ACCC approves Sydney Airport, Vulcan soars on VW deal, Whitehaven rating hike: ASX down 0.3% at noon

Market Reports

by Melissa Darmawan

The Australian sharemarket dipped at the open and is on track to snap its four-day winning streak. Market participants were welcomed by a consolidation on Wall St ahead of the key inflation figures after a gallop across the major indexes in the past week amid comfort around the hawkish tilt from the Fed, and positive vaccine news coming from Pfizer and BioNTech. 

Despite the favourable outcome from early trials, investors focused on the surge in Covid-19 cases in Europe, which saw their major indexes buck the rally. The UK had recorded over 51,000 new cases, with Prime Minister Boris Johnson reviving the work from home mandate to buy time for booster shots to be administered.

In Asian markets, Japan’s Nikkei’s had a choppy start though its performance is muted as investors assess the Omicron risk to the economic recovery.

On this backdrop, local investors digested several updates where the competition watchdog gave its nod of approval on numerous mergers that have been on the cards. Adding to the gateway is news in the resources space on the export of lithium and LNG both here in Australian and in Europe with a few giants in its respective arena.

The losses at time of writing are mainly across the board with industrials ekeing out a 0.3 per cent gain as the only sector in the black. This was helped by Sydney Airport (ASX:SYD) taking-off on news that the ACCC has given its nod to allow Sydney Aviation Alliance the go ahead with its merger. Shares trading 2.8 per cent higher at $8.58.

The worst performer is information technology down 0.9 per cent on a weak lead from Wall St with consumer discretionary, and communication services trading lower. The losses are mild across the sectors in the order of 0.1 per cent and 0.6 per cent.

Market participants are also digesting news from Governor Philip Lowe’s online speech this morning. Dr Lowe has welcomed the government’s planned regulatory overhaul of the payments systems presenting the opportunity for a RBA backed digital currency said that it “could emerge quite quickly”. “The digital economy is very important to Australia’s future and we need a regulatory system that encourages innovation and ensures the system is safe and stable.”

The major lenders are trading mixed and in a muted fashion. Westpac (ASX:WBC) is leading by 0.1 per cent, followed by National Australia Bank (ASX:NAB) ekeing out a 0.07 per cent gain. Commonwealth Bank (ASX:CBA) is underperforming by 0.3 per cent then ANZ (ASX:ANZ) by 0.2 per cent.

Across the resources space, Fortescue Metals (ASX:FMG) continues to rally adding another 0.5 per cent, while BHP (ASX:BHP) is down 0.7 per cent, followed by Rio Tinto (ASX:RIO) trading 0.4 per cent lower.

Woodside Petroleum (ASX:WPL) is managing to keep its gains, up 0.05 per cent while Santos (ASX:STO) and Oil Search (ASX:OSH) is trading 0.7 per cent and 0.2 per cent lower, respectively. Meanwhile, Whitehaven Coal (ASX:WHC) is trading 1.0 per cent higher at $2.51 amid a broker upgrade. Check out broker moves.

At noon, the S&P/ASX 200 is 0.3 per cent or 19 points lower at 7,387. The SPI futures are pointing to a fall of 38 points.

Local economic news

Payroll jobs rose by 0.2 per cent in the fortnight to November 13, following a rise of 1.5 per cent in the previous fortnight, according to figures released on Thursday by the Australian Bureau of Statistics.

Company news

The Australian Competition and Consumer Commission (ACCC) has given its nod of approval around Cleanaway’s (ASX:CWY) $501 million proposal to buy parts of Suez locally-based waste assets.

The Australian Competition & Consumer Commission (ACCC) has given its approval for Seven West Media's (ASX:SWM) offer to buy Prime Media (ASX:PRT) valued at $132 million.

The Australian Competition & Consumer Commission (ACCC) has paved the way for Sydney Aviation Alliance’s proposed $23.6 billion proposal to buy Sydney Airport (ASX:SYD).

Viva Energy (ASX:VEA) awards Woodside Petroleum (ASX:WPL) the go ahead to supply the east coast with LNG from Western Australia via a memorandum of understanding (MoU).

Gina Rinehart-backed Vulcan Energy (ASX:VUL) inked a deal with auto giant Volkswagen to supply at least 34,000 tonnes of battery grade lithium for five years.

Broker moves

Citi upgraded Whitehaven Coal’s (ASX:WHC) rating to a buy from neutral with a price target of $3.20. The broker has published its annual commodities 2022 outlook report and noted that after five solid quarters of outperformance, it expects the sector to take a breather, setting up a "more diversified sector for 2022 and 2023". Citi expects energy and bulk commodities will underperform the market and that base metals will outperform.

Iron ore is expected to stage a U-shaped price move next year as China eases credit sales and property bounces back. Citi expects iron ore prices to average US$88 a ton in the June half and US$105 a ton in the second half, before pulling back in the longer term to US$60 to US$80 a ton.

Analysts also forecast higher lithium prices but feels that cost headwinds are ahead amid energy inflation, higher feedstock prices, wages and logistics costs come to fruition. The rating upgrade comes after the recent strong retreat in the share price. Target price eases to $3.20 from $3.50 to reflect a weaker earnings outlook. Shares in Whitehaven Coal (ASX:WHC) are trading 1.0 per cent higher at $2.51.
 
Best and worst performers

The best-performing sector is Industrials, up 0.3 per cent. The worst-performing sector is Information Technology, down 1.1 per cent.

The best-performing stock in the S&P/ASX 200 is IGO Limited (ASX:IGO), trading 3.5 per cent higher at $10.54. It is followed by shares in Polynovo Limited (ASX:PNV) and Sydney Airport (ASX:SYD).

The worst-performing stock in the S&P/ASX 200 is Redbubble Limited (ASX:RBL), trading 7.8 per cent lower at $3.07. It is followed by shares in Codan Limited (ASX:CDA) and Magellan Fin Grp Ltd (ASX:MFG).

Commodities and the dollar

Gold is trading at US$1784.66 an ounce.
Iron ore is 1.4 per cent lower at US$107.00 a ton.
Iron ore futures are pointing to a fall of 2.4 per cent.
One Australian dollar is buying 71.63 US cents.

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