‘Elon effect’ drops Bitcoin; Warner and Discovery to merge; ASX to rise despite US lull

The Australian share market is set to modestly rise, despite tech stocks on Wall Street pulling that market lower.

At 9:30am AEST, ASX 200 futures were up 0.2 per cent.

The benchmark closed 0.1 per cent up on Monday after it was pulled higher by energy stocks.

Meanwhile, globally the price of oil is up.

It is up 1.1 per cent to $US69.46 on rising demand from the US and hopes that it will rise further as Europe re-opens from the pandemic.

Tech stocks drag down Wall St

There are concerns that rising inflation in the US will see monetary policy soon tightened.

Vice-chair of the Federal Reserve, Richard Clarida, said the US economy has not met the “substantial further progress” threshold for tapering asset purchases.

He also said “we will certainly give advance warning before we anticipate scaling back the pace of those purchases”.  

But ANZ analysts noted that Mr Clarida did not sound an alarm from last week’s big inflation surprise.

“We expect the minutes from the FOMC’s April 28 meeting released on Thursday morning to be consistent with Clarida’s views,” a company spokesperson said.

As those fears grow, all US markets ended lower, with the tech-laden Nasdaq taking the biggest hit, albeit with a loss of just 0.4 per cent.

Major retailers including Walmart, Ralph Lauren, Macy’s and Target (American) are all set to report in the US this week.

The US dollar is also down against the major currencies.

The Australian dollar is buying 77.69 US cents.

‘Elon effect’ continues on Bitcoin

The cryptocurrency has dropped to a three-month low after Tesla boss Elon Musk took it on a wild ride.

Bitcoin is down to US$42,185 – which is still high compared to last year but its lowest value since February.

Mr Musk had been a big proponent of the currency but in the last week has been tweeting concerns about its environmental impact and how he won’t let people use it to buy Tesla cars.

That had followed pressure from activists about his use of Bitcoin, which has a large carbon footprint due to the process known as “mining”.

Mr Musk suggested earlier this week that he may have sold off some of his coin.

But in a tweet he now said Tesla has not sold off any of the cryptocurrency.

Loading

Mega entertainment merger

Mega entertainment production house WarnerMedia and TV network Discovery are set to merge.

The merger will put another streaming giant into the increasingly competitive space.

WarnerMedia is owned by conglomerate AT&T.

WarnerMedia includes the eponymous film studio that produces blockbusters such as Harry Potter and Batman, and HBO, the producer of shows such as Game of Thrones and Sex & The City.

Meanwhile, separate company Discovery has TV channels such as Animal Planet and Food Network.

In a note to investors, AT&T said it would spin off WarnerMedia to merge with Discovery, subject to regulatory approvals.

“The companies expect the transaction will create substantial value for AT&T and Discovery shareholders by … accelerating both companies’ plans for leading direct-to-consumer streaming services for global consumers,” the note said.

“The new company will compete globally in the fast-growing direct-to-consumer business.”

The deal comes as streaming platforms such as Netflix performed strongly during the pandemic and increasingly challenged traditional production houses.

The enterprise value of the new combined company will be more than $US120 billion, carrying $US58 billion in debt.

AT&T only spent $US85 billion to acquire the WarnerMedia assets less than three years ago.

The name of the new company will be disclosed by next week.