Equities trim gains on hot inflation, Crown, A2 Milk, Toys"R"Us ANZ on watch: ASX to edge lower

Market Reports

by Melissa Darmawan

US stocks and bond markets were closed for Memorial Day holiday. Hot German inflation trims US futures after it rose which cast a shadow over optimism on lockdowns easing in China. Crown Resorts (ASX:CWN) has been hit with a $80 million fine. 

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

The Australian sharemarket is poised to open lower ahead of a big week of GDP data.

Hot German inflation trims US futures

US stocks were closed for Memorial Day holiday which means we will take our lead from European markets. The major indexes closed higher, however, as investors “sell-in-May then go away”, it means that volume was light. Other than the US traders having a break, so will the Brits ahead of their two days off this week.

Though what has investors optimistic is the trio of news from China.

Firstly, Chinese officials also unveiled further economic support measures, including reducing rent and property taxes for businesses, granting subsidies for water, electricity and natural-gas costs.

Secondly, there’s freedom for residents in low-risk areas to leave and enter their compounds while lastly, taxi and ride hailing services are set to resume, allowing cars onto the road in low-risk areas.

The news is very well received as the financial hub takes its biggest steps toward lifting a two-month strict lockdown.

Oil prices edged higher amid this while energy traders monitor the EU closing in on a Russian import ban, ahead of further sanctions against Moscow. Any further ban on Russian oil on a tight market, doesn’t bode well for inflation. OPEC+ is struggling as it is to keep up with output and it’s likely they will maintain their plan.

Despite the news, equities and US futures trimmed their gains after hotter-than-expected German inflation numbers, adding pressure for action from central bankers to curtail hot prices.

Let’s look at what this means for us back home.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris gained 0.7 per cent, Frankfurt rose 0.8 per cent while London’s FTSE added 0.2 per cent.

On the London Stock Exchange, Rio added 0.6 per cent, BP gained 0.7 per cent and Shell fell 0.3 per cent.

Asian markets closed higher, Tokyo’s Nikkei added 2.2 per cent, Hong Kong’s Hang Seng gained 2.1 per cent while China’s Shanghai Composite rose 0.6 per cent.

Yesterday, the Australian sharemarket closed 1.5 per cent higher at 7,287.

SPI futures

Taking all of this into the equation, the SPI futures are pointing to 0.2 per cent fall

What to look out for today

ANZ and Roy Morgan are set to release their consumer confidence figures.

Energy stocks are set to be in the limelight. Keep an eye out for the majors. Woodside Petroleum (ASX:WPL), Beach Energy (ASX:BPT), and Santos (ASX:STO).

In company news, Crown Resorts (ASX:CWN) has been hit with a $80 million fine from the Victorian Gambling and Casino Control Commission in relation to the China UnionPay process. The gaming watchdog has also indicated it continues to consider “further disciplinary proceedings against Crown related to the other findings of the Royal Commission, which may each attract a fine of up to $100 million.” Shares closed 0.1 per cent higher at $12.91 yesterday.

Mighty Kingdom (ASX:MKL) could come off its trading halt today.

Along the lines of fun and games, a stock to watch is Toys"R"Us ANZ (ASX:TOY). The pure-play online retailer is debt free and has $14.8 million in cash as of January, and exited from all its unprofitable businesses. The CEO has a 34 per cent stake in the company, and is gaining momentum with its strategy.

The A2 Milk (ASX:A2M) confirmed on Monday they had submitted applications to the U.S. Food and Drug Administration for supplying baby food to the country.

Amid month-end rebalancing with asset managers, keep an eye out for Coles (ASX:COL) after US asset manager Columbia Threadneedle Investments added the grocery giant and sold out of Aristocrat (ASX:ALL). Fidelity bought more OceanaGold (ASX:OGC) and sold out of Newmont (ASX:NEM).

Ex-dividend

There are seven companies set to trade without the right to its dividend.

Infratil (ASX:IFT) is paying 10.8637 cents unfranked
My Food Bag Group (ASX:MFB) is paying 3.6232 cents unfranked
Metrics Income (ASX:MOT) is paying 1.06 cents unfranked
Metrics Master (ASX:MXT) is paying 0.86 cents unfranked
Orica (ASX:ORI) is paying 13 cents unfranked
Partners Group Global Income Fund (ASX:PGG) is paying 0.721 cents unfranked
Pengana International Equities (ASX:PIA) is paying 1.35 cents fully franked

Dividend-pay

There are five companies set to pay eligible shareholders today.

Autosports Group (ASX:ASG)
Janus Henderson Group Plc (ASX:JHG)
Kelly Partners Group Holdings (ASX:KPG)
Plato Income Maximiser (ASX:PL8)
Red Hill Iron (ASX:RHI)

Commodities

Iron ore futures point to a 2.5 per cent gain.

Gold is flat at US$1,857 an ounce. Silver was down $0.13 or 0.6 per cent to US$21.97 an ounce.

Oil has added $2.10 or 1.8 per cent to US$117.17 a barrel.

Currencies

One Australian Dollar at 7:00 AM has strengthened since yesterday, buying 71.99 US cents (Mon: 71.63 US cents), 56.92 Pence Sterling, 91.87 Yen and 66.84 Euro cents

Source: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics

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