Wall St mixed, Tesla has 22% upside, Delivery Hero’s stake in U.K. Deliveroo climbs 5%, Why Universal Biosensors is a buy again: ASX to rise

 

Another mixed closed on major indexes around the globe on mounting fears that Covid-19 cases could derail the pandemic rebound while the oil price slump pressured the Energy sector on concerns the delta variant might slow down oil demand. Meanwhile, banks impressed investors on the local market as earnings season heats up.

The Australian sharemarket is set to rise with the SPI futures pointing to a 0.3 per cent gain.

Mixed market amid stimulus & virus concerns

It was a mixed market on Wall St with the tech names outperforming with stay-at-home stocks doing well amid concerns of the climb in Covid-19 cases, while worries linger around the Fed’s potential pull back on tapering their support.

Oil prices fall as Covid-19 worries mount

Energy names and reopening stocks led the retreat as oil prices continued to plummet on worries that the impact of the delta variant will lessen demand as people stay at home. There is also concern that demand in oil will soften as Beijing imposes restrictions due to the spread of the delta variant.

The S&P 500 and Dow Jones closed in the red, not quite able to keep their gains from their record highs posted on Friday.

The Dow Jones dipped 0.3 per cent to 35,102, the S&P 500 closed fractionally lower at 0.1 per cent to 4,432 while the Nasdaq clinched up by 0.2 per cent at 14,860.

Taking a look at the S&P 500 sectors, Healthcare, Consumer Staples and Financials added over 0.3 per cent while Communications marginally rose 0.03 per cent. Energy fell 1.5 per cent followed by Real Estate and Industrials. The rest closed lower.

Bond yields moved higher with the yield on the 10-year treasury rose to 1.32 per cent from 1.28 per cent.

U.S. job openings hit a record 10.1 mil in June

After taking a look at the labour market following Friday’s jobs report, U.S. employers posted a record number of job openings in June according to the Labor department. There were 10.1 million job openings compared to 9.2 million in May. The hiring rate also rose in June to 6.7 million and despite the climb in figures indicating a bounce back, those quitting their jobs rose to a new record of 2.7 per cent.

Tesla, AMC & Sanderson Farms making moves

Elsewhere, poultry producer Sanderson Farms jumped 7.4 per cent after it agreed to a US$4.5 billion buyout by Cargill and Continental Grain Co.

Tesla climbed 2.1 per cent after a broker upgraded the stock to a buy from a hold. Analysts forecast that the shares will move 22 per cent higher thanks to efficient capital deployment and improved operating margins.

The meme stock, AMC jumped 3.4 per cent as earnings beat projection as blockbuster films like “Fast 9” and “A Quiet Place Part II” bolstered revenues. The world’s largest theatre chain posted a lessened quarterly loss as they compete with at home streaming options.

European markets close mixed, U.K. Deliveroo jumps 4.5%

Across the Atlantic, European markets closed mixed. London’s FTSE clinched up 0.1 per cent as energy stocks like Shell and BP offset gains in defensive sectors. Paris & Frankfurt edged 0.1 per cent lower. In U.K trade, miners rose with Rio Tinto, up 0.9 per cent and BHP added 0.4 per cent

U.K Deliveroo jumped 4.5 per cent after German competitor Delivery Hero on news they've built a 5 per cent stake in the UK food delivery company.

Asian markets rises while TikTok owner plans to list

Asian markets closed higher as Chinese stocks rose with a bounce back in blue-chip stocks offsetting losses in tech shares.

Hong Kong’s Hang Seng gained 0.4 per cent and China’s Shanghai Composite closed 1.1 per cent higher. Japanese markets were closed for a public holiday.

China’s inflation climbs in July

In economic news, China’s producer price index climbed 9 per cent year-on-year in July, rising at a faster pace from the previous month and above expectations while consumer price index rose 1 per cent year-on-year.

Elsewhere, China’s ByteDance which owns social media app TikTok, reportedly plans to go public in Hong Kong next year, despite regulatory pressures out of Beijing

ASX 200 flirts at new highs led by bank stocks

Yesterday, the Australian sharemarket flirted at new record highs before fading to close flat at 7,538 as investors flocked to finance stocks.

Suncorp jumped 7.9 per cent after posting bumper earnings while NAB rose 0.9 per cent after they struck a $1.2 billion deal to buy Citi’s consumer business.

Westpac is set to sell its Australian life insurance business to TAL Dai-ichi Life Australia, following similar moves by rivals.

Four out of the 11 sectors closed higher with Financials adding the most, up 1.3 per cent followed by Utilities, Property and Healthcare. Materials continue their decline, falling 1.1 per cent as the price of iron ore continues to pressure miners lower.

Local economic news

Today the consumer and business sentiment figures take centre stage.

The NAB business confidence index is pencilled in which will give us a gauge of the recent lockdowns. It fell the most in 11 months in June to 10.7 points while the conditions index took a tumble from its record high to 24.1 points.

ANZ and Roy Morgan have slated their weekly consumer confidence survey which is expected to come in soft due to the recent outbreak.

Also, the Australian Bureau of Statistics is set to release their building approvals for June.

Reporting season

Today Challenger (ASX:CGF), James Hardie (ASX:JHX) and Megaport (ASX:MP1) are set to release figures today.

Stock watch

I covered Universal Biosensors (ASX:UBI) on the 15th June when it was trading at 72 cents. It ran up to 97 cents (or almost 35 per cent gain) in share price. It has been hit with profit taking, and now looking good again.

For those that missed out in mid-June, you now have another opportunity to join this growth story.

Our weekly stock to watch this week is diagnostic device maker Universal Biosensors (ASX:UBI). David Thang, Senior Private Wealth Adviser at Sequoia (ASX:SEQ) rates Universal Biosensors as a buy. From a technical angle, Universal Biosensors is bullish on a number of grounds.

Taking a step back, you will notice that there is a rhythm in the way the share price pulls back (correction). This is shown by the light-blue shaded region on the chart and highlighted by the blue downward sloping arrows. The initial share price correction was 34.19, followed by 31.36 and recently 25.26 per cent. The corrections have become shallow, which signals the strength of the underlying long-term uptrend.

Support was respected at the 61.8 per cent Fibonacci retracement of $0.73 towards late July as shown by the orange arrow. Should upward momentum gather traction over the coming week, then this would trigger a continuation of the broader uptrend in place since mid-2020. If this preferred scenario was to evolve, then a re-test of the July high of $0.97 could potentially be on the cards.

Shares in Universal Biosensors (ASX:UBI) closed 7.4 per cent higher at $0.80 yesterday.

Ex – Dividend

Wotso Property (ASX:WOT) is paying 3 cents unfranked.

Commodities

Iron ore is flat at US$172.51. Its futures are pointing to 4.4 per cent fall.

Gold has slumped 2.1 per cent to a more than four-month low to US$1727 an ounce while Silver has fallen 4.4 per cent to US$23.27 an ounce.

Oil fell 2.6 per cent to US$66.48 a barrel against the rising US dollar and concerns that new Covid-19 restrictions in China could slow a global recovery in fuel demand,

Currencies

One Australian Dollar at 7:45 AM has weakened against the greenback buying 73.33 US cents, 52.99 Pence Sterling, 80.89 Yen and 62.48 Euro cents.
Investor event

Please join us at our next online investor event on Tuesday 24 August at 12.30pm with CEOs presenting from 5 different companies from resources to healthcare. Make your way to fnn.com.au to register for your free spot.
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