The S&P/ASX 200 (ASX: XJO) opened higher on Wednesday and followed a strong US lead on Tuesday, adding 0.8% with the industrials and IT sectors the key drivers.
On Tuesday, the ‘risk-on’ mood boosted Afterpay Ltd (ASX: APT) by 10% and competitor Zip Co (ASX: Z1P) 9.1% after what has been a difficult few months for the BNPL companies. Click here to read our coverage of what’s driving the APT share price & Z1P share price.
By far the biggest news was the announcement of a ‘travel bubble’ with New Zealand commencing in three weeks’ time.
According to the joint announcement, Australians will be able to travel across the ditch freely, subject to conditions, in what stands out as a boon for travel providers, in NZ at least. The news sent shares of Qantas (ASX: QAN) and Air New Zealand (ASX:AIZ) up 3.1% and 8.2% respectively, with Flight Centre (ASX: FLT) and Webjet also rallying by over 4% respectively.
There is now hope that similar deals could be made with our Asian neighbours. The day trading community seems to have lost one this week, with shares in Alaskan energy explorer 88 Energy (ASX: 88E) leading the losers, falling 67.1% today on weaker than expected results, coming after a 100% rally last week.
Cleanaway jumps, RBA rates on hold
The Reserve Bank of Australia kept interest rates on hold on Tuesday, at 0.1% once again, with the only change in commentary noting it is ‘carefully’ watching the housing market. The release noted that first home buyers rather than investors have been driving the rally. The RBA also hinted at an extension to their $200 billion quantitative easing program. Cleanaway Ltd (ASX: CWY) lead the market higher on Tuesday (and was down 2% in early trading on Wednesday). The CWY share price jumped 15.9% yesterday after officially announcing their offer to purchase the local operations of competitor Suez for $2.5 billion. Veolia has confirmed it will be challenging the offer as it seeks to take over Suez’s parent company in France.
Fertiliser and explosives maker Incitec Pivot (ASX: IPL) is the latest mining services company to take a hit, announcing a $36 million fall in earnings as ammonia production in the US failed to keep up with expectations. It was good news on the jobs front, as ANZ Job ads hit a 12 year high jumping 7.4% in March ahead of an expected 100-150,000 losing their jobs as Job Keeper ends.
Tesla smashes expectations, US markets down
US markets stagnated after a strong start to the week, with the Nasdaq finishing flat, the Dow Jones down 0.3% and the S&P500 0.1% lower. It was the slowest trading day of the year with very limited volume as investors search for direction. Technology was the biggest drag, which doesn’t bode well for the ASX, retailers including Nike Inc. (NSYSE: NKE) jumped 1.5% on signs of an improving economy.
Following Australia’s lead US job openings reached a two year high, hitting 7.4 million in March, as the vaccine rollout boosts hopes of a return to normal. The IMF also upgraded expectations for the global economy to grow of 6% in 2021 compared to 5.5% prior. The IMF expect China to solidify its dominance, expected to generate over 20% of global economic growth in the next five years. The fallout from the Greensill and Archegos debacles continues, with Credit Suisse taking a US$4.7 billion loss. Late last week Tesla (NYSE: TSLA) reported the delivery of 185,000 vehicles in the first quarter, a record and well ahead of expectations despite a microchip shortage.
