ASX to open at fixed rate, earnings clouds pour in

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Kostin said that the start of the fourth quarter reporting season this week will renew focus on three key themes from 2021: threats to the growth of COVID-19 variants; pressure on margins due to inflation in input costs; and possible tax reform.

Consensus expects fourth quarter earnings per share growth of 20 percent, driven by 15 percent sales growth and a 99 basis point margin increase to 11.5 percent, said Kostin. “Stocks with pricing power should outperform. “

Today’s agenda

Local: November construction approvals

Overseas data: investor confidence in the euro zone in January, unemployment rate in November

Market highlights

ASX futures up 2 points or 0.03% to 7351

  • AUD + 0.3% at 71.81 US cents
  • Bitcoin on bitstamp.net at US $ near morning AEDT
  • On Wall St: Dow -0.01% S&P 500 -0.4% Nasdaq -1%
  • In New York: BHP + 3.6% Rio + 3.1% Atlassian -3.2%
  • Tesla -3.5% Apple + 0.1% Netflix -2.2% NYSE Fang -0.6%
  • In Europe: Stoxx 50 -0.4% FTSE + 0.5% CAC -0.4% DAX -0.7%
  • Spot gold + 0.3% at US $ 1796.55 / oz in New York
  • Brent -0.3% to US $ 81.75 per barrel
  • US oil -0.7% to US $ 78.90 per barrel
  • Iron ore -0.7% at US $ 127.30 per tonne
  • 2-year yield: United States 0.86% Australia 0.65%
  • 5-year yield: US 1.50% Australia 1.47%
  • 10-year yield: US 1.76% Australia 1.85% Germany -0.05%

From today’s financial review

NSW and Qld Relax Isolation Rules to Keep Shelves Well Stocked NSW and Queensland End Mandatory Isolation for Essential Workers in Food and Grocery Production and Distribution in an effort to mitigate the supply chain shortages that have left supermarket shelves bare.

‘Permanent’ home work is on the rise Jobs offering temporary and permanent home work have nearly doubled in the past nine months, and even the end of the lockdown has not stopped the rise.

‘It’s the opposite’: High-end real estate market continues to climb Demand for housing in prime enclaves of Sydney and Melbourne remains stronger than ever, according to buyers’ agents, estate agents and appraisers .

These are the hottest high-tech gadgets of 2022 (so far) The Consumer Electronics Show that wrapped up this weekend in Las Vegas turned out to be the most interesting gadget festival in years. .

United States

After a record close for the S&P 500 on Monday January 3, declines in mega-caps such as Tesla, Nvidia and Alphabet on Friday left the benchmark ending at the start of the new year down 1.9% on the week. The tech-rich Nasdaq 100 closed more than 4% this week.

Social media platform Reddit Inc, whose message boards have become at the heart of the stock trading frenzy in 2021, is calling on Wall Street banks Morgan Stanley and Goldman Sachs Group for its initial public offering, told Reuters a source close to the case.

GameStop shares rallied on Friday after a report that the video game retailer planned to expand its non-fungible token (NFT) market and partner with crypto companies.

Apple boss Tim Cook’s salary in 2021 was 1,447 times that of the tech giant’s average employee, according to a file, fueled by stock awards that helped him earn a total of nearly $ 100 million.

Fundstrat Opinion on US Equities: “Our technical strategy department has commented on the severity of the damage done to many growth names over the past few days and this suggests that January could see a continued migration of growth / technology to markets. valuable sectors such as energy and finance.

“Energy was our preferred sector in 2021 and we believe there are still a lot of gains here. We want you to see it more as a long and secular business based on the dynamics of supply and demand. And, even though it was the best performing industry last year, these companies are better managed than ever. “

Europe

European stocks slipped on Friday amid concerns over rising inflation and soaring coronavirus infections.

The pan-European STOXX 600 closed 0.4% lower and slipped 0.3% on the week.

Europe’s travel and leisure sector fell 1.6% and was among the worst performers on the day as countries grapple with an increase in COVID-19 cases from omicron.

Data also showed eurozone inflation hit a record high last month, likely indicating increased pressure on the European Central Bank to raise interest rates this year.

The gains of some chipmakers helped limit some losses in the tech sector. Italian STMicroelectronics rose more than 3% after posting quarterly revenues above its own estimates.

German chipmaker Infineon Technologies gained 1.7%, taking inspiration from South Korean Samsung Electronics which posted encouraging fourth quarter results.

Deutsche Bank climbed 1.8 percent to a more than six-month high. The CFO of the German lender told Handelsblatt in an interview that the company is confident it will hit a key profitability target this year.

Asia

China’s benchmarks were roughly flat on Friday, with weakness in tech stocks offsetting the rebound in real estate stocks in hopes of policy easing.

The blue chip CSI300 was flat at 4,822.37 points, while the Shanghai Composite Index lost 0.2% to 3,579.54 points.

The ChiNext start-up market fell 1.8 percent, bringing the weekly decline to 5.7 percent, the largest in 10 months.

Hong Kong stocks rose nearly 2% on Friday, marking their best day in a month, helped by a rebound in tech and real estate stocks.

The Hang Seng Index rose 1.8 percent to 23,493.38 points, while the Chinese Enterprise Index gained 2.0 percent to 8,231.28 points.

Currencies

On Friday, benchmark 10-year yields climbed to 1.801%, the highest since January 2020, according to Reuters. They are up from a low of 1.491 percent at year-end and 1.353 percent on December 20.

Analysts say if it stays above current levels, the 2% area is likely to be next.

Key to this is the expectation that the US labor market continues to recover at an accelerating pace. While the figures for December fell short of expectations, Scott Minerd of Guggenheim said the report globally tipped the potential for a 3% unemployment rate by December.

“With the unemployment rate likely to meet the Fed’s target for late 2022 in the coming months, and with the growing risks of wage increases exacerbating inflation, a rate hike in March is more and more likely. “

San Francisco Fed Chairman Mary Daly said on Friday she supported a “gradual” increase in interest rates and a reduction in the Fed’s balance sheet faster than in the last tightening.

“I would prefer a flatter fund rate path and more balance sheet adjustments to get us back to a more normal place on the balance sheet if we were to use it again,” Daly said at the annual meeting of the American Economic Association. , held virtually because of the pandemic.

The balance sheet, she said, is a powerful tool, but it is also the one with which the Fed has the least experience – and therefore “I would prefer that we adjust the policy rate gradually and move forward. a reduction in the balance sheet sooner than we did in the last cycle, ”she said.

“If we adjust the balance sheet and see the impact on the economy, on the housing market and on the economy in general, then we can adjust the policy rate after the fact,” Daly said.

Merchandise

Dalian iron ore rose on Friday and rose nearly 6% on the week as traders returned from the New Year’s holidays, optimistic about a potential recovery in demand in China.

May’s most active iron ore contract on China’s Dalian Commodity Exchange closed the day up 1.4% at 719 yuan (112.78) per tonne, rising for a fourth consecutive session to hit 725 , 50 yuan earlier today, its highest level since October 27.

On the Singapore Stock Exchange, the most-traded steel ingredient contract expiring in late February climbed 0.7% to US $ 128.25 per tonne, its strongest since December 22.

In his daily steel report, S&P Global Platts said prices for iron ore transported by sea fell on Jan. 7 as demand for cash declined.

Some sources expected the Chinese resupply to end soon, Platts also reported, as Chinese factories have already filled 90% of their needs for the Lunar New Year.

Separately. Platts reported that FOB prices for metallurgical coal shipped by sea rose on January 7 amid continued tight supply and healthy demand, while prices delivered to China rose amid firmer demand and higher price levels.

Political unrest in Kazhakstan has lifted uranium prices last week, although William Freebairn’s nuclear power and uranium prices team leader at S&P Global Platts, said there was no immediate physical shortage.

“The uranium supply chain from mine to commercial use is long, with uranium being mined about 18 months before it is used in a nuclear reactor, so the immediate impact of any disruption is limited, ”Freebairn said.

“So no one is talking about a shortage for nuclear power plant operators, it’s a longer term impact that would only be noticed if transportation or production were to be offline for weeks or months. “

Australian equity market

ASX shows resilience in the face of US market sell-off The Australian stock market has proven its resilience to global market sell-off, pushing Wall Street stocks to a three-month low, with the S&The P / ASX 200 index aims for a record as the Nasdaq Composite approaches correction territory.

ASX starts 2022 with a wild week: The Australian equity market saw a wild ride in the first week of 2022, peaking four months before suffering its worst session in 16 months two days later.

What to expect from mergers and acquisitions in 2022: Investment bankers announce last year’s $ 300 billion&One party shows no signs of slowing down in 2022, despite bets on rate hikes and record trading volumes last year.

Chanticleer: Index Heavyweight Magellan: It’s hard to see Magellan’s strong relationships with global institutional investors, built over the past decade, deteriorate as quickly as the market seems to think.

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