ASX set to rise as GameStop shares surge again in the US, Nasdaq slumps

The Australian share market is set to continue its positive trend this week.

At 7:45am AEDT, ASX futures were up 0.7 per cent to 6,781.

The benchmark local ASX 200 index closed 0.4 per cent higher on Monday after being up by as much as 1.8 per cent earlier in the session.

Stocks were boosted by the local currency trading down at 76.60 US cents.

CBA analysts are predicting the Australian dollar will slump further.

“The risk in the near term is that AUD moves nearer our end-March forecast of 0.76,” they said. 

“While the bond rout is pulling AUD lower, the medium term fundamentals of high commodity prices will eventually push it higher in our view.”

Wall Street had mixed results on its first day of trade for the week.

The Dow climbed, led by stocks poised to benefit the most from an economic rebound as the US Senate passed a US$1.9 trillion COVID-19 relief aid.

President Joe Biden said he hoped for a quick passage of the revised coronavirus relief package by the House of Representatives so he could sign it and send $US1,400 direct payments to Americans.

But prospects of more government spending and faster economic growth have stoked fears of a spike in inflation, sending the benchmark 10-year Treasury yield to near one-year highs.

US Treasury Secretary Janet Yellen said she did not expect the economy to run too hot because of the increased spending.

The Dow was less than 100 points below its record closing high. The S&P 500 had been in the green most of Monday but then slumped in late trading.

Tech stocks were also taking a hit with the Nasdaq trading down in late trade.

Most tech-related stocks, including Apple, Microsoft, Tesla and Amazon, resumed a slide from the past three weeks on fears of higher interest rates.

Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up.

GameStop stock rising again

Shares in the US gaming company surged more than 50 per cent along with other so-called meme stocks.

GameStop surged in January thanks to enthusiastic Reddit users taking on shortsellers and then slumped again.

On US Monday trade, they again climbed to $US210.87. That was still far beyond its climax in late January at $US347.51.

Other stocks favoured by retail investors on forums such as Reddit’s now famous WallStreetBets also rallied.

This included AMC Entertainment, headphone maker Koss Corp, and Rocket Companies.

Delivering platform prepares for UK IPO

European markets ended largely in the green on their first day of trade for the week.

One of the headline-making events of the day was when the food delivery app Deliveroo announced it will list on the London share market.

Like most parts of the world hit by COVID-19, food delivery businesses have surged in the UK during the pandemic.

Deliveroo is a global app and has a presence in Australia that rivals Uber Eats.

Its initial IPO is expected to value its worth at $US7 billion.

That is based on a $US180 million private funding round completed in January with backers including minority shareholder Amazon, the world’s most valuable company. (Full Story)

That would make it the biggest London IPO by market cap since Royal Mail in 2013.

The app is pinning its hopes on the continuing demand for food delivery apps.

However, the Deliveroo IPO revealed it is still operating at an underlying loss of $US308.93 million in 2020.

ABC/wires