Dow hit record high on Wall St surge, giving summer lead to ASX: SPI futures point to fall

Wall St kicks-off 2022 on a positive start with the Dow hitting a fresh record high. Nasdaq outperformed. Apple touches US$3 trillion market cap intraday while shares in Tesla accelerates on 2021 delivery record. SPI futures point to a fall as of last day of 2021, but gives warm lead to ASX today. Gold players fell, energy giants soared, as tech titans galloped.

The Australian sharemarket is starting on a soft note according to the SPI after a mixed close around the globe. The futures are pointing to a decline which I’ll cover off with you shortly. 

Dow hit record high on Wall St surge

Wall St rallied with the Dow hitting a record high, as investors started to pile into stocks after what has been a quiet week between Christmas and New Year’s holiday. Stocks closed higher as traders looked past rising Covid-19 cases, and future moves from the Fed.

Don’t forget that we are now at the tail-end of the Santa rally with one more trading day to see if we live up to the period where traditionally, gains of up 1.5 per cent are seen in the S&P 500. This period consists of the last five trading days of the year prior and the first two for the new year.

“January Barometer” lifts-off

Then we walk into the month with another theory known as the “January Barometer”. This points to the notion that if the stock market rises during the first month of the year, we could be up for further gains for the next 11 months. Since 1950, the January Barometer has been right 84.5 per cent of the time according to the Stock Trader’s Almanac.

From a yearly perspective, the S&P 500 rose 27 per cent in 2021, beating expectations. However, analysts expect returns to be more modest this year. The Federal Reserve has started to taper its stimulus support to combat four decade high inflation. It’s expected to weigh on company earnings growth which would ripple to the share price.

Apple hits US$3t market cap, intraday

Let’s take a look at the biggest winners across the major indexes today. Apple surpassed a US$3 trillion market cap for the first time ever on the first trading day of 2022. Shares closed 2.5 per cent higher and is the biggest weight on the Nasdaq and the S&P 500.

Apple is the first company to hit that US$3 trillion market cap and touched US$182.86 intraday, the magic number to mark this milestone. The tech giant has now tripled its valuation in less than four years, the move really shows the momentum behind this company. Investors are confident in Apple’s position and its growth trajectory after reporting several record breaking quarters. Driven by his popular products like the iPhone and set to dive into the AR and VR space, the Metaverse which will no doubt be a theme for this year.

Tesla shares accelerate on strong deliveries

Elsewhere Tesla reported its 2021 year and delivery numbers, its best year yet. Shares drove higher by 13.5 per cent. The EV car maker delivered over 936,000, an increase of 87 per cent from 2020 and beating Wall St’s expectations of 900,000.

Wall St gains as 10-yr records worst start since 2009

At the closing bell, the Dow Jones rose 0.7 per cent to 36,585, the S&P 500 rose 0.6 per cent to 4,797 while the Nasdaq closed 1.2 per cent higher at 15,833.

Across the S&P 500 sectors, it was a mixed performance. Energy had a blockbuster performance surging 3.1 per cent, followed by consumer discretionary, up 2.8 per cent, financials and information technology rose over 1 per cent. The laggards were materials, down 1.4 per cent, followed by your defensives, healthcare and real estate fell 1 per cent.

The yield on the 10-year treasury note rose 12 basis points to 1.63 per cent recording its worst start to a year since 2009, investors embraced risk amid the surge in Omicron cases. Gold dipped on a stronger greenback.

European markets pop on bumper year by autovehicle players

Across the Atlantic, European markets closed higher with Paris and Germany’s stock exchange open. Investors continued to digest Spanish data showing inflation rising to nearly three decade highs.

The pan-European STOXX 600 index rallied 0.5 per cent to close at a record high amid autovehicle players like Porsche and Volkswagen riding on the coattails of Hyundai and Tesla, on news of strong production and annual targets. In economic news, the final reading of Eurozone manufacturing PMI for December was in line with expectations of 58 from 58.4 previously.

Paris and Frankfurt both 0.9 per cent higher yesterday while London’s FTSE last closed 0.3 per cent lower on 31 December 2021.

Asian markets falls on Evergrande demolition order

Asian markets closed lower as the Hong Kong exchange was opened. Chinese property developer shares dived following local reports that Evergrande Group has been ordered to demolish apartment blocks in Hainan province.

Shares in Evergrande went into a trading halt amid news that the local government told Evergrande to demolish 39 buildings in 10 days because the building permit was illegally obtained.

Hong Kong’s Hang Seng closed 0.5 per cent lower yesterday. Elsewhere to close off 2021, Japan’s Nikkei last closed 0.4 per cent lower on 30 December, while China’s Shanghai Composite last closed 0.6 per cent higher on 31 December.

ASX 200 caps 2021 with 13% rise

On Friday, the ASX 200 closed 0.9 per cent lower snapping its six day winning streak at 7,445 and for the week, the local bourse rose 0.3 per cent. From a yearly perspective, the XJO rose 13 per cent, its best year since the 23 per cent jump in 2019, and the fourth-best performance over the decade.

NSW’s daily Covid-19 cases have almost doubled with over 21,100 infections. Traders mulled on the potential implications to the economic recovery after reviewing modelling which forecasted the daily case of 25,000 in a month’s time not far from coming into fruition, the cases are within this range, amid South Africa declaring its Omicron peak subsiding.

The property sector led the broader market lower by 1.6 per cent, with financials, the dominant sector on the local bourse fell 1.2 per cent with materials shedding the least, down 0.3 per cent.

The best-performing stock in the S&P/ASX 200 was Paladin Energy (ASX:PDN) closing 6 per cent higher at $0.88, followed by shares in Regis Resources (ASX:RRL), and St Barbara (ASX:SBM).

The worst-performing stock in the S&P/ASX 200 was Clinuvel Pharmaceuticals (ASX:CUV) closing 4.8 per cent lower at $27.21, followed by shares in HUB24 (ASX:HUB), and Challenger (ASX:CGF).

In company news, lithium players took the spotlight with Magnis Energy Technologies (ASX:MNS) stating a game-changer for the transport sector is on the cards. The lithium battery maker said that their recent results from a previously successful fast charging program has repeated itself again on another program where the battery life showed no capacity loss after 250 cycles using a 15-minute charge. Shares closed 11.6 per cent higher at $0.575.

Meanwhile, Global Lithium Resources (ASX:GL1) sealed the deal to buy its 80 per cent stake in the Manna Lithium Project from Breaker Resources valued at $33 million. The offer was unveiled two weeks ago with the upfront consideration payable last week. Shares closed 9.8 per cent higher at 95 cents.

Switching gears to the medical field, Mesoblast (ASX:MSB) met with the US FDA watchdog for skin therapies to discuss their letter. It addressed a cell therapy to treat severe inflammation due to a complication around bone marrow transplants for children. The health authorities requested more information to help progress with its application. Shares closed 3.7 per cent higher at $1.41.

The major banks saw declines over 1 per cent with National Australia Bank (ASX:NAB) leading the pack by a fall of 1.6 per cent, followed by Commonwealth Bank (ASX:CBA) lost 1.2 per cent, then ANZ (ASX:ANZ) down 1.1 per cent while Westpac (ASX:WBC) closed 0.7 per cent lower at 0.7 per cent.

Iron ore miners closed mixed Rio Tinto (ASX:RIO) adding 0.6 per cent, BHP (ASX:BHP) rose 0.4 per cent while Fortescue Metals (ASX:FMG) bucked the trend closing 0.4 per cent lower.

In other resources, Woodside Petroleum (ASX:WPL) fell 0.9 per cent while Santos (ASX:STO) lost 1.4 per cent lower though Beach Energy (ASX:BPT) rallied 0.8 per cent higher.

The gold players shined with Northern Star (ASX:NST) adding 1.2 per cent, Newcrest Mining (ASX:NCM) rose 1 per cent, while Evolution Mining (ASX:EVN) closed 0.7 per cent higher.

SPI futures

Looking ahead, the SPI futures are pointing to a fall of 1.2 per cent, as per the last day of 2021, so it hasn’t taken into account the Wall St rally.

Local economic news

Today we have two sets of economic data points, starting with a pulse check on the manufacturing sector. IHS Markit is set to issue the results of the December survey of purchasing managers. In November, the index rose from 58.2 to 59.2, the third fastest output on record. Focus will be on the figures to see if pricing pressures and skilled labour shortages will weigh.

Also keep an eye out for the home value index from CoreLogic for December. It’s expected that home prices will rise at a slower pace.

IPOs

There is one company scheduled to make its debut on the ASX today. Keep an eye out for Greentech Metals (ASX:GRE).

Ex-dividend

There are four companies going ex-dividend today.

Eildon Capital Group (ASX:EDC) is paying 2 cents unfranked
Magellan Global Fund (ASX:MGF) is paying 3.66 cents unfranked
NB Global Corporate Income Trust (ASX:NBI) is paying 0.8049 cents un franked
Pengana Private (ASX:PE1) is paying 3.1168 cents unfranked.

Commodities

Iron ore has added 0.2 per cent at US$112.24. Its futures are pointing to a rise of 0.9 per cent.

Gold fell $26.70 or 1.5 per cent to US$1,802 an ounce, silver was down $0.43 or 1.8 per cent to US$22.93 an ounce.

Oil rose $0.76 or 1.01 per cent to US$75.97 a barrel ahead of OPEC+ set to meet in the 24 hours amid current plans to boost output to 400,000 barrels per day.

Currencies

One Australian Dollar at 8:25 AM was weaker buying 71.89 US cents (Fri 72.50), 53.32 Pence Sterling, 82.92 Yen and 63.62 Euro cents.