ASX to open flat, Dow resets record high

This post was originally published on this site

Six of the S&P 500’s industry groups were higher: energy, financials, industrials and materials all were up at least 1 per cent. Information technology tumbled 1.6 per cent.

“We do know that the seasonality of the first several days of a new year brings in new money. You’ve got a couple of stutter steps here and some decisions to be made in rebalancing portfolios,” said Art Hogan, chief market strategist at National Securities in New York.

“While we know (omicron) is transmitting very rapidly, the symptoms seem to be far less severe. And the combination of those two things gives us some hope that this will likely burn out faster than any of the other variants that we’ve seen.”

Travel stocks rose, and cruise operators Norwegian Cruise Line Holdings, Royal Caribbean and Carnival Corp advanced.

Today’s agenda

Advertisement

No local data

Overseas data: Euro zone December Markit services PMI; US December ADP employment report, December Markit services PMI

Market highlights

ASX futures flat at 7532 near 4.45am AEDT

  • AUD +0.7 per cent to 72.40 US cents
  • Bitcoin on bitstamp.net +0.5% to $US46,826.97 as of 4.50am AEDT
  • On Wall St near 12.45pm: Dow +0.7% S&P 500 -0.01% Nasdaq -1.6%
  • In New York: BHP +2.1% Rio +2.4% Atlassian -8%
  • Tesla -3.9% NYSE Fang -2.4% Netflix -2.3% Microsoft -2.1%
  • In Europe: Stoxx 50 +0.8% FTSE +1.6% CAC +1.4% DAX +0.8%
  • Spot gold +0.7% to $US1814.43/oz at 12.42pm New York time
  • Brent crude +1.5% to $US80.17 a barrel
  • US oil +1.5% to $US77.19 a barrel
  • Iron ore +0.7% to $US123.12 a tonne
  • 2-year yield: US 0.76% Australia 0.62%
  • 5-year yield: US 1.38% Australia 1.41%
  • 10-year yield: US 1.68% Australia 1.74% Germany -0.13%
  • US prices as of 12.45pm in New York

From today’s Financial Review

Advertisement

ACCC ready to take on Apple Pay: Competition watchdog chairman Rod Sims has vowed to crack down on banks, fintechs and the incursion of Apple, Facebook and Google into financial services.

Cases not expected to peak for another month, experts warn: While infections peaked in South Africa about six weeks into its omicron wave, experts say it will ‘be a while’ before the same happens in Australia.

Australia’s CEOs are spending billions on AI and data: Many of the country’s business leaders are implementing the latest data analytics and artificial intelligence software to gain an edge.

United States

Advertisement

US manufacturing slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade.

The Institute for Supply Management’s index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9 per cent of the US economy.

Economists polled by Reuters had forecast the index would fall to 60.1.

An estimated 4.5 million workers quit or changed jobs in November, according to new data from the Department of Labour, as labour shortages have helped create one of the more worker-friendly job climates in years.

Toyota outsold General Motors in the US in 2021, marking the first time the Detroit automaker has not led US auto sales for a full year since 1931.

Advertisement

A US jury found Theranos founder Elizabeth Holmes guilty of defrauding investors in the blood testing startup, convicting her on four of 11 counts. A sentencing date was not immediately set.

BlackBerry is pulling the plug on service for its once ubiquitous business smartphones, which were toted by executives, politicians and legions of fans in the early 2000s.

Europe

European stocks extended their new year rally on Tuesday, led by economically sensitive banks and travel stocks on signs that the Omicron coronavirus variant might be less severe than initially feared.

The pan-European STOXX 600 index ended 0.8 per cent higher at 494.02 points, hitting a record high for a second consecutive session.

The European banks subindex jumped 3.3 per cent to November highs, and was the best performer for the day as government bond yields on both sides of the Atlantic got a boost from expectations of tighter monetary policy.

Advertisement

Citigroup said it was overweight on European banks, citing potential interest rate hikes, profit growth, and capital returns. The brokerage ranked BNP Paribas, Lloyds and UBS as its top picks.

Europe’s travel and leisure index jumped 3.5 per cent to its highest in more than six weeks. British airlines soared, with Ryanair and British Airways-owner IAG climbing 8.9 per cent and 11.3 per cent, respectively.

Wizz Air jumped 12.2 per cent, leading gains in the STOXX 600 after reporting a spike in December traffic.

London’s FTSE 100 gained 1.6 per cent, catching up with a global rally as trade resumed after a long holiday weekend.

Asia

China stocks fell on Tuesday in their first trading session in 2022, as weakness in tech shares offset a rebound in property plays.

Advertisement

The blue-chip CSI300 index fell 0.5 per cent, to 4917.77, while the Shanghai Composite Index lost 0.2 per cent to 3632.33 points.

Technology shares led the losses. Shanghai’s Nasdaq-style STAR Market lost 2.4 per cent, while the start-up market ChiNext dropped 1.3 per cent.

In Hong Kong, the Hang Seng Index was flat at 23,289.84, while the China Enterprises Index edged down 0.1 per cent to 8180.16 points.

China’s cyberspace regulator said on Tuesday it would implement new rules from Feb. 15 that require platform companies with data for more than 1 million users to undergo a security review before listing their shares overseas.

The Hang Seng Tech Index fell 1 per cent, having erased early gains.

Property shares rebounded sharply, as uncertainty around the sector’s financial health boosted volatility. The Hang Seng Mainland Properties Index bounced 3.5 per cent, following a 2.8 per cent decline the previous session.

Advertisement

Shares of China Evergrande Group jumped as much as 10 per cent in resumed trade on Tuesday after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there.

Currencies

Economists see $A at US73¢ by June 2022: Economists have cut their forecasts for the Australian dollar in the expectation that the Fed will raise interest rates well ahead of the Reserve Bank.

The AFR View: Full recovery needs bolder plan for a bigger Australia: Bullishness among market economists about the economy in 2022 is in contrast with businesses’ lack of optimism for a population plan to solve labour shortages.

RBA’s QE experiment may end as soon as February: “Central bank bond buying had exceeded its use-by date,” says Yarra’s Tim Toohey, as a high concentration of RBA ownership and a sweeping recovery turn the lights out on QE.

RBA’s bruising year threatens house price falls in 2022: Economists are scaling back predictions for house price growth in 2022 as lenders rush to lift rates.

Advertisement

The surge in euro-area inflation that surprised policy makers in recent months is close to its peak, according to European Central Bank Governing Council member Francois Villeroy de Galhau.

A report on French consumer prices in December shows the first signs of stabilisation and the ECB expects upward pressures to fade through 2022, the French central bank chief said in a New Year address posted on his institution’s website.

“Inflation is now close to its peak in our country and in the euro area,” Villeroy said Tuesday. “While remaining very vigilant, we believe that supply difficulties and energy pressures should gradually subside over the course of the year.”

Commodities

Dalian coking coal futures rose on Tuesday to their highest level in more than two months as market participants welcomed the new year feeling optimistic about demand prospects for the steelmaking input in China.

Advertisement

The most-traded May coking coal contract on China’s Dalian Commodity Exchange ended daytime trading 5.7 per cent higher at 2337 yuan ($US367.74) a tonne, after touching 2370.50 yuan earlier in the session, its strongest since October 28.

Coke, the processed form of coking coal and which is used as the primary reducing agent of the main steelmaking raw material iron ore, rose 4.8 per cent to 3047 yuan a tonne. It hit 3050 yuan earlier in the day, its highest since December 27.

“The price of coking coal is firm, supporting coke. In the short term, steel mills will gradually resume production, which is good for coke demand,” Sinosteel Futures analysts said in a note.

Speculations about supply of coking coal tightening also spurred interest in the material, as Indonesia has banned exports of coal because of concerns it could not meet its own demand for the power generation input

Australian sharemarket

Lithium stocks electrify ASX in new year rally: The S&P/ASX 200 Index rallied 145.2 points, or 2 per cent, to 7589.8 buoyed by lithium producers, riding the fortunes of Tesla’s record quarter of deliveries; Novonix rallied 14.5 per cent to $10.52.

Advertisement

Fund managers again wrongfooted by big tech: Stockpickers post patchy performance as investors pull $US474b from actively managed US share funds in 2021.

Street Talk

ST is on annual leave.