Tech shares tumble as Yellen raises tremors on a rate hike: ASX to fall

 

The Australian share market is to drop at the open following a mixed lead from Wall St as big technology shares tumbled pulling back from its positive start to the month. The tech shares sell-down followed US Treasury Secretary Janet Yellen’s statement around interest rates as she hints that it may need to rise somewhat to prevent the economy from overheating. As technology shares rely on earnings in the future, rising interest rates hurt the present value of their cash flow which means investors look towards safe-haven assets like government bonds instead. The tech heavy Nasdaq closed at its worst point since March. All six tech giant names closed in the red with Apple dragging on the sector by 3.5 per cent followed by Amazon and Google parent Alphabet. Oil prices rallied by 2 per cent as optimism on the reopening of the US and Europe offset the nerves in lowered demand in countries affected by the pandemic.

Figures from around the globe

Wall Street closed mixed yesterday: the Dow Jones Industrial Average closed 0.06 per cent higher at 34,133 points, the S&P 500 closed 0.67 per cent lower at 4,165 points and the Nasdaq closed 1.88 per cent lower at 13,634 points.

European markets closed lower, London’s FTSE fell 0.7 per cent, Paris lost 0.9 per cent and Frankfurt closed 2.5 per cent lower.

In Asian markets, Hong Kong’s Hang Seng gained 0.7 per cent while Tokyo’s Nikkei and China’s Shanghai Composite were closed.

Taking all of this into equation, the SPI futures are pointing to a 0.4 per cent fall.

Yesterday, the Australian share market closed 0.6 per cent higher at 7,068.

Local economic news

The Australian Bureau of Statistics is due to publish building approvals and its “selected living cost indexes” for the March quarter. The AiGroup Performance of Construction index and IHS Markit final reading on services activity is also due out. St George economists expects approvals to rise by 3 per cent after leaping 21.6 per cent in February with the HomeBuilder scheme adding a boost to the numbers in March. Chief economist Besa Deda said that since building approvals are elevated, numbers suggest a boom in house prices which could spill over into approvals that will likely deepen the upturn forming in residential construction activity. Approvals for housing are high but approvals for units are lagging. This residential construction upturn may not be dominated by high-rise apartments as it was in the previous cycle before the pandemic.

Company news

Map technology company Nearmap (ASX:NEA) has increased its full year guidance by 20-26 per cent for its annual contract value to $128-132 million. This upgrade is from their previous forecast of $120-128 million. The company attributes this to its strong performance in the first half which continued into the second half of FY2021 as the aerial technology provider continues to see growth momentum across its core industry verticals from their new and existing client base. Nearmap will also continue to invest their proceeds from the FY21 capital raise the development of HyperCamera3 that is scheduled to be rolled out in out in FY22. HyperCamera3 is a device which captures ultra-high altitude imagery, obliques and 3D. Shares in Nearmap (ASX:NEA) closed 0.48 per cent lower at $2.06.

Broker moves

Morgan Stanley rates Spark infrastructure (ASX:SKI) as an add with a price target of $2.30. The upgrade from a hold comes after an improved regulated revenue income where the broker increased its price target from $2.17. The Australian Energy Regulator has allowed for an -8 per cent reduction in revenue in the first regulatory year, and effectively flat across the following four years. The broker estimates a potential 12 month total shareholder return of circa 12 per cent. Shares in Spark Infrastructure Group closed 1.38 per cent higher at $2.21 yesterday.

Currencies

One Australian Dollar at 8:00 AM was buying 77.12 US cents, 55.54 Pence Sterling, 84.30 Yen and 64.20 Euro cents.

Ex-Div

Bank of Queensland (ASX:BOQ) is paying 17 cents fully franked.

Commodities

Gold has lost $15.80 to US$1776 an ounce.
Silver has fallen $0.40 to US$26.56 an ounce.
Oil was up $1.20 to US$65.69 a barrel.
 
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Source: Finance News Network