The ASX is expected to fall today, with ASX 200 futures down 0.2% to 7289, following Wall Street’s losses and its own gains on Friday.
The local index was propped up by the technology and financials sectors, finishing with a 0.6% gain on Friday and the S&P/ASX 200 closing the week at 7,279.5 points.
Top performer was enterprise software company Xero Ltd, which rose another 5.4% to $108 to help the broader tech sector add 2.2%. Another big climber was AUB Group Ltd which climbed 5.9% to $27.38 after completing a $150 million capital raising at $24 per share.
Austal Ltd gained 26% to $2.01 after winning a contract worth up to $US3.2 billion ($4.8 billion) for detail design of the Auxiliary General Ocean Surveillance Ship T-AGOS 25 Class for the United States Navy.
As for Wall St, US stock markets eased on Friday, based on GOP debt ceiling negotiators walking away from a debt ceiling meeting.
The walkout overshadowed comments from Fed chair Powell, who said that because of banking sector stress, it might be unnecessary to raise rates.
The Nasdaq added 3.47% locking in its fourth straight week of gains. The S&P500 added 1.61%, and the Dow Jones gained 0.38%.
IG analyst Tony Sycamore writes, “For this week, the focus in the US will be on updates around the US debt ceiling which will resume today, earnings from Nvidia on Wednesday 24, and the Fed’s preferred measure of inflation, the PCE Price Index, on Friday, the 26.”
What happened last week
Here’s what we saw source: (Commsec)
US sharemarkets fell on Friday after US debt ceiling negotiations in Washington were paused, denting optimism a deal could be reached in the coming days to avert a default.
Losses were kept in check after US Fed chair Jerome Powell said interest rates may not have to rise as much as expected to quell inflation.
Also dampening sentiment was a report that US Treasury secretary Janet Yellen told chiefs of large lenders that more bank mergers may be needed. The KBW Regional Banking index fell by 2.2%.
Shares of Morgan Stanley (NYSE:NYSE:MS) lost 2.7% after CEO James Gorman said he would step down from the role. Foot Locker (NYSE:FL) shares dropped 27.2% after the footwear retailer cuts its annual sales and profit forecasts. Nike (NYSE:NKE) (-3.5%) and Under Armour (-4.2%) shares both fell.
European markets
Climbed on Friday, with financial services stocks up 2.2%. European Central Bank president Christine Lagarde stressed the need for policymakers to keep interest rates high to combat inflation.
Shares of semiconductor companies AMS and Nordic Semiconductor rallied around 5.4%.
The continent-wide FTSEurofirst 300 index rose by 0.7% to a more than one-year high and was up 0.8% for the week. The UK FTSE 100 index gained 0.2% and was slightly positive for the week.
Currencies
Were stronger against the US dollar in European and US trade.
- The Euro rose from US$1.0766 to US$1.0826 and was near US$1.0810 at the US close.
- The Aussie dollar firmed from US66.29 cents to US66.73 cents and was near US66.45 cents at the US close.
- The Japanese yen lifted from 138.64 yen per US. The dollar to JPY137.41 and was near JPY138.00 at the US close.
Global oil prices dipped by 0.4% on Friday as traders worried that US politicians will fail to agree on a new debt ceiling and trigger a default that would hurt the economy and reduce fuel demand.
- The Brent crude price fell by US28 cents or 0.4% to US$75.58 a barrel.
- The US Nymex crude oil price shed US31 cents or 0.4% to US$71.55 a barrel. Both crude benchmarks rose by around 2% for the week.
- Copper futures lifted 1.1% and aluminium futures gained 0.6%. For the week, copper rose by 0.2% with aluminium 2.8% higher.
- The gold futures price rose by US$21.80 or 1.1% to US$1,981.60 an ounce. Spot gold was trading near US$1,977 an ounce at the US close. Gold fell by 1.9% over the week.
- Iron ore futures dipped by US 17 cents or 0.2% to US$107.10 a tonne as optimism that Chinese steel demand was improving faded. For the week, iron ore lifted by 1.8%.
eToro market analyst Josh Gilbert shares his three things to watch in Australia in the coming days.
1. Australian Retail Sales
The RBA got good news last week as unemployment rose to 3.7% in a key data point that could well mean the Central Bank leaves rates on pause next month. Another focal point in the data puzzle impacting the RBA’s next move is handed down this week with monthly retail sales.
March’s read on retail sales showed sales rose by 0.4% month-on-month as retail spending begins to subdue. As the full effect of the RBA’s rate hikes passes through to households, consumers are becoming more cautious over their spending habits, something the RBA wants.
As a result, this period will see more consumers ‘down trade’, which should benefit consumer staple names such as Coles, with retail sales being driven by food sales. The everyday consumer has been fairly resilient over the last 12 months, but confidence is near record lows, and households are now really starting to feel the pinch.
2. Nvidia Earnings
The conversation of AI in the investment world has been rife so far in 2023 and earnings season in the US was no different, with thousands of mentions of AI on earnings calls from US tech.
The investor excitement for this developing technology has sent Nvidia’s shares soaring by more than 100% this year and so far, the tech giant wears the crown for the S&P500’s best-performing stock of 2023.
This week, Nvidia reports its Q1 earnings in which investors will be hoping for more good news, but question marks now lie over its valuation with its rally this year. Nvidia is by far the market leader in developing graphics chips, and this is exactly what is needed to handle the complex calculations required to power AI applications, meaning investors believe Nvidia will reap the rewards from growing demand.
However, outside of AI, the PC market is seeing considerable weakness affecting AMD and Intel (NASDAQ:INTC) this quarter. So, the focus for investors will be if AI demand can offset other areas of weakness and if Nvidia can provide strong guidance for the rest of the year. Nvidia said in Q4 it expects $6.5 billion in revenue, which will be an important number to watch.
3. Webjet Full Year Results
Travel stocks have been some of the top performers on the ASX200 so far this year as investors believe the surge in travel demand won’t taper anytime soon. Earnings from travel compatriots globally in the last month have been stellar, with Expedia (NASDAQ:NASDAQ:EXPE), Booking (NASDAQ:BKNG).com, Singapore Airlines and Emirates all reporting better-than-expected results.
Webjet investors will be hoping to see the same result from its full-year numbers. In its half-yearly results, Webjet reported a massive 217% increase in revenue and a 557% jump in EBITDA but importantly said that profitability should climb above pre-pandemic levels.
Given that travel has come back in a big way, Webjet’s full-year results could spell more good news for shareholders this year, but its guidance may be in focus with headwinds such as labour costs, weakening consumers and recession risks.