A wave of optimism across the major international benchmarks as strong demand and falling oil supplies pushed crude prices higher. Energy stocks powered up amid the rally in cyclical stocks.
The Australian sharemarket is poised to rise with the SPI futures pointing to a 0.2 per cent gain.
Wall St’s main indexes closed in the black with optimism in the air after the weekly jobless claims came in at a new pandemic low.
Weekly jobless claims at new pandemic low
Americans filing for the first time unemployment benefits fell to 340,000 last week. This is down from 353,000 from the week before and in line with estimates ahead of the August job’s report. Westpac group economists are expecting 850,000 new jobs to be added to the American economy.
These numbers came after yesterday’s private sector jobs which came in at a big miss by nearly 50 per cent however, an improvement from the month before. We are seeing momentum in the jobs space however, there are still over 8 million Americans who do not have a job when compared to pre-pandemic levels.
We will wait and see what the figures say, as it will attract a lot of attention on how the Fed will respond around their monthly bond purchases program. The central bank has signaled that they are likely to taper by the end of this year although this move doesn’t mean that they’ll hike interest rates immediately thereafter. Low interest rates have underpinned the growth we have seen in markets amid record low borrowing rates.
At the close, the Dow Jones gained 0.4 per cent to 35,444, the S&P 500 added 0.3 per cent to 4,537 while the Nasdaq closed 0.1 per cent higher at 15,331.
The yield on the 10-year treasury note remained steady at 1.30 per cent.
Across the sectors on the S&P 500, investors moved into cyclicals with energy powering ahead, up 2.5 per cent followed by healthcare and industrials. A marginal retreat in growth stocks with technology inching lower by 0.05 per cent while communication services was the worst performer down, 0.7 per cent followed by consumer discretionary.
Let’s take a look at some company news.
Apple closed 0.8 per cent higher after they announced they will allow media apps to create in-app links to help users create accounts on a company’s website. It paves the way for services like Spotify and Netflix to get around the current system where currently, Apple makes a cut of up to 30 per cent on subscriptions. It comes after years of tech companies like Spotify saying that Apple’s restrictions were unfair and anticompetitive. Spotify shares closed 6.6 per cent higher while Netflix added 1.1 per cent.
General Motors closed 0.3 per cent lower on news that they are cutting production at most factories this month. This is due to the chip shortage that we are seeing and follows news from Ford and even the Japanese auto vehicle makers like Nissan.
European markets gains ignoring stocks trading ex-div
Across the Atlantic, European markets closed higher as optimism over the growth of the economy boosted reopening stocks.
Paris and Frankfurt both added 0.1 per cent while London’s FTSE added 0.2 per cent despite BHP going ex-dividend.
Miners were mixed with BHP tumbling 5.6 per cent while Rio Tinto added 1.4 per cent.
Asian markets gains on hope of more stimulus
Asian markets also closed higher as investors hope that soft economic growth in China might spur more stimulus.
Tokyo’s Nikkei gained 0.3 per cent, Hong Kong’s Hang Seng added 0.2 per cent and China’s Shanghai Composite closed 0.8 per cent higher.
ASX 200 weighed down by blue chips trading ex-div
Yesterday, the Australian sharemarket closed 0.6 per cent lower at 7,486 for the second straight day. The local bourse was weighed down by stocks trading almost the value of their payout as they trade ex-dividend.
The largest market cap company on the index, BHP (ASX:BHP) fell 6.9 per cent after paying a dividend of around $2.74. Those who held the stock before the ex-div date will be looking forward to a nice payout on 21st of this month. Despite this, the heavyweight miner fell to a nine month low, pressured even further on the decline in the iron ore price.
Adding to the pressure was biotech CSL (ASX:CSL) which was also traded ex-dividend closing 1.8 per cent lower. Supermarket giant Woolworths (ASX:WOW) was another major player to trade ex-dividend closing 1.5 per cent lower.
Across the sectors, technology stocks were the best performer, up 0.8 per cent followed by consumer discretionary marginally adding. Materials lagged 2.5 per cent by no surprise with BHP being the laggard in the index. Energy adding 0.7 per cent. In the green were industrials, property and consumer the laggard in the index. Healthcare closed 1.1 per cent lower followed by consumer staples and utilities. Financials and communication services closed flat.
Nation’s trade surplus boosted by commodity boom
Investors also saw a record high for the nation’s trade surplus for July. According to the Australian Bureau of Statistics, the surplus extended into the current quarter at $12.1 billion, thanks to a boom in commodity prices, in particular iron ore pushing export earnings higher.
We saw a 7.5 per cent jump at $2.2 billion in resources exports underpinned by a 5 per cent monthly increase in the value of goods and services.
Iron ore exports were up 3.5 per cent to $19.1 billion from June, on a seasonally adjusted basis, and 66 per cent higher from the year before.
Shareholders are set to enjoy their payout this month however, there are concerns if the iron ore sector can keep the surplus at record highs.
The ingredient to making steel, iron ore, has seen their price fall by $US80 a ton since July last year. Recently, China’s iron ore demand has flickered in an effort to limit carbon emissions.
Local economic news
Today the retail trade figures for July are due from the Australian Bureau of Statistics.
Credit Suisse rates Temple & Webster (ASX:TPW) as outperform with a price target of $15.73.
Their financial year 2021 results were pre-reported and EBITDA and EBIT were in line with that disclosure. However, their net profit was lower than Credit Suisse forecasted as a higher benefit associated with tax assets didn’t come to fruition.
The furniture retailer provided an upbeat trading update that has shown further sales growth in August. Credit Suisse upgrades near-term sales forecasts under the assumption that lockdowns persist through September.
Their outperform rating remains while their price target is raised to $15.73 from $14.62.
Shares in Temple & Webster Group (ASX:TPW) closed 3.45 per cent lower at $13.42 yesterday.
We have an IPO today. Ballymore Resources (ASX:BMR) is set to make their debut.
Ampol Limited (ASX:ALD) is paying 52 cents fully franked.
Bendigo and Adelaide Bank (ASX:BEN) is paying 26.5 cents fully franked.
Bravura Solution Ltd (ASX:BVS) is paying 6 cents unfranked.
Cyclopharm Limited (ASX:CYC) is paying 0.5 cents unfranked.
Excelsior Capital (ASX:ECL) is paying 2 cents fully franked.
Eureka Group Ltd (ASX:EGH) is paying 0.59 cents unfranked.
McPherson’s Ltd (ASX:MCP) is paying 1.5 cents fully franked.
Pengana Capital (ASX:PCG) is paying 8 cents fully franked.
Prime Financial (ASX:PFG) is paying 0.4 cents fully franked.
People Infrastructure (ASX:PPE) is paying 6 cents fully franked.
Pental Ltd (ASX:PTL) is paying 1.6 cents fully franked.
Resimac Group Ltd (ASX:RMC) is paying 4 cents fully franked.
SDI Limited (ASX:SDI) is paying 1.65 cents fully franked.
Iron ore has lost 1 per cent to US$142.02 after Brazil exported a record 34.8 million tonnes last month.. Their futures are pointing to 0.5 per cent fall.
Gold has lost $4.50 or 0.25 per cent to US$1812 an ounce while silver has fallen $0.30 or 1.3 per cent to US$23.92 an ounce.
Oil was up $1.40 or 2 per cent to US$69.99 a barrel on bets that the market can cope with additional supply from OPEC+. Meanwhile, Hurricane Ida’s has led to almost 94 per cent of crude production operations remaining shut.
One Australian Dollar at 7:40 AM is stronger from yesterday buying 74.02 US cents, 53.51 Pence Sterling, 81.37 Yen and 62.33 Euro cents.
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