ASX 200 on Wednesday: Top 5 things to watch out

Summary

  • The Australian shares are expected to open lower amid concerns around a rise in inflation in the
  • According to the ASX 200 futures, the domestic market may fall by 0.6% at open.
  • The investors are expected to assess the impact of Australia’s federal budget on stocks today.

The Australian equity benchmark ASX 200 is expected to open marginally lower on Wednesday, tracking a sell-off on Wall Street overnight amid concerns around rising inflation in the United States. According to the ASX 200 futures, the domestic market may fall by 0.6% at open.

Even the ‘recovery budget’ presented by the Australian government on Tuesday, which allocated billions of dollars in fresh funding, would not be able to support the market today. The benchmark closed lower on Tuesday.

Across the Tasman Sea, New Zealand's benchmark NZX 50 equity rose 0.013% to 12,640.8 in early trade.

Meanwhile, on Tuesday, the NASDAQ closed down 0.1%, while the Dow Jones lost 1.4% and the S&P 500 fell 0.9%.

Here are top 5 things to watch out for today:

Source: ©Markrhiggins  | Megapixl.com

Impact of Australia’s federal budget 2021-2022

Australian Federal Treasurer Josh Frydenberg on Tuesday presented the national government’s budget for 2021-2022 to the lower house of Parliament. The Federal Government proposed a new funding for various sectors, including aged care, which received an AU$17.7-billion funding boost, and low- to middle-income earners. The latter will see up to 10 million Australians receive another tax offset of up to AU$1,080 in their refunds, providing a boost to consumer spending.

Stocks in focus could be Mayfield Childcare Limited (ASX:MFD), Think Childcare Group (ASX:TNK), and Japara Healthcare Limited (ASX:JHC).

Premier Investments Limited (ASX:PMV), Adairs Limited (ASX:ADH), and Wesfarmers Limited (ASX:WES) are the retail stocks to be tracked closely today.

Tech stock such as Rent.com.au Limited (ASX:RNT), Flexiroam Limited (ASX:FRX), and Peppermint Innovation Ltd (ASX:PIL) would also be in demand after the government allocated AU$1.2 billion over the next six years as part of its “Digital Economy Strategy”.

Meanwhile, S&P Global Ratings affirmed negative outlook on the Australian economy as the budget proposed heavy spending. The rating agency said that the budget left Australia with little room to address potential risks from trade tensions.

READ MORE: Is 2021 going to be a sparkling year for aluminium?

US inflation and the UK GDP data

On Wednesday, the US will release the April numbers for consumer price inflation. The rise in retail prices has been a cause for worry for the Federal Reserve, which has fixed an inflation target of 2%. The prices grew by 2.6% year-on-year basis in March. A Surge in inflation numbers has an impact on bond yields. Meanwhile, in keeping with market concerns about increasing inflation, the yield on benchmark 10-year Treasuries increased to 1.6235% overnight.

The UK is scheduled to release the first GDP estimates for the January-March quarter today. The data is expected to improve over past quarters in a country that has managed to vaccinate a large proportion of its population.

Gold, crude oil trade higher

Gold prices gained, as a softer US dollar negated losses arising by rising US Treasury yields. Spot gold increased 0.11% to US$1,837.39 an ounce, after dropping as much as 1% in the early session. The gold shares such as De Grey Mining Limited (ASX:DEG), Newcrest Mining Limited (ASX:NCM) and (ASX:RSG) could trade positively today. 

Oil prices reversed all early losses by the end of Tuesday's session. The gains were due to concerns around gasoline shortage after a cyberattack caused an outage at the largest US fuel pipeline system. The WTI crude notched up by 0.8% to US$65.44 a barrel, while Brent crude was up 0.5% to US$68.69 per barrel. Energy stocks such as Santos Limited (ASX:STO), Origin Energy Limited (ASX:ORG) and Woodside Petroleum Limited (ASX:WPL) could be in focus today.

READ MORE: Three ASX shares that are trading at a bargain

Source: © Paultama   | Megapixl.com

READ MORE: Why investing in gold stocks can add feather to your portfolio cap

Building approvals data

The Australian Bureau of Statistics will release data on building approvals. The seasonally adjusted estimate for total dwellings approved rose 17.4% in March. Private sector dwellings excluding houses rose 63.6%, while private sector houses rose 0.1% in seasonally adjusted terms. The real estate stocks such as Goodman Group (ASX:GMG), Mirvac (ASX:MGR), and Stockland (ASX:SGP) would be tracked by investors today.

Euro Zone CPI, industrial production data

Euro zone April CPI and March industrial production data would also be released today. The data would guide the European stock market for the rest of the week.

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