Nasdaq soars, Why a strong USD weighs on Microsoft, Calix, Crown, Macquarie on watch: ASX to jump

Market Reports

by Melissa Darmawan

Wall St jumps on recession fears cooling for now. Oil prices fell after Saudi Arabia flagged that they would hike output to make up the shortfall due to the EU's ban on 90% of Russian crude then it rebounded after OPEC+ agreed to a increase production. Calix (ASX:CXL) for a stock to watch, plus Crown Resorts (ASX:CWN).

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

The Australian sharemarket is set to rebound after a tech surge on Wall St.

Tech jump on Wall St rally

US stocks closed sharply higher as the Nasdaq outperformed. The pullback in the treasury yields did help tech shares rally, while dip buyers snapped up Microsoft shares after the tech giant cut profit and revenue forecast  due to the strength of the greenback.

At the closing bell, the Dow Jones gained 1.3 per cent to 33,248, the S&P 500 added 1.8 per cent to 4,177 and the Nasdaq jumped 2.7 per cent to 12,317.

What happened?

The private payrolls data came in weaker-than-expected and suggested to investors that tomorrow’s big jobs report could also come in cooler. We are following a data-dependent Fed with a focus on combating inflation. Therefore, if the job figures come in hot, it could prompt the central bank to hike its interest rates more aggressively - this would spook the market and we could see a sell-off.

Investors also learned that OPEC+ agreed to raise output by a more-than-expected 648,000 barrels per day in July and August. This isn’t enough to make up for the loss of more than one million barrels per day from Russia, however Saudi Arabia has flagged that they’re ready to hike oil production. The news sent the energy sector as the only sector to close lower in an almost broad rally on the S&P 500.

Meanwhile, Microsoft issued a weak outlook blaming the strength of the greenback. When a company generates its earnings from overseas, when you convert the foreign currencies into the greenback, it means they would get less. Bear in mind that it’s a weaker outlook due to unfavourable currency movements not due to less products being sold. That means the company is going through a cycle.

Let’s look ahead as to what this means for the Australian sharemarket today.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris gained 1.3 per cent, Frankfurt added over 1 per cent while London’s FTSE was closed..

Asian markets closed mixed, Tokyo’s Nikkei lost 0.2 per cent, Hong Kong’s Hang Seng fell 1 per cent while China’s Shanghai Composite added 0.4 per cent.

Yesterday, the Australian sharemarket closed 0.8 per cent lower at 7,176.

SPI futures

Taking all of this into the equation, the SPI futures are pointing to 1.1 per cent gain

What to look out for today

S&P global purchasing managers’ index for May plus the April lending indicators from the Australian Bureau of Statistics are due.

Technology stocks could be back in favour today. Block closed almost 7 per cent higher. 

Watch out for a rally in lithium stocks if Aussie players take a lead from the US, thanks to gains of up to 10 per cent by Lithium America, Livent, and Albermarle.

Keep an eye out for any companies that have exposure to earnings overseas. Macquarie Group (ASX:MQG), ResMed (ASX:RMD), Treasury Wine Estates (ASX:TWE). The focus moving forward could be on companies that generate revenue in US dollars.

Coal India is reportedly issuing a short term and medium term tender next week for coal imports, given concerns surrounding power supply. Keep an eye out for Whitehaven Coal (ASX:WHC), New Hope (ASX:NHC).

A stock to watch is technology company Calix (ASX:CXL). The share price has been on an upward trend since 13 May. The company has also recently received three government grants and the news flow so far has been positive. It looks like we are just at the beginning of a new chapter. Eyes will be on any updates from their plans over the next 12 months.

Crown Resorts (ASX:CWN) amid talks that the NSW gaming regulator could issue a licence to open its Barangaroo casino.

Dividend-pay

There are two companies set to pay eligible shareholders today

QV Equities (ASX:QVE)
United Overseas Australia (ASX:UOS)

Commodities

Iron ore futures point to a 3.8 per cent gain.

Gold has gained $23.30 or 1.3 per cent to US$1872 an ounce. Silver was up $0.43 or 1.9 per cent to US$22.35 an ounce.

Oil has added $2.22 or 1.9 per cent to US$117.48 a barrel.

Currencies

One Australian Dollar at 7:00 AM has strengthened since yesterday, buying 72.67 US cents (Thu: 71.78 US cents), 57.77 Pence Sterling, 94.37 Yen and 67.63 Euro cents.

That’s all for the outlook. I’m Melissa Darmawan for Finance News. Have a great day and stay safe.

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Commentators may hold positions in stocks mentioned. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.
 
Source: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, Reuters

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