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Morning Market Wrap: ASX to Rise after Positive US Job Data

6 Apr 2021
By
The Australian market is expected to open significantly higher following the US overnight, with ASX 200 futures currently up 0.82% at 6825 as of 8:00am AEST.

Last night all three of the major US benchmarks experienced a strong rally after better-than-expected job growth and increased service activity. Nonfarm payroll increased by 916,000 in March, unemployment fell to 6%, and the Institute for Supply Management’s non-manufacturing activity index experienced the highest level in the survey’s history. The tech-heavy Nasdaq experienced the most significant gain of 1.67% and finished the day at 13,705.59. Tesla was the index’s best performer, gaining 4.4% after it reported the delivery of 184,000 vehicles and production of 180,338 in the first quarter of 2021, a new record for the company. Google and Facebook also propelled the benchmark forward, increasing by 4.2% and 3.4%, respectively. The S&P 500 finished the first trading day after Easter up 1.44% at 4,077.91. Travel shares were among some of its best performers with Norwegian Cruise Line and Carnival gaining 7% and 4.6%. The Dow Jones Industrial Average managed a new all-time close high of 33,527.19, with the index experiencing an increase of 1.13%. The giant tech names of Apple, IBM, Intel and Microsoft can take the credit for the benchmark’s success, with them all rising by 2-3%.

The ASX 200 finished last week on a positive note, up 0.6% to 6,828.70 after initially facing a strong selloff earlier in the week. Boral experienced the largest increase on Thursday, with the share increasing by almost 7%. This came after the sale of their joint venture stake in USG Boral for $1.3 billion. AMP saw an increase of 4.7% after it announced that its CEO Francesco De Ferrari would be departing. High growth tech stocks also fared well, with Zip Co, Appen and Xero increasing by 4.5%, 3.5% and 3.4%, respectively. Ahead today is the RBA’s policy meeting, with the market expecting no change to their current interest rates.

 

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

The US dollar weakened against most major currencies, with the US Dollar Index (DXY) falling by 0.5% to 92.57. This came as both the S&P 500 and the Dow Jones reached record highs and US Treasury yields held. The Australian dollar rose against the USD, increasing from lows of US$0.7645 to currently be trading at US$0.7657. Gold fell overnight as investors moved away from the perceived “safe haven” asset after the announcement of US job data and strong service activity. Spot Gold fell slightly by 0.1% to US$1726 per ounce. Oil recorded a significant fall after OPEC+ agreed late last week to monthly production hikes from May until July. This was enough to offset the US’s positive economic data and saw Brent Crude Oil fall by almost 5%. Report have also come in about Iran and the US re-establishing talks about the Iranian nuclear deal and, if successful, could see an increase in supply from the Iranians. Iron ore prices rose last week, increasing by 1.5% on Thursday to US$167 per tonne. This came after last week’s production cuts from Vale thanks to seasonal rains affecting the Brazilian miner’s operations.

 

 

This article was written by Alex Single, Investment Accounts Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.

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