Wall St rebounds, BHP confirms unification, AMP rated as Sell: ASX to rise

Market Reports

by Melissa Darmawan

US stocks rebound as S&P 500 shakes off 2-day woes. OPEC+ sticks to output for January. Back home, ASX 200 dipped on tech tumble. BHP (ASX: BHP) confirmed their plans to proceed with its unification.

The Australian sharemarket is set to open higher with the SPI futures pointing to a gain of 0.7 per cent.

US stocks rebound as S&P 500 shakes off 2-day woes

Wall St jumped closing at session highs after yesterday’s 2-day worst losing stretch for the S&P 500 since October last year. We did lose a bit of steam in the final minutes of trade as volatility came in, amid three new cases that have been confirmed in America with the Omicron variant.

Adding to the volatility has been news from the Fed this week around the taper timeline, and the pace set to accelerate with interest rate hikes likely to be brought forward to help combat elevated and persistent inflation. Stocks were in rally mode boosted by hopes after President Biden said that a shutdown is not coming in a bid to reduce the spread of the new variant.

Weekly jobless claims rise

In economic news, weekly jobless claims came in above the prior week's 52-week low, below estimates and moving in the right direction. Last week’s 222,000 claims were consistent with where the job market was at pre-pandemic. These numbers are moving in the right direction, a positive indicator for the economy amid the labour shortages.

Apple iPhone 13 demand slows while Square will be Block

In tech news, demand for Apple’s iPhone has reportedly slowed down according to Bloomberg. The company told the suppliers that the demand for the iPhone 13 has fallen, and to cut the production goal by 10 million units. In a wider context, Apple has been one of the bright spots amid this volatile market edging higher. Shares closed 0.6 per cent lower.

Shares in Square fell 1.2 per cent on news they are changing their name to Block. The second company on Wall St in recent times to change their company name with Facebook now known as Meta. The company is expanding beyond the payments business and into blockchain and crypto technology. The name change is slated next week for the 10 December. As part of the change, Square crypto will be changed to Spiral. The rebrand comes after Jack Dorsey said that he was stepping down as CEO of Twitter a few days ago. Shares in Twitter closed 0.4 per cent lower.

OPEC+ sticks to output for January

Meanwhile, OPEC+ started their meeting to determine output targets for January. Their initial plan was to increase production by 400,000 barrels per day each month. This changed when the new variant of Covid-19 came, and the coordinated strategic approach to tap into oil reserves unfolded. Despite this, they stuck to the initial plans. Oil prices retreated before going back into rally mode, yet will remain under pressure till we find out more about the new variant.

The week has been choppy with catalysts from the Fed and the virus creating volatility. We have been in a pandemic for almost two years so investors have been primed to time their opportunities like buying the dip. To note, the major indexes are not too far away from record highs.

The Santa rally is starting to get momentum, though as we get closer to year-end lighter trading volumes are likely to create some rockiness. It appears that the new variant of the coronavirus has been treated with some caution, looked at with a different shade compared to the start of the pandemic, which is optimistic as concerns about the virus derailing the economic recovery have been one of the sources of uncertainty.

The next couple of weeks will be of importance to determine how deadly the new strain is and the impact it could have to the economy.

Wall St rises as bond yields dip

At the closing bell, the Dow Jones gained 1.8 per cent to 34,640, the S&P 500 added 1.3 per cent to 4,574 while the Nasdaq closed 0.8 per cent higher at 15,381.

Across the S&P 500, all sectors advanced. Industrials and energy led by 2.9 per cent followed by financials with healthcare adding the least, up 0.4 per cent.

The yield on the 10-year treasury note rose 1 basis points to 1.44 per cent, while gold dipped on a firmer greenback.

European markets sinks

Across the Atlantic, European markets closed lower. Paris lost 1.3 per cent, Frankfurt fell 1.4 per cent and London’s FTSE lost 0.6 per cent, with losses minimised buoyed by the resource giants. Miners and oil players rose with BHP and Shell as the standouts rising around 1.2 per cent.

BHP gained 1.2 per cent, Rio added 0.6 per cent, BP jumped 1.1 per cent, Shell advanced 1.3 per cent.

Asian markets mixed on IPO uncertainty

Asian markets closed mixed amid China Securities Regulatory Commission denied reports that the country is looking to ban companies from going public on offshore stock exchanges. Tokyo’s Nikkei fell 0.7 per cent, Hong Kong’s Hang Seng gained 0.6 per cent, while China’s Shanghai Composite shed 0.1 per cent,

ASX 200 sheds on tech tumble

Yesterday the Australian sharemarket closed 0.2 per cent lower at 7,225 rebounding from session lows after the local bourse found its footing.

Technology shares pressured the index tumbling 3.2 per cent among the seven sectors that declined, while defensives attempted to offset with utilities adding 1.5 per cent.

Afterpay (ASX:APT) led the declines in the tech sector tumbling 6.1 per cent to $100.02 on news that its shareholder meeting was pushed back due to a delay by the Bank of Spain to give its regulatory approval for the transaction. The buy-now pay-later giant has received the blessings from several regulators for the transaction except from the Bank of Spain at this point. The bank has a deadline earmarked for February 21 next year to provide its decision.

Woolworths (ASX:WOW) has emerged as a rival buyer for Priceline owner API (ASX:API) with a $862 million offer, a move that would see one Woolies spread its wings into the healthcare space. The deal is to acquire 100 per cent of the shares in API at a price of $1.75 a share valuing the business at $872 million. The bid is ahead of the Wesfarmers’ (ASX:WES) offer of $1.55 a share which was proposed in July that triggered a bidding tug of war with Sigma Healthcare (ASX:SIG), who are behind the Amcal and Guardian brands after its $773.5 million bid that was withdrawn in early November. Shares in Woolworths (ASX:WOW) closed 0.4 per cent higher at $39.99, while shares in Australian Pharmaceutical Industries (ASX:API) surged 16 per cent at $1.74.

Macquarie (ASX:MQG) added 1.5 per cent after naming out former Reserve Bank governor Glenn Stevens to pick up the baton from Peter Warne as chairman from May next year.

The other major lenders closed mixed with National Australia Bank (ASX:NAB) adding 0.8 per cent, ANZ (ASX:ANZ), marginally higher by 0.2 per cent while Westpac (ASX:WBC) bucked the trend closing 0.8 per cent lower. Commonwealth Bank (ASX:CBA) was the winner out of the lot adding 2.2 per cent.

Gaming giant Aristocrat Leisure (ASX:ALL) is one step closer to sealing the deal to buy UK online gaming platform Playtech, after shareholders in the UK listed firm gave its nod of approval to sell its financial trading division, Finalto, to Gopher Investments, meeting a condition of Aristocrat’s offer for the UK wagering company. Shares added 0.2 per cent.

In the casino space, Crown Resorts (ASX:CWN) rejected a sweetened takeover offer from Blackstone Group. The embattled casino operator said that the latest offer did not “represent compelling value”. Despite this, the Board has offered Blackstone the opportunity to undertake initial due diligence inquiries on a non-exclusive basis so they can formulate a revised proposal that would adequately reflect the value of Crown. Shares closed 0.7 per cent at $11.02.

The best-performing stock in the S&P/ASX 200 was Worley (ASX:WOR), closing 6.1 per cent higher at $10.08, followed by shares in AGL Energy (ASX:AGL), and Fletcher Building (ASX:FBU).

The worst-performing stock was Netwealth Group (ASX:NWL) closing 6.5 per cent lower at $15.19, followed by shares in Afterpay (ASX:APT), and Orocobre (ASX:ORE).

Company news

BHP (ASX: BHP) confirmed their plans to proceed with its unification. The BHP Board believes the unification is in the best interests of shareholders and that it will result in a simpler and more efficient company structure. This will see the ASX be the miner’s primary exchange. Shares in BHP Group (ASX:BHP) closed 0.5 per cent lower at $39.71 yesterday.

Broker moves

UBS rates AMP (ASX:AMP) as a sell with a price target of 90 cents. The broker models scenarios for an AMP demerger and concludes that the company's tight capital position, weak profitability, and structural decline reduces the odds of a successful solution. UBS notes the demerger-contender PrivatMarketsCo's revenues and margins have been falling in the past 18 months. The broker also notes that the near-term outlook is poor, raising demerger and transformation costs and accentuating dis-synergy risks. Meanwhile, the AMP business will be heavily reliant on cost-cutting.The broker downgrades forecasts by a fall of 17 per cent this financial year. Shares in AMP (ASX:AMP) closed 4.1 per cent lower at $0.94 yesterday.

Ex-dividend

There are three companies trading ex-dividend today.

Civmec (ASX:CVL) is paying 1 cent fully franked
Infratil (ASX:IFT) is paying 6.2669 cents unfranked
Oceania Healthcare (ASX:OCA) is paying 1.7058 cents unfranked

AGMs

There are two companies set to meet with shareholders.

Allegiance Coal (ASX:AHQ)
Tuas (ASX:TUA)

Dividend-pay

There are four companies set to pay eligible shareholders today.

HGL (ASX:HNG)
Irongate Group (ASX:IAP)
QV Equities (ASX:QVE)
Steamships Trading (ASX:SST)

Commodities

Iron ore has lost 2.7 per cent to US$101.62. Its futures point to a 1.9 per cent fall.

Gold lost $14.90 or 0.8 per cent to US$1769 an ounce, silver was up $0.07 or 0.3 per cent to US$22.41 an ounce.

Oil gained $1.34 or over 2 per cent to US$66.91 a barrel.

Currencies

One Australian Dollar at 8:15 AM has weakened from yesterday, buying 70.90 US cents (Thurs: 71.05), 53.31 Pence Sterling, 80.23 Yen and 62.75 Euro cents.
 

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.