Wall St mixed as Tech falls, Oil price rises, Whitehaven's price target lifts: ASX to lift

Mixed market around the globe as earnings results helped offset inflation and supply chain concerns. Alibaba surges lifting Hong Kong’s Hang Seng. ASX pushed higher by tech & banks. Morgan rated Whitehaven Coal (ASX:WHC) as a buy lifting its target price after base case analysis.

The Aussie market is set to rally with the SPI futures pointing to a gain of 0.2 per cent.

Dow hits record high on earnings wave

A mixed market on what has been a solid week. The Dow hit a new record high as investors continued to digest strong corporate earnings. Results have come in stronger than expected though questions arise around the profit outlook. Despite this, the results have impressed market participants powering the major indexes, the Dow took the spotlight today while the S&P 500 is on a six day winning streak.

Technology names have taken a step back, after the yield on the 10-year treasury note danced in the range we have been seeing.

Netflix fell over 2.0 per cent as Deutsche Bank downgraded the stock. Despite two-thirds of their subscribers already watching Squid Game, this figure did not have any major impact on U.S. subscriber numbers. The success has already been priced in which could be a concern for next year’s outlook. As the world reopens, people are likely to be out and about, rather than at home amid government stimulus waning. The broker downgrade went from a buy to a hold, with an unchanged target price of US$590.

Telecom giant Verizon shares rose over 2.3 per cent after a surprising strong earnings report. Subscriber growth improved along with better-than-expected guidance for the full year.

United Airlines dipped 0.6 per cent despite reporting a beat on revenue. The airline said that the cost of fuel will likely lead to higher ticket prices. They didn’t say when they are looking to be profitable. The news comes ahead of its rivals American Airlines, Southwest and others set to report their results. Investors are starting to mull on how much they need to budget, on booking that next trip.

Shares in Pinterest soared almost 13 per cent on reports that PayPal might acquire the platform. The moves would bring the payments company into the eCommerce space. An area where Facebook and its other brands, Instagram have been working in. Bloomberg said that the deal would value the company at US$39 billion. PayPal sunk 5 per cent on the news.

Looking at some politics, the Biden administration’s moves boosted optimism as the infrastructure bill is getting closer to being finalized. The package is likely to be more at the US$1.9 trillion mark. The President won’t see all the ticket items get pushed through, though what will, is set to put the economy on a stronger outlook ahead of the midterm elections.

Elsewhere, the Federal Reserve Beige Book noted that the economy is expanding at the mercy of supply chain disruptions. The growth was seen to grow at a "modest to moderate rate" with "most districts reported significantly elevated prices". While, MBA mortgage applications fell by 6.3 per cent in the past week.

Wall St mixed as bond yields ticks higher

At the closing bell, the Dow Jones gained 0.4 per cent to 35,609, the S&P 500 added 0.4 per cent to 4,536 while the Nasdaq closed 0.1 per cent lower at 15,122.

The yield on the 10-year treasury note ticked higher by 2.0 basis points to 1.65 per cent, gold shined on a weaker greenback.

Across the S&P 500 sectors, defensives led with three losers. Utilities was the best performer, up 1.6 per cent followed by real estate and health care. Technology was the worst performer down 0.3 per cent followed by communication services then consumer discretionary.

European markets mixed on inflation

Across the Atlantic, European markets closed higher. Paris added 0.5 per cent, Frankfurt rose 0.1 per cent and London’s FTSE closed also 0.1 per cent higher on a mild dip in the annual inflation rate.

The annual U.K. consumer prices rose 3.1 per cent in September, slowing from 3.2 per cent the month before. Annual inflation fell back due to the unwinding of their Eat Out to Help Out campaign, which contributed to the push up to 3.2 per cent in August. However, the cost of producing factory goods rose, with metals and machinery showing an increase too.

Across the miners and oil giants, it was a mixed closed collectively. BHP lost 0.3 per cent, Rio dropped 3.3 per cent after they raised its capital spending plans and pledged US$7.5 billion to reduce carbon emissions. BP added 0.3 per cent while Shell closed 0.1 per cent higher.

Travel stocks like IAG tumbled 4.9 per cent on concerns about rising Covid-19 infections and a new mutation.

Asian markets mixed as Alibaba surges

Asian markets closed mixed. Tokyo’s Nikkei added 0.1 per cent on weak export growth in September.

Hong Kong’s Hang Seng gained 1.4 per cent on the hopes that Beijing will soften their approach in regulating the tech sector. Alibaba surged over 6.6 per cent also.

China’s Shanghai Composite closed 0.2 per cent lower after the central bank injected more liquidity but left prime loan rates unchanged. Expectations for cuts to the bank reserve ratio requirements also eased.

ASX 200 lifted higher by tech & banks

Yesterday, the Australian sharemarket closed 0.5 per cent higher at 7,414, its highest finish in more than a month. The gains were nearly across the board except for energy and communications services.

Financials were the second main contributor behind technology with the Commonwealth Bank (ASX:CBA) leading out of the major four adding over 1.0 per cent.

Across the resources space, Woodside Petroleum (ASX:WPL) surged 1.8 per cent while, BHP (ASX:BHP) led out of the mining giants adding 0.5 per cent. The miner raised its offer for Canadian nickel explorer Noront Resources by $128 million.

Kogan.com (ASX:KGN) soared 6.7 per cent after the online retailer posted a 32 per cent surge on quarterly earnings in the September quarter. They celebrated a 23 per cent increase in sales, and they resolved their issue around excess inventory.

Worley rocketed at 7.5 per cent after UBS boosted its rating and 12 month target price. The moves followed the news on Tuesday after they were awarded a contract with Shell. The deal was to help develop a low-carbon fuel plant in the Netherlands.

The best-performing stock in the S&P/ASX 200 was Codan (ASX:CDA) closing 7.6 per cent higher at $13.33. It was followed by shares in Worley (ASX:WOR) and Kogan.com (ASX:KGN).

The worst-performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC), closing 7.9 per cent lower at $3.05. It was followed by shares in Flight Centre Travel Group (ASX:FLT) and The Star Ent Group (ASX:SGR).

In other company news, Brambles (ASX:BXB) jumped 2.5 per cent after a number of brokers reiterated its positive outlook. The broker noted that their pallet and container subsidiary, CHEP would be able to pass on price hikes to customers. Apparently, their customer base is prepared to pay a premium for quality and reliability of supply.

REA (ASX:REA) surged 4.9 per cent after they unveiled plans to lift its stake in Property Guru with an $32 million equity investment.

Local economic news

Today the Bureau of Statistics is set to release weekly payroll jobs and wages figures for the fortnight to September 25.

This will give us an insight to the jobs market in a period that wasn’t covered in the labour force report last week.

Broker moves

Morgans rates Whitehaven Coal (ASX:WHC) as an add with a target price boost of $3.92. The company’s September quarter production was in line with the broker's forecast, though coal prices are this company’s friend. Market feedback suggests that there is upside risk to the broker's base-case financial year 2022 price forecast. Therefore, there was some modelling done on a base and bull case. On a base case, valuation is $3.32 but on a bull case it rises to $4.51. So, they’ve split the difference to raise the target price to $3.92 from $3.85 keeping the broker rating unchanged. Shares in Whitehaven Coal (ASX:WHC) closed 7.9 per cent lower at $3.05 yesterday.

Ex-dividend

Spheria Emerging Co (ASX:SEC) is paying 2.5 cents fully franked

Dividend-pay

There are five companies set to pay eligible shareholders dividends today.

Austal (ASX:ASB)
Charter Hall Social Infrastructure REIT (ASX:CQE)
Lovisa Holdings (ASX:LOV)
SRG Global (ASX:SRG)
Think Childcare (ASX:TNK)

AGMs

There are 12 companies slated to meet with shareholders virtually today.

APA Group (ASX:APA)
Auckland International Airport (ASX:AIA)
Charter Hall Long Wale REIT (ASX:CLW)
Crown Resorts (ASX:CWN)
Endeavour Group (ASX:EDV)
Healius (ASX:HLS)
Magellan Financial Group (ASX:MFG)
Orora (ASX:ORA)
Perpetual (ASX:PPT)
Perpetual Equity Investment Company (ASX:PIC)
Transurban Group (ASX:TCL)
Wesfarmers (ASX:WES)

Quarterly report

There are nine companies set to release a quarterly update.

AMP (ASX:AMP)
Cimic Group (ASX:CIM)
Iluka Resources (ASX:ILU)
Megaport (ASX:MP1)
Mirvac Group (ASX:MGR)
Santos (ASX:STO)
South32 (ASX:S32)
Transurban (ASX:TCL)
Woodside Petroleum (ASX:WPL)

IPOs

There are two companies slated to make their debut on the ASX today. Keep an eye out for Tech Minerals (ASX:ITM) and Lykos Metals (ASX:LYK).

Commodities

Iron ore has added 3 cents to US$124.07. Its futures point to a 1.7 per cent gain.

Gold gained $14.60 or 0.8 per cent to US$1785 an ounce, silver was up $0.53 or 2.2 per cent to US$24.41 an ounce.

Oil was up $0.91 or 1.1 per cent to US$83.87 a barrel as U.S. crude stockpiles fell.

Currencies

One Australian Dollar at 7:30 AM has continued to strengthen from yesterday, buying 75.19 US cents, 54.39 Pence Sterling, 85.98 Yen and 64.54 Euro cents.

Investor event

Please join us for our next online investor event on Tuesday 26 October with six companies presenting. From lithium explorers to marketing service providers. Make your way to fnn.com.au to reserve your free online spot.