to be in the range of $209.5 million and $211.5 million on revenue of $769 million.

In terms of other stocks, keep an eye out for Uniti (ASX:UWL) shares. Brookfield has joined the bidding war, teaming up with HRL Morrison to take on a Macquarie-led group who lobbed a $5 per share bid for the infrastructure-focused telco.

Ex-dividend

Adbri (ASX:ABC) is paying 7 cents fully franked
Australian Clinical Labs (ASX:ACL) is paying 12 cents fully franked
Civmec (ASX:CVL) is paying 1 cent fully franked

Dividend-pay

There are 22 companies set to pay eligible shareholders today

Anglogold Ashanti (ASX:AGG)
Argo Global Listed Infrastructure (ASX:ALI)
Avjennings (ASX:AVJ)
Bravura Solutions (ASX:BVS)
Capral (ASX:CAA)
Excelsior Capital (ASX:ECL)
Evolution Mining (ASX:EVN)
FFI Holdings (ASX:FFI)
Globe International (ASX:GLB)
Genworth Mortgage Insurance Australia (ASX:GMA)
GR Engineering Services (ASX:GNG)
Joyce Corporation (ASX:JYC)
Michael Hill International (ASX:MHJ)
Mcmillan Shakespeare (ASX:MMS)
Monadelphous Group (ASX:MND)
NAOS Ex-50 Opportunities Company (ASX:NAC)
NAOS Small Cap Opportunities Company (ASX:NSC)
Origin Energy (ASX:ORG)
Pro Medicus (ASX:PME)
PWR Holdings (ASX:PWH)
Reckon (ASX:RKN)
Shine Justice (ASX:SHJ)

Commodities

Iron ore has lost 0.1 per cent to US$146.35. Its futures point to a 1.3 per cent gain.

Gold has gained $25.70 or 1.3 per cent to US$1968 an ounce. Silver is up $0.66 or 2.6 per cent to US$25.85 an ounce.

Oil has fallen $3.59 or 3.1 per cent to US$111.34 a barrel.

Currencies

One Australian Dollar at 7:35 AM has strengthened from yesterday, buying 75.14 US cents (Thu: 75.01 US cents), 56.98 Pence Sterling, 91.93 Yen and 68.33 Euro cents.

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