S&P 500 snaps 4-day winning streak, MQG, ABB, RHC on watch today: ASX to edge higher

Wall St took a breather today, closing in the red after several strong days of gains, and two straight weeks of gains. The S&P 500 snapped its four day winning streak after we saw dip buyers in the prior session, bidding up the tech sector, the most beaten down sector. This comes amid quarterly rebalancing and quarterly company earnings next month.

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

The Australian sharemarket is set to consolidate today with a muted open in sight.

S&P 500 snaps 4-day winning streak

Wall St took a breather today, closing in the red after several strong days of gains, and two straight weeks of gains. The S&P 500 snapped its four day winning streak after we saw dip buyers in the prior session, bidding up the tech sector, the most beaten down sector. This comes amid quarterly rebalancing and quarterly company earnings next month.

Investor’s optimism dampened after apparent progress and peace talks didn’t stop further attacks on Ukraine, while also keeping an eye on bond yields as the treasury yield curve inverted on Tuesday for a very brief moment, so this was the 2-year and the 10-year for the first time since September 2019.

Recap of what each yield curve means

We had seen other yield curves of medium to longer term treasuries actually even invert earlier in recent times for the first time since 2006. Yield curves usually slope upwards which tends to indicate a strong economy amid rising inflation and rising interest rates. A flat yield curve represents less optimism from investors about economic growth, while an inverted yield curve flags a recession is likely in 2-years time as per JP Morgan based on the historical figures.

“Recessions don’t typically start ahead of the curve inverting, and the lead-lag could be very substantial, as long as 2 years… Further, over this timeframe, equities tended to beat bonds handsomely,” adding that the peak in equity markets historically takes place around a year after the inversion”. JPMorgan strategists led by Mislav Matejka.

Big “R” and 2024 elections, inflation tonight

Market participants are on the lookout as it’s a big topic of conversation due to its historical nature to predict an economic slowdown. If this is the case, two years from now is 2024 which lands in the year of the US presidential election and the UK’s general election.

Well all of this is in focus as the Federal Reserve is set to raise rates in order to combat inflation which is sitting at 40 year highs. Also it’s ahead of the personal consumption expenditures index, the preferred measure of inflation by the Federal Reserve to measure inflation tonight.

Poland to ban Russian oil and coal this year

Meanwhile, Russia’s attacks on Ukraine continue to persist even after the military promised to scale back operations in several areas, including the capital of Kiev. Despite the fourth round of peace talks in Turkey, fighting on the ground even after negotiators from both sides met this week and flagged that the talks were making progress.

Amid this, headlines around the impact on the global oil supply continues as Russia is a major energy supplier, especially to Europe. Poland plans to stop importing Russian oil by the end of the year, a day after instead it’s going to ban Russian coal imports by May. Elsewhere, Germany is telling its people to conserve natural gas as it plans to stop using Russian oil and coal this year.

Private sector grows ahead of big jobs report on Friday

In economic news, the private sector added 455,000 jobs in March, coming in better than expectations as per the ADP. This figure usually doesn’t move the needle on Wall St as the Labor Department’s monthly job report on Friday is the one to watch. While the American economy grew to an annualised rate of 6.9 per cent on quarter in the last three months of 2021 as per the Bureau of Statistics.

Markets roar in the past 2 weeks

It’s been very interesting to see the market bounce back in the recent weeks, when it was down almost 10 per cent – correction territory, now the market has roared back. If you scan back to what has happened in the past few weeks, the same challenges have persisted and good news is far and few or short lived.

The war in Europe is still going on with no signs of that subsiding soon, oil prices are still north of US$100, and Covid-19 cases are still on the board. If you’re looking to predict which way the winds will blow on a daily or weekly basis in this environment, it’s tough.

There’s a reason why there is a time horizon and traditional fundamentals and technicals when it comes to investing and managing your wealth.

Figures around the globe

At the closing bell, the Dow Jones lost 0.2 per cent to 35,229, the S&P 500 fell 0.6 per cent to 4,602 and the Nasdaq dropped 1.2 per cent to 14,442.

Across the S&P 500 sectors, consumer discretionary fell 1.5 per cent, followed by information tech, almost wiping off the prior day’s gains, down 1.4 per cent, and financials. Energy was the outperformer by 1.2 per cent, followed by utilities up 0.8 per cent, and healthcare, and consumer staples. Classic bond proxies as we saw the yield dip.

The yield on the 10-year treasury note fell by 5 points to 2.35 per cent, while the US 2-year yield dipped 4 points to near 2.31 per cent. Gold rose on a weaker greenback.

Across the Atlantic, European markets closed mixed. Paris fell 0.7 per cent, Frankfurt lost 1.5 per cent while London’s FTSE gained 0.6 per cent.

On the London Stock Exchange, Rio jumped almost 4 per cent, BP gained 3.1 per cent and Shell rose 4.4 per cent.

Asian markets closed mixed, almost tracking prior session’s gains in Wall St.Tokyo’s Nikkei fell 0.8 per cent, Hong Kong’s Hang Seng added 1.4 per cent while China’s Shanghai Composite gained almost 2 per cent in anticipation of further stimulus initiatives.

Yesterday, the Australian sharemarket closed 0.7 per cent higher at 7,515, rallying for its seventh straight day, within a 2 per cent striking distance of an all time high from August. It’s the longest winning streak since December 2020, charged up by information tech by 3.9 per cent while healthcare, industrials and consumer discretionary added around 1.3 per cent each. Energy was the laggard by 0.8 per cent and materials, trimming 0.3 per cent.

SPI futures

Taking all of this into the equation, the SPI futures are pointing to a 0.1 per cent gain.

Local economic news

This federal budget unveiled this week and the Reserve Bank of Australia’s recent forecasts, point to the unemployment rate hitting 3.75 per cent this year, a level not seen since the early 1970s. Our jobless rate is at four per cent, its lowest level in 14 years.

A proxy to the jobless rates are the job vacancy figures from the Australian Bureau of Statistics. The bureau is set to release numbers for the three months to February.

We will also see the business approvals today for February today. There’s been a bit of volatility around approvals, especially since in January it tanked by 27.9 per cent due to staff shortages during the Omicron outbreak and the summer holidays.

This month’s figures are looking a bit more bullish with economists expecting a bounce back of 10 per cent after this dive.

The RBA is set to release its monthly credit data for February. In January private sector credit came in 0.6 per cent higher to an annual rate of 7.6 per cent, its fastest pace since November 2008 though still below the pre-global financial crisis levels. Economists expect a slower growth of 0.4 per cent for the month.

What to keep an eye out for

We saw a bullish finish in the commodities space which bodes well for our resources-rich index. Iron ore miners, base metal, gold and oil stocks could be in favour today. The Aussie dollar continues to consolidate with a 75 handle.

Keep an eye out for Macquarie Group (ASX:MQG) amid news of its asset management arm mulling on a sale of toll-road assets in India

In terms of broker moves, Jefferies has cut Aussie Broadband’s (ASX:ABB) to a hold with a price target of $5.60. Goldman Sachs has boosted Ramsay Health Care ‘s (ASX:RHC) target price to $74 and retained its buy rating. Ords has boosted the target price of Eagers Automotive (ASX:APE) to $17.50 with a buy rating.

Ex-dividend

There are 10 companies set to trade with the right to its dividend.

Eagers Automotive (ASX:APE) is paying 42.5 cents fully franked
Cadence Capital (ASX:CDM) is paying 4 cents fully franked
CDO Opportunity Fund (ASX:CDO) is paying 7.5 cents fully franked
Eildon Capital Group (ASX:EDC) is paying 2 cents unfranked
Global Value Fund (ASX:GVF) is paying 3.3 cents fully franked
Harvey Norman (ASX:HVN) is paying 20 cents fully franked
Image Resources (ASX:NL IMA) is paying 2 cents fully franked
Metrics Income Opportunities Trust (ASX:MOT) is paying 1.48 cents unfranked
Metrics Master Income Trust (ASX:MXT) is paying 0.72 cents unfranked
Partners Group Global Income Fund (ASX:PGG) is paying 0.6833 cents unfranked

Dividend-pay

There are 24 companies set to pay eligible shareholders today

Ampol (ASX:ALD)
Atlas Arteria (ASX:ALX)
Ambertech (ASX:AMO)
Bendigo And Adelaide Bank (ASX:BEN)
Briscoe Group Australasia (ASX:BGP)
Beach Energy (ASX:BPT)
Base Resources (ASX:BSE)
Best & Less Group Holdings (ASX:BST)
CPT Global (ASX:CGO)
Coles Group (ASX:COL)
Deterra Royalties (ASX:DRR)
Data#3 (ASX:DTL)
Glennon Small Companies (ASX:GC1)
Ironbark Capital (ASX:IBC)
Kelsian Group (ASX:KLS)
Kelly Partners Group Holdings (ASX:KPG)
Morphic Ethical Equities Fund (ASX:MEC)
Newcrest Mining (ASX:NCM)
Plato Income Maximiser (ASX:PL8)
Peter Warren Automotive Holdings (ASX:PWR)
Ramsay Health Care (ASX:RHC)
Shaver Shop Group (ASX:SSG)
Symbio Holdings (ASX:SYM)
Thorney Opportunities (ASX:TOP)

Commodities

Iron ore has gained 3.4 per cent to US$158.20. Its futures point to a 1.2 per cent fall.

Gold has gained $20.60 or 1.1 per cent to US$1939 an ounce. Silver is up $0.30 or 1.2 per cent to US$25.04 an ounce.

Oil has gained $3.10 or almost 3 per cent to US$107.34 a barrel.

Nickel gained 3.7 per cent to US$1.49 a pound, Aluminium rose 3.5 per cent and zinc added 3.4 per cent amid a weaker greenback and supply tightness.

Currencies

One Australian Dollar at 7:40 AM has strengthened from yesterday, buying 75.13 US cents (Wed: 75.09 US cents), 57.20 Pence Sterling, 91.51 Yen and 67.32 Euro cents.

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