Wall St slides, Iron ore dips, Why a bump in Alumina’s price target: ASX to dip

Profit taking seen across the major indexes around the globe over uncertainty over central banks’ scale back timing. Japan’s market continued to climb as political moves continued to boost investor sentiment.

The Australian sharemarket is set to fall with the SPI futures pointing to a 0.5 per cent dip

Wall St fell for the third day as investors weighed on the rising number of Covid-19 cases against the scale back timeline of the Fed’s support.

Market participants took their profits in tech and materials as uncertainty continues to loom. They also digested data on job openings that came in at a new record high on the last day of July.

Job openings at record high, economic growth slows as per Beige Book

U.S. job openings rose to 10.9 million, up from 10.2 million from the month before. According to the Job Openings and Labor Turnover Survey (JOLTS) from the Labor department, employers struggled to find workers with the right skills to fill the role. The report also showed that hiring dipped 6.7 million in July from 6.8 million from June. Also, 107,000 Americans voluntarily quit their jobs in July, lifting the total to 4.0 million.

This report comes after last Friday’s disappointing jobs growth showing the economy only created 235,000 roles last month.

The demand for workers was echoed by the Federal Reserve’s Beige Book report. This encompassed information collected on or before 30 August. It showed “all Districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity.”

It also said that “the deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions”.

Inflation also got a mention which was seen to be “steady at an elevated pace”.

Nasdaq fading from record highs

At the close, the Dow Jones lost 0.2 per cent to 35,031, the S&P 500 fell 0.1 per cent to 4,514 and the Nasdaq closed 0.6 per cent lower at 15,287.

The yield on the 10-year treasury note fell by four basis points to 1.34 per cent.

Across the sectors on the S&P 500, we saw gains in the defensives space. Real estate added 0.6 per cent, industrials and consumer discretionary gained 0.2 per cent. Energy fared the worst, down 1.3 per cent followed by materials and utilities. Technology and communication services both lost 0.4 per cent while the other sectors closed in the red.

European markets stay cautious ahead of ECB meeting

Across the Atlantic closed lower ahead of tonight’s European’s central bank meeting.

Paris lost 0.9 per cent, Frankfurt dropped 1.5 per cent lower and London’s FTSE fell 0.8 per cent.

Heavyweight miners in U.K. trade closed in the red. BHP fell 1.3 per cent while Rio Tinto closed 1.0 per cent lower.

Asian Markets takes a breather

Asian markets closed mixed after investors booked their profits on tech shares amid a calmer regulatory backdrop.

Hong Kong’s Hang Seng took a breather after a three week rally, down 0.1 per cent while China’s Shanghai Composite dipped 0.04 per cent snapping two straight days of gains.

Tokyo’s Nikkei gained 0.9 per cent, its highest point in six months after investors buy-on-hope of a stronger economic outlook. Japan’s 2nd quarter GDP figures showed how the economy dodged a recession.

ASX 200 trades lower amid stocks hitting fresh highs

Yesterday, the Australian sharemarket also took a breather, closing 0.2 per cent lower at 7,512. The session followed a similar pattern seen this week where the index recovers from session lows at the closing bell. With the number of companies trading ex-dividend, the volatility in the commodity prices amid the monetary policy outlook, the local bourse has meandered its way to the close, lacking conviction with its moves.

The XJO was buoyed by gains in the financial and industrial sectors with fractional gains across energy and utilities.

In the loser’s corner, the losses were more pronounced. Property shed 1.3 per cent while consumer staples lost 1.2 per cent. Materials dipped 1 per cent while technology tailgated, down 0.9 per cent. Consumer discretionary, edged lower by 0.4 per cent followed by healthcare and communication services.

The best performing stock in the ASX 200 was Soul Pattinson (ASX:SOL) closing 5.6 per cent higher at $38.23, a record high, ahead of their merger with Milton Corp followed by shares in Macquarie Group (ASX:MQG) and Technology One (ASX:TNE).

The worst-performing stock was St Barbara (ASX:SBM) closing 6.1 per cent lower at $1.47, followed by shares in Eagers Automotive (ASX:APE) and Northern Star Resources (ASX:NST).

In company news, shares in Macquarie Group (ASX:MQG) closed at a record high after posting news on what could’ve pressured the stock lower. The investment bank warned investors that their first half 2022 is expected to be “slightly down on 2H FY21”. However, if you dig a little deeper, it means that earnings for that period are set to jump more than the $985 million it recorded for the same period in 2020. Stocks lept 4.7 per cent higher at $179.13 on the news.

Logistics group Qube (ASX:QUB) also closed at a record high, up 4.6 per cent higher at $3.42 after they announced their $90 million spree to acquire the Newcastle Agri Terminal.

Local economic news

The Australian Bureau of Statistics is set to release their weekly payroll and jobs data for the fortnight ending 14 August.

Also, RBA Governor Guy Debelle is scheduled to make a virtual speech after 6pm EST.

Broker moves

Citi rates Alumina (ASX:AWC) as a neutral with a price target of $2.10.

After the Jamalco refinery fire and the military coup in Guinea, Alumina prices have shot up to US$340 per ton. Due to this, Citi increased net profit estimates by 22 per cent to US$178 million.

If the coup in Guinea gives rise to material disruption in bauxite exports, the broker would review alumina price forecasts again.

The neutral rating is maintained but the target rises to $2.10 from $1.80.

Shares in Alumina (ASX:AWC) closed 4 per cent higher at $2.10 yesterday.

IPO

We have one company set to make their debut on the ASX today. Keep an eye out for Copper Search (ASX:CUS) today.

Ex-dividend

We have a line up of 20 companies trading ex-dividend today so keep an eye out for these companies potentially trading lower today. 

Auswide Bank Ltd (ASX:ABA) is paying 21 cents fully franked
Austin Engineering (ASX:ANG) is paying 0.3 cents fully franked
Beacon Lighting Group (ASX:BLX) is paying 4.6 cents fully franked
Dusk Group (ASX:DSK) is paying 10 cents fully franked
Easton Investments (ASX:EAS) is paying 2.5 cents fully franked
Ebos Group Ltd (ASX:EBO) is paying 38.8033 cents 95.77 per cent franked
Generation Development Group Ltd (ASX:GDG) is paying 1 cents fully franked
Laserbond Limited (ASX:LBL) is paying 0.6 cents fully franked
Michael Hill International Ltd (ASX:MHJ) is paying 3 cents unfranked
McMillan Shakespeare (ASX:MMS) is paying 31.1 cents fully franked
Monadelphous Group (ASX:MND) is paying 21 cents fully franked
Monash IVF Group Ltd (ASX:MVF) is paying 2.1 cents fully franked
Nine Entertainment (ASX:NEC) is paying 5.5 cents fully franked
Nzme Limited (ASX:NZM) is paying 2.8664 cents 85 per cent franked
Objective Corporation Limited (ASX:OCL) is paying 9 cents fully franked
Pro Medicus Limited (ASX:PME) is paying 8 cents fully franked
Reliance Worldwide (ASX:RWC) is paying 7 cents 20 per cent franked
South32 Limited (ASX:S32) is paying 7.5 cents fully franked
Shriro Holdings Ltd (ASX:SHM) is paying 6 cents fully franked
Vita Group Ltd (ASX:VTG) is paying 2.4 cents fully franked

Commodities

Iron ore has lost 4.2 per cent to US$132.19. Their futures are pointing to a 2.7 per cent fall.

Gold slipped falling to a two-week low at $5.00 or 0.3 per cent to US$1794 an ounce due to a stronger greenback and higher yields while silver has fallen $0.32 or 1.3 per cent to US$24.06 an ounce.

Oil was up $0.95 or 1.4 per cent to US$69.30 a barrel as U.S. Gulf of Mexico producers restored output at a slow pace after Hurricane Ida.

Currencies

One Australian Dollar at 7:40 AM is a tad weaker buying 73.67 US cents, 53.49 Pence Sterling, 81.27 Yen and 62.35 Euro cents.

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