Wall St climbs on debt deal, Irish central bank slaps EML Payments, Sims rated as a buy: ASX to rise

Market Reports

by Melissa Darmawan

Global indexes around the globe closed higher, the U.S. debt ceiling gave investors a sigh of relief. European markets were helped along with Russia's lifeline to stabilize the energy markets. The ASX snapped its 2-day losing streak as technology stocks rose. EML Payments (ASX:EML) warns shareholders about Irish central bank's next moves.
 
The Australian sharemarket is set to rally, with the SPI futures pointing to a gain of 0.5 per cent.

Debt ceiling extension saves the day

U.S. stocks closed higher after investors had a sigh of relief, lawmakers reached a deal to avoid a debt default till December. The tech-heavy Nasdaq outperformed out of the three major indexes again, as they recovered from Monday’s selloff which saw Facebook shares and other tech titans tumble.

Despite stocks closing higher, investors are still preparing for more volatility on the cards. There are still a wide range of outcomes ranging from economic indicators, to corporate earnings and supply chain issues, and also inflation which continues to take the spotlight.

The global energy crisis calmed inflation concerns on unexpected stockpiles in the U.S. However, overnight oil prices rose after the U.S. department of energy said it has no plans "at this time" to tap into oil reserves to help with rising gas prices.

Jobless claims beat expectations ahead of jobs report

Adding to the sentiment, investors also watched the labour market move in the right direction ahead of the closely watched jobs report, which could determine the Fed's timeline for tapering monetary policy.

Americans filing for first time unemployment benefits fell to 326,000 for the first time in four weeks according to the Labor department. This puts claims close to their pandemic low of 312,000 seen last month, before Hurricane Ida hit and the expiration of the federal unemployment benefits. Since then, kids have returned back to school allowing parents to go to work. However, to the downside, we did see delta cases peaking.

So, could we be up for a trifecta? We had better-than-expected ADP private payroll jobs figures, now jobless claims have improved. Hopefully, we might get better-than-expected nonfarm payroll figures tomorrow. This is in the backdrop of the ISM manufacturing and service reports showing tailwinds.

Wall St gains, bond yields rose as gold dips

At the close, the Dow Jones gained almost 1 per cent to 34,755, the S&P 500 added 0.8 per cent to 4,400 while the Nasdaq closed 1.1 per cent higher at 14,654.

The yield on the 10-year treasury note by 5 basis points to 1.57 per cent, as gold dipped on a weaker greenback.

Across the S&P 500 sectors, the gains were almost across the board with utilities being the outlier, shedding 0.5 per cent. Consumer discretionary was the best performer adding 1.5 followed by materials and healthcare. Technology continued to ascend at 0.9 per cent.

European markets rebounds as investors buy-the-dip

Across the Atlantic, European markets closed higher after Russia’s intervention in the gas market calming investors.

Paris gained 1.7 per cent, Frankfurt advanced 1.9 per cent and London’s FTSE closed 1.2 per cent higher.

Rio Tinto surged 4 per cent, BHP jumped 3.6 per cent. While Shell advanced 1.3 per cent and BP rose 1 per cent on news that the cash boost from high energy prices in the September quarter is slated to offset the US$400 million impact of Hurricane Ida on its Gulf of Mexico operations.

Asian markets rally ahead of China markets resuming trade

Asian markets closed higher. Tokyo’s Nikkei snapped its eight day losing streak adding 0.5 per cent, Hong Kong’s Hang Seng gained 3.1 per cent while China’s Shanghai Composite was closed.

ASX 200 snaps 2-day losing streak

Yesterday, the Australian sharemarket closed 0.7 per cent higher at 7,257, snapping its two day losing streak.

The local bourse had gains across the board except energy, as they took a breather, shedding 0.8 per cent. Despite the pull back in the sector, it has had an excellent run coming off a 16 per cent surge in September amid the energy crisis in Europe and in Asia. Technology stocks was the best performer, up 2.3 per cent, then financials and healthcare.

The best-performing stock in the S&P/ASX 200 was Super Retail Group (ASX:SUL), closing 7.8 per cent higher at $12.38 on the back of a broker upgrade. UBS believes the company is beneficiaries of the post lockdown math and upgraded its earnings per share forecast and rating. It was followed by shares in Collins Foods (ASX:CKF) and Pilbara Minerals (ASX:PLS).

The worst-performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC) closing almost 7 per cent lower at $3.34 followed by shares in The Star Entertainment Group (ASX:SGR) and Santos (ASX:STO).

In company news, the competition watchdog has slapped Qube (ASX:QUB) with an investigation into the company’s $90 million spending spree to acquire Newcastle Agri Terminal. The deal went ahead before the ACCC gave its tick of approval on potential competition concerns. Shares in Qube Holdings (ASX:QUB) closed 0.6 per cent lower at $3.27.

Collins Foods (ASX:CKF) inked a deal to run the KFC chain in the Netherlands over the next decade with Yum! Brands. The plan is to open up to 130 new KFC stores, quadrupling Collins' Dutch store count of 29. The agreement kicks off on the last day of this year. Shares in Collins Foods (ASX:CKF) closed 6.9 per cent higher at $12.81.

Wesfarmers (ASX:WES) snapped up their 19.3 per cent share in Priceline owner Australian Pharmaceutical Industries (ASX:API), in an effort to block out the owner behind the Amcal and Guardian brands, Sigma (ASX:SIG). The battle between the retail giants heated up after Sigma (ASX:SIG) swooped in and trumped Wesfarmers second offer last month. Despite Sigma’s offer being superior to Wesfarmers, the move prevents Sigma talking to API’s largest stakeholder, Washington Soul Pattinson who owns 19.3 per cent of the company. Shares in Wesfarmers (ASX:WES) closed 0.5 per cent higher at $54.33 while shares in Australian Pharmaceutical Industries (ASX:API) closed 1.7 per cent higher at $1.53, and shares in Sigma (ASX:SIG) closed flat at $0.57.

Wall St-listed Target tapped Sezzle (ASX:SZL) on the shoulder to partner with the retail giant to provide shoppers in the U.S the ability to buy-now and pay-later with Nasdaq-listed rival Affirm. Shares in Sezzle closed 14.6 per cent higher at $5.65

Local economic news

Today the Reserve Bank has pencilled in to publish the semi-annual Financial Stability Review.

Company news

Digital gift card business EML Payments (ASX:EML) is concerned that the Irish Central Bank's limits will hinder their European operations of the Prepaid Financial Services business after releasing an update after market close yesterday. Shares in EML Payments (ASX:EML) closed at $3.70 yesterday.

Broker moves

Citi upgraded Sims (ASX:SGM) to a buy with a target price of $18. The broker expects the metals and electronics recycling company to be the beneficiary of steel decarbonisation strategies.

Citi believes the stock is now "sufficiently cheap" even in a moderating scrap pricing cycle. The company is slated to benefit from China’s scrap demand growth over time.

The broker suspects the second half earnings per tonne in financial year 21 of US$76 per tonne was the peak for the current cycle. They expect this will retrace to a through cycle level of US$23 per cent in financial year 2024 in line with historical levels. The rating is upgraded from a neutral and the target price is reduced to $18 from $19.

Shares in Sims (ASX:SGM) closed 2.4 per cent higher at $12.72 yesterday.

Ex-dividend

Fat Prophets Gbl Ltd (ASX:FPC) is paying 4.5 cents fully franked
MFF Capital Inv Ltd (ASX:MFF) is paying 3.5 cents fully franked
Think Childcare (ASX:TNK) is paying 24 cents fully franked
Virtus Health Ltd (ASX:VRT) is paying 12 cents fully franked

Dividend-pay

There are 18 companies slated to pay eligible shareholders their dividends.

DDH1 (ASX:DDH)
Genesis Energy (ASX:GNE)
Healius (ASX:HLS)
Lindsay Australia (ASX:LAU)
LaserBond (ASX:LBL)
Lycopodium (ASX:LYL)
Metrics Income Opportunities Trust (ASX:MOT)
Monash IVF Group (ASX:MVF)
Metrics Master Income Trust (ASX:MXT)
Probiotec (ASX:PBP)
Perpetual Credit Income Trust (ASX:PCI)
Reliance Worldwide Corporation (ASX:RWC)
Ryder Capital (ASX:RYD)
Shine Justice (ASX:SHJ)
Sigma Healthcare (ASX:SIG)
Vita Life Sciences (ASX:VLS)
Woolworths Group (ASX:WOW)
WiseTech Global (ASX:WTC)

Commodities

Iron ore has gained 0.3 per cent to US$117.02.

Gold has lost $5.60 or 0.3 per cent to US$1,756 an ounce while silver was up $0.09 or 0.4 per cent to US$22.62 an ounce.

Oil was up $1.43 or 1.9 per cent to US$78.86 a barrel.

Currencies

One Australian Dollar at 7:20 AM has strengthened from yesterday, buying 73.15 US cents 53.73 Pence Sterling, 81.65 Yen and 63.30 Euro cents.
 

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