Wall St gains, Tech bulls run, Rio cuts guidance, BOQ rated as buy: ASX to rise

The trickle down in the U.S. 10-year bond yield, jobless claims and positive earnings results pushed technology shares higher. Asian markets were mixed while the local market nearly erased the losses from the past 3-days. Citi rated Bank of Queensland (ASX:BOQ) as a buy. No major economic news.

The Australian sharemarket is set to rise with the SPI futures pointing to a gain of 0.6 per cent.

U.S. stocks close higher on tech rally

U.S. stocks had a good day closing in the black, the Nasdaq outperformed, tech shares led the day as the yield on the 10-year treasury trickled lower. The Dow, up for the first time up in five sessions, a welcome gain on Wall St.

Jobless claims falls to lowest point pre-pandemic

Weekly jobless claims fell to its lowest level since the pandemic started to 293,000. A sign that the job market is improving despite the ongoing labour shortage.

Meanwhile, the producer price index rose, driven by higher energy and food prices. This is the inflation gauge that shows what suppliers are charging businesses, which would flow through to the consumer. It showed a 0.5 per cent rise to 8.6 per cent in September, compared to a year before. Despite this being the largest 12-month rise since the series started, today’s growth was smaller-than-expected.

Energy rally favours stocks & dents your back pocket

Energy has taken quite a bit of attention, the rally in energy has helped global markets rise, however, it’s not the same type of enthusiasm when it comes to how energy impacts inflation, and ultimately your own pocket. With commodity prices looking bullish as the northern hemisphere walks into Winter, the next producer price index report could see a further rise. Investors will also look for clues on supply-chain disruptions this earnings season, to see if energy prices, and inflation could temper with profit outlook.

This news comes after yesterday’s consumer prices which rose for September, an indicator that the Fed watches, also for their case around raising interest rates, along with the jobs market.

This week, the International Monetary Fund also expressed their concern around inflation, giving warning that central banks need to prepare themselves to tighten monetary policy if surging prices worsen.

Despite this, investors are buying back into growth stocks on a falling bond yield, on the notion that the current inflation landscape will not trigger a rate rise anytime soon from the Fed.

Rally on Wall St as bond yields dip & tech wins

At the closing bell, the Dow Jones gained 1.6 per cent to 34,913, the S&P 500 added 1.7 per cent to 4,438 while the Nasdaq closed 1.7 per cent higher at 14,823.

The yield on the 10-year treasury note dipped 3 basis points to 1.52 per cent, while gold rose on a weaker greenback.

Across the S&P 500 sectors, not a single shade of red. Materials was the outperformer, up 2.4 per cent with technology at 2.3 per cent. Consumer discretionary and staples added the least at around 1 per cent.

Bank of America & Dominos takes the spotlight

Bank of America surged almost five per cent after the revenue they make on loans, net interest income, rose 10 per cent driven by strong deposit growth and better-than-expected loan losses. Deposit balances hit a trillion for the first time, up 16 per cent. Morgan Stanley, Wells Fargo, and Citigroup all posted stronger-than-expected earnings as well. Keep an eye out for banks today.

Dominos shares lifted from session lows, despite same store sales being negative since 2011. The company said that staff shortages and lack of pandemic stimulus support. However, globally same stores sales rose more than eight per cent for the quarter. Keep an eye out for this stock today.

Square shares rose over 2 per cent, keep an eye out for tech shares and Afterpay (ASX:APT) today.

European markets pulled higher by miners & oil giants

Across the Atlantic, European markets closed higher. Paris added 1.3 per cent, Frankfurt gained 1.4 per cent and London’s FTSE closed 0.9 per cent higher as heavyweight miners and oil companies rose.

BHP and Rio both surged 3.7 per cent as sentiment rose on a lifted economic outlook. BP rose 0.8 per cent, Shell climbed 1.3 per cent tracking oil prices higher.

Asian markets mixed finish on dovish comments

Asian markets closed mixed. Tokyo’s Nikkei gained 1.5 per cent after dovish comments from a Bank of Japan board official pushed tech shares higher. Hong Kong’s Hang Seng was closed due to a national holiday.

China’s Shanghai Composite closed 0.1 per cent lower after China’s September factory gate inflation rose to a record high on soaring commodity prices.

During a virtual meeting in Japan, Asahi Noguchi said “the bottom line is, in the case of Japan, reducing monetary easing in response to rising inflation as some central banks are about to do will not be an option for the time being”.

ASX 200 gains snapping a 3-day losing streak

Yesterday, the Australian sharemarket closed 0.5 per cent at 7,312, gaining for the first day this week after investors shrugged off inflation concerns and mulled on the September jobs data.

The economy shed 138,000 jobs versus an expectation of 120,000 in September. Employment has fallen for two months in a row as per the Australian Bureau of Statistics.
The nation’s jobless rate edged higher to 4.6 per cent from 4.5 per cent in August. When you compare this to the number of job openings, vacant roles are still 46.5 per cent higher before the pandemic, in February 2020 as at August this year.

The local bourse snapped its losing streak, nearly recouping all the losses from the past three days underpinned by a surge in technology shares, up 4.1 per cent followed by materials adding 1.7 per cent.

We had three sectors that just couldn’t keep up with the pace. Energy shed 0.9 per cent followed by financials lost 0.5 per cent then utilities skidded 0.2 per cent.

Gold rallied which saw precious metal miners perform with Silver Lake Resources (ASX:SLR) surged 6.7 per cent, Regis Resources (ASX:RRL) added 5 per cent, and Evolution Mining (ASX:EVN) closed 4.8 per cent higher.

Shares in online marketplace Redbubble’s (ASX:RBL) fell after their revenue sank, which was attributed to a reduced demand for face masks. The company’s revenue tumbled 28 per cent to $106 million, while its EBITDA tumbled 85 per cent compared to the previous corresponding quarter.

Shares in Netwealth (ASX:NWL) rose after it attracted $4.0 billion funds under administration for the September quarter while rival HUB24 (ASX:HUB) also rallied. The company hit a record quarterly net inflows of $3.0 billion for the September quarter.

The best-performing stock in the S&P/ASX 200 was Netwealth Group (ASX:NWL), closing 15.6 per cent higher at $16.52. It was followed by shares in Perseus Mining (ASX:PRU) and HUB24 (ASX:HUB).

The worst-performing stock in the S&P/ASX 200 was Redbubble (ASX:RBL) closing 12.5 per cent lower at $3.99 after their trading update showed a deceleration in growth. It was followed by shares in Insurance Australia Group (ASX:IAG) and AMP (ASX:AMP).

To find more about the top headlines yesterday including South32 (ASX:S32), Adore Beauty (ASX:ABH), join me at Stocks of the Hour here.

Company news

Rio Tinto (ASX:RIO) had a “difficult” September quarter and cut financial year 2022 iron ore production guidance to between 320 million and 325 million tonnes, versus prior guidance between 325 million and 340 million tonnes. Keep an eye out for the full story today.

Broker moves

Citi gave Bank of Queensland’s (ASX:BOQ) rating a boost to a buy from a neutral, with a price target of $10.50. The bank’s financial year 2021 results met Citi’s estimates. The company’s outlook for financial year 2022 is slated to be better-than-expected. However, the broker suspects the negative stock reaction on Wednesday was due to investors focusing on the costs that appear to be rising. After adjusting for an accounting reclassification and slightly higher volume growth, the broker believes that the management is on track to deliver broadly flat expenses. The broker rating is upgraded and the target price raised to $10.50 from $9.90.

Shares in Bank of Queensland (ASX:BOQ) closed 0.4 per cent higher at $9.34 yesterday.

Ex-dividend

Harvey Norman (ASX:HVN) is paying 15 cents fully franked
Rhipe Ltd (ASX:RHP) is paying 13 cents fully franked

Dividend-pay

There are 13 companies set to pay eligible shareholders this dividend today.

Absolute Equity Performance Fund (ASX:AEG)
Eagers Automotive (ASX:APE)
Coventry Group (ASX:CYG)
Embelton (ASX:EMB)
Fonterra Shareholders’ Fund (ASX:FSF)
Gale Pacific (ASX:GAP)
Garda Diversified Property Fund (ASX:GDF)
Hub24 (ASX:HUB)
Meridian Energy (ASX:MEZ)
National Tyre & Wheel (ASX:NTD)
Qualitas Real Estate Income Fund (ASX:QRI)
Westgold Resources (ASX:WGX)
XRF Scientific (ASX:XRF)

AGMs

Treasury Wine Estates (ASX:TWE)

Commodities

Iron ore is up 1.4 cent to US$125.91. Its futures point to a 1.0 per cent fall.

Gold gained $3.10 or 0.2 per cent to US$1798 an ounce, silver was up $0.41 or 1.8 per cent to US$23.58 an ounce.

Oil was up $1.03 or 1.3 per cent to US$81.47 a barrel.

Currencies

One Australian Dollar at 7:30 AM continues to strengthen buying 74.17 US cents, 54.25 Pence Sterling, it has now hit a 3-week high, 84.31 Yen and 63.98 Euro cents.

Investor event

Please join us for our next online investor event on Tuesday 26 October with six companies presenting. From lithium explorers to marketing service providers. Make your way to fnn.com.au to reserve your free online spot.