The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.
It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them.Â
Local market turns on bond yields, oil prices spike, Star ‘unsuitable’
The domestic market managed to reverse the prior day’s gains, falling 1 per cent on Tuesday after US bond yields jumped on further central bank commentary.
This coincided with agreement on further bans on Russian oil imports which sent the oil price above US$120 per barrel. Every sector was lower, led by technology and financials, which fell 2 per cent each behind weak performances from National Australia Bank (ASX:NAB) and Commonwealth Bank (ASX:CBA).
Weakening building approvals, which fell 2.4 per cent in April, along with comments from major bank CEO’s around the growing risks in the construction sector were enough to hit market sentiment. The utilities and staples sectors outperformed, as did energy with the likes of Beach (ASX:BPT) and Paladin (ASX:PDN) which gained 5 and 2 per cent respectively.
It was also bad news for Star Entertainment (ASX:SGR) which fell another 2 per cent after the NSW investigation into potential legal breaches found the group ‘unsuitable’ to hold a casino license.
China release sends materials higher, ResApp in Pfizer deal, A2 Milk faces challenge
The Chinese Government has laid out a 50 point plan to stimulate the economy post the damaging capital city lockdowns, with streamlined building approvals and incentives for electric car among them.
This comes as Beijing cases fell to just 100 and manufacturing in the city was set to be allowed from 1 June. Interestingly, the manufacturing PMI which reports on the entire economy fell to just 49.6 in April, strong than expected.
Shares in microcap healthcare company ResApp (ASX:RAP) entered a trading halt after announcing they had received a bid from giant Pfizer to take over all shares in the company.
A2 Milk (ASX:A2M) took a breather, gaining just 0.6 per cent, as investors identified the challenge of having their unique product approved in the US market in a short period of time to capitalise on the current shortage.
The secondary beneficiary of the Chinese policy changes was materials, with Mineral Resources (ASX:MIN) up 1.8 per cent and Fortescue (ASX:FMG) 1.3 per cent.
Biden, Powell, talk inflation, May ends flat, crude flattens
US markets finished unchanged for the month of May, after closing slightly lower on Wednesday.
The Dow Jones falling 0.7, the S&P500 0.6 and the Nasdaq 0.4 per cent with the backdrop of an unprecedented meeting between Fed Chair Jerome Powell and President Joe Biden to discuss the challenge of inflation.
Consumer sentiment continues to weaken, hit by higher oil prices with the economy at risk of boiling over as Fed members flag more aggressive rate hikes despite weakening demand for goods.
It was a tough month for retailers with the likes of Target (NYSE:TGT) falling heavily as inventories soared just as demand for products shifted to services. On the positive side was Salesforce.com (NYSE:CRM) with the company up 6 per cent after market reporting a double digit jump in revenue but a shrinking profit.
Chinese stocks including Alibaba (NYSE:BABA) and JD.Com (NYSE:JD) continued to rally as lockdowns come to an end while Amazon (NYSE:AMZN) jumped 4 per cent after approving their stock split.
