Wall St, oil prices and iron ore were all down on Tuesday, pointing to a slow start on the ASX this morning.
Here's what happened.
- The SPI futures index was down 0.1% early this morning.
- The Australian dollar was lower at US73.05c after being as high as US73.40.
- Iron ore was down 3.3% to $US152.60 a tonne.
- Brent oil was down 0.6% at $US72.99 a barrel with Hurricane Ida shuttering US Gulf Coast refineries causing expectations that demand will drop.
- Lead was down 2.4%.
- Aluminium was up by 2.4%.
- Nickel rose 2.9%.
- Spot gold was trading near US$1,815 an ounce at the US close.
Australian market
More than 80 of Australia’s top CEOs have penned an open letter to the government, urging state governments to follow the national cabinet’s path out of lockdown.
It comes as the ASX is set for a poor start to trading today amid lockdown-based recession fears.
"We have seen the effectiveness of lockdowns in suppressing the virus last year, and in slowing its spread today while we vaccinate the population as quickly as possible," the CEOs’ message says.
"We are encouraged by the building momentum in the vaccine program, with Australia now administering more doses per capita each week than the UK or the US ever achieved in their programs.
"At the same time, we can also see the impact of lockdowns on our people, on our customers, on our small business suppliers, and on communities and families right across the country.
"Australia is juggling a mental health emergency at the same time as a global pandemic. Some of the impacts of current lockdowns are hidden, and the effects will be long lasting.
"As vaccination rates increase, it will become necessary to open up society and live with the virus, in the same way that other countries have done. The national cabinet has agreed to a roadmap that provides a path out of lockdowns, with an easing of restrictions from 70% and 80% vaccination rates. We need to stay the course."
According to our CEOs, the national roadmap balances COVID risks in a more vaccinated population with the risks of indefinite lockdowns and international isolation.
"We ask governments to work together to implement the national plan and chart a path out of the current lockdowns. Providing a light at the end of the tunnel will encourage more Australians to get vaccinated. We need to give people something to hope for, something to look forward to, something to plan around, and to be confident about their futures."
Australian indices
- ASX 200 lifted 0.41% to 7,534.90
- ASX24 futures dipped 0.4% to 7,445
- S&P/ASX Small Ordinaries rose 0.98% to 3,568.80
- All Ordinaries was up 0.45% to 7,823.30
US markets
While there were modest losses yesterday on US markets modest as investors keep an eye out for key labour market data, the overall outlook is generally positive.
Despite the Delta variant surge, the Fed’s reassuring signal that the central bank will be cautious in removing its massive stimulus from the economy has tempered any negative sentiment.
US investors have turned their attention to the government employment report due out Friday, which is likely to show hiring slowed as the virus resurged.
That is nothing to fret about according to Peter Cardillo of Spartan Capital who said, “the fundamentals of the market remain strong and interest rates are not going up anytime soon.
“Until that interest rates needle moves, it’s a good sign that perhaps the September’s blues might not have its full effect.”
Is the Zoom boom over?
Looking at one US stock in particular, it seems the Zoom work from home boom may be over.
eToro Analyst Josh Gilbert said, “Zoom Technologies reported earnings of US$1.36 per share on revenues of US$1.02 billion, compared to analyst expectations of profits of US$1.16 per share on revenues of US$990.23 million.
"After a stellar 2020, Zoom’s share price has stagnated in 2021, gaining just under 2% YTD. This report shows continued resilience in earnings, with its first-ever billion-dollar quarter, but weak guidance has sent the stock tumbling after hours. Revenues grew by 54% year-over-year (YoY) but showed the smallest YoY growth since trading as a public company.
“Zoom’s fundamentals are still solid, with strong profitability, and a customer base that continues to swell. Customers generating more than US$100K in trailing 12-month revenue grew to 2,278, up 131% YoY.
“Zoom was always going to struggle to match year-over-year comparisons, with astronomical growth in 2020. As a result, we are seeing slower YoY growth rates, but ultimately Zoom’s core customer base is still expanding, which investors may view positively. Its guidance for Q3 earnings showed revenue of US$1.05 billion and earnings of US$1.07, both lower than analysts expected, disappointing Wall Street.
“In Q2 2021, Zoom announced a pending acquisition of Five9 to continue to gain market share in the software sector. It is expected Zoom will continue its M&A activity as a strategy over the coming years to capitalise on the growing spend from the enterprise sector on software and the enablement of complete work-from-home solutions. After gaining strong brand recognition globally in the last 18 months, Zoom’s growth prospects still look appealing, but they will have to battle ongoing headwinds.”
US indices
- Dow Jones fell 0.1% to 35,360.73
- S&P 500 dropped by 0.1% to 4,522.68
- Nasdaq was stable at 15,259.24
European markets
Euro markets performed poorly on Tuesday as eurozone inflation rose from 2.2% to a 10-year high of 3% in August.
The pan-European STOXX 600 index fell by 0.4%, however, was higher for the seventh straight month - the longest winning streak since 2013.
In Germany, data showed a bigger fall in unemployment than expected in August.
European indices
- STOXX 600 fell 0.38% to 470.88.
- German Dax fell 0.3% to 15,835.09.
- UK FTSE fell 0.4% to 7,119.70.