Wall St lifts, Bitcoin ETF debuts, Aristocrat to resume, Zip Co rated as a sell: ASX to rise

Global indexes closed mixed as earnings season is offset by a surge in commodity prices. Healthcare and insurers took the spotlight at technology stock continued to rally. The ASX ran out of steam to fade from its 3-week high.

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

U.S stocks lift higher on earnings boost

Earnings season boosted investors’ optimism as the major indexes closed in the black. The momentum follows the bank’s strong results last week reassuring market participants on the outlook ahead. Today, healthcare and insurers made an impression, while inflation concerns weighed down consumer stocks amid rising commodity prices.

Investors appeared to be comfortable with inflation for now until the Fed hints otherwise. Technology shares continued to rally, with Apple jumping over 1.5 per cent. The tech giant rose defied the second broker downgrading its earnings forecast amid the shortage in chip supplies.

Healthcare & insurers impresses investors

Johnson and Johnson jumped over 2.3 per cent after raising its profit forecast for the year.

Travelers rose 1.6 per cent after the insurer delivered record underwriting revenue dodging a loss from the impact from Hurricane Ida.

Procter & Gamble shed 1.8 per cent after flagging that margins are likely to be squeezed due to higher commodity and freight costs.

Merck leads on Covid-19 pill as Atea fails

Elsewhere, Atea Pharmaceuticals crashed 66 per cent after its experimental Covid-19 antiviral pill failed to deliver results. This helped rival Merck & Co add over 3.0 per cent on the news.

House starts & building permits falls

Investors appeared to have shrugged off the news on what is thought to be a peak in the housing market. U.S. home construction fell 1.6 per cent in September on a revised August figure, which was lowered. New building permits hit a one year low amid supply shortages and rising costs.

Bitcoin ETF debuts

In other news, the first Bitcoin ETF made their debut on the Chicago Mercantile exchange. The ETF follows the futures price of Bitcoin, it doesn’t track Bitcoin 1:1, just the futures. It surged over 3.0 per cent at the open, then investors lost hope and booked their profits.

Wall St gains as bond yields lifts

At the closing bell, the Dow Jones gained 0.6 per cent to 35,457, the S&P 500 added 0.7 per cent to 4,520 while the Nasdaq closed 0.7 per cent higher at 15,129.

The yield on the 10-year treasury note rose five basis points to 1.64 per cent as gold gains on a weaker greenback.

Across the S&P 500, the gains were almost across the board with consumer discretionary as the outlier, down 0.3 per cent. Healthcare topped the list as the best performer, up 1.3 per cent followed by utilities and energy.

European markets mixed on commodity rise

Across the Atlantic, European markets closed mixed. Paris lost 0.1 per cent, Frankfurt added 0.3 per cent and London’s FTSE closed 0.2 per cent higher boosted by retail and insurers.

Miners and oil giants rose amid gains in the commodity price. Zinc is back at a 14-year high. BHP added 1.1 per cent, Rio gained almost 1 per cent, BP rose 0.1 per cent while Shell closed 0.5 per cent higher.

Meanwhile, British Airways owner International Airlines Group fell sharply for the second day, down 5.2 per cent on the back of a broker downgrade.

Asian markets tracks gains in stateside

Asian markets closed higher tracking gains in stateside. Tokyo’s Nikkei added 0.7 per cent pushed higher by tech, Hong Kong’s Hang Seng gained 1.5 per cent while China’s Shanghai Composite closed 0.7 per cent higher.

ASX 200 slips from 3-week high

Yesterday, the Australian sharemarket closed 0.1 per cent lower at 7,375 slipping from a three-week high after advancing for most of the session. The rally in tech shares were offset by the losses in the materials sector as investors shrugged off the minutes from the Reserve Bank.

The mining giants pressured the local bourse as the price of iron ore dipped amid power restrictions in the northern hemisphere weighing on sentiment.

BHP (ASX:BHP) was the main laggard, falling 2.0 per cent to $38.39 after the miner reported a slump in iron ore output. BHP said that the shortage of train drivers amid a heavy maintenance schedule meant they exported less iron ore compared to last year.

Rio Tinto (ASX:RIO) tumbled 3.3 per cent to $98.15 while Fortescue Metals (ASX:FMG) closed 1.2 per cent lower to $14.56.

The price in base metals fell like aluminium weighing on miners. South32 (ASX:S32) fell 2.3 per cent to $3.88 and Alumina (ASX:AWC) declined 3.0 per cent to $2.23.

Elsewhere Afterpay (ASX:APT) rose 2.7 per cent to $124.30 while Zip Co (ASX:Z1P) soared 5.2 per cent to $7.10 in a bid to offset the losses from the miners.

The best-performing stock in the S&P/ASX 200 was The A2 Milk Company (ASX:A2M), closing 5.3 per cent higher at $6.97 after UBS boosted its stake from 6.35 per cent to 7.40 per cent. It was followed by shares in Zip Co (ASX:Z1P) and Appen (ASX:APX).

The worst-performing stock in the S&P/ASX 200 was Unibail-Rodamco-Westfield (ASX:URW) closing 5.7 per cent lower at $4.78 sinking with its counterpart in Europe. It was followed by shares in Codan (ASX:CDA) and Chalice Mining (ASX:CHN).

Bio tech CSL (ASX:CSL) rose 0.6 per cent to $296.18 after the company’s research and development update. Head of research and development, Bill Mezzanotte said that due to the pandemic, clinical trials for one of its drug candidates was delayed. CSL has started a new collaboration with an Aussie medical research and medicine developer. It is slated that the duo will create a Centre for Biologic Therapies.

Cochlear (ASX:COH) jumped 1.9 per cent at $219.29 after their AGM. The company please shareholders after reiterating profit guidance. The medical device company expects to deliver profit growth of between 10 to 20 per cent in the 2022 fiscal year. They also believe that sales revenue is expected to benefit from market growth.

Today, Aristocrat Leisure (ASX: ALL) is set to resume trading today. The gaming company went into a trading halt to raise funds to acquire U.K. listed gambling software Playtech for $3.9 billion.

Local economic news

Today the National Skills Commission is to release the final report on skilled job vacancies for September.

The number of job advertisements jumped unexpectedly by 4.9 per cent or by 10,700 job openings in their preliminary report.

Last week’s labour force report showed another 138,000 jobs were lost in September. The jobs report also showed a sharp drop in the participation rate, as people stopped looking for work as the lockdowns weighed.

The final job ads report comes ahead of the weekly payroll jobs report from the Bureau of Statistics due tomorrow. This report will cover the period of the fortnight to September 25, and will give us insights to figures that weren’t captured in last week’s labour force figures.

Company news

Sydney Airport posted a tumble of 98.8 per cent in passenger traffic in September compared to the same period in 2019. Keep an eye out for further updates.

Broker moves

UBS rates Zip Co (ASX:Z1P) as a sell with a price target of $5.40. After the company’s first half update, the broker observes growth remains strong in absolute terms though below expectations. In the U.S. the revenue yield was 7 per cent with the number of transactions on average per customer falling to just 1.06 in the quarter.

UBS highlights the risk of inactive customers falling off the company’s customer base over the upcoming three quarters. If so, it would lead to a lower absolute customer growth.

Shares in Zip Co (ASX:Z1P) closed 5.2 per cent higher at $7.10 yesterday.

AGMs

A big day on the AGM front with 10 companies slated to meet shareholders online.

Adairs (ASX:ADH)
Audinate Group (ASX:AD8)
Deterra Royalties (ASX:DRR)
Flight Centre Travel Group (ASX:FLT)
Korvest (ASX:KOV)
Mystate (ASX:MYS)
Origin Energy (ASX:ORG)
Reject Shop (ASX:TRS)
Service Stream (ASX:SSM)
Super Retail Group (ASX:SUL)

Quarterly report

There are two miners set to release quarter updates including Evolution Mining (ASX:EVN) and OZ Minerals (ASX:OZL).

Trading updates

Keep an eye out for trading updates from Sydney Airport (ASX:SYD) and Atlas Arteria (ASX:ALX).

Ex-dividend

There are two companies trading ex-dividend today.

Cellnet Group (ASX:CLT) is paying 0.3 cents unfranked
Kelly Partners Group (ASX:KPG) is paying 1.1 cents fully franked

Dividend-pay

There are five companies set to pay eligible shareholders dividends today.

Link Administration Holdings (ASX:LNK)
Nine Entertainment Co Holdings Ltd (ASX:NEC)
Perpetual Equity Investment Company Ltd (ASX:PIC)
Perenti Global Ltd (ASX:PRN)
Sims Ltd (ASX:SGM)

IPOs

There are three companies set to make their debut on the ASX. Keep an eye out for computer services provider, Activeport Group (ASX:ATV), Alvo Minerals (ASX:ALV) and RAM Essential Services Property Fund (ASX:REP). They own and manage a portfolio of commercial retail and medical real estate assets.

Commodities

Iron ore has lost 0.2 per cent to US$124.04. Its futures point to a 0.5 per cent gain.

Gold gained $4.30 or 0.2 per cent to US$1770 an ounce, silver was up $0.46 or 1.9 per cent to US$23.73 an ounce.

Oil was up $0.39 or 0.5 per cent to US$82.83 a barrel.

Currencies

One Australian Dollar at 7:30 AM is back in rally mode buying 74.76 US cents, 54.22 Pence Sterling, 85.54 Yen and 64.26 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.