Wall St gains, Incitech profit surges, NAB ex-div today, MAF's target price rise: ASX to open flat


Mixed market around the globe as earnings season winds down amid hot inflation. U.S stocks rallied but closed lower for the week. Commodity players and travel stocks fell led to a weaker performance in Europe. Evergrande’s move brought enthusiasm in Asian markets. MA Financial (ASX:MAF) rated as a buy with Ords giving its target price a 90 per cent jump to $10.50.

The Australian sharemarket is set to open flat with the SPI futures pointing to a 0.04 per cent fall, to be precise.

U.S stocks rally but closes lower for the week

Wall St rallied on Friday with the Nasdaq and the S&P 500 extending their gains from Thursday, while the Dow rose for the first time in four sessions. Over the week, the major indexes snapped a five-week winning streak.

Inflation jitters short-lived

Mid-week there was a bit of trepidation from investors after fresh economic data showed that inflation tipped its highest level in more than 30 years. Though the clawback appeared to be short-lived. Investors seem to believe that the current price spikes amid the supply chain bottlenecks won’t be forever. The Fed has also repeatedly referred to the factors driving inflation as "transitory".

It was enough to send the major indexes spiralling on Wednesday, and a mixed performance on Thursday as the bond yield continued to rise, and it rose after being closed for Veterans Day.

All this coming within striking distance of record highs, the major indexes closed near session highs, but lower on the week.

Record quitters as job openings higher than unemployed

Adding to the docket of economic news was job openings coming in at 10.4 million, with the number of listings for new jobs higher than the number of unemployed people of 7.6 million.

Meanwhile, the number of Americans quitting their jobs is at record highs. There were 4.4 million people who quit their jobs in September according to the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS. A lot of this movement as the economy continues to reopen.

Consumer sentiment falls to 10-year low on inflation worries

Elsewhere, consumer sentiment fell to its lowest point in a decade. One in four consumers said that their standard of living fell in November due to higher costs and concerns about inflation.

Johnson & Johnson lifts Dow as Tesla falls

Johnson & Johnson gave the Dow a lift after announcing the split of the company into two. The division that sells band-aids and baby powder is going to split off from the division that sells medical devices and prescription drugs. Shares closed 1.2 per cent higher.

In other news, CEO Elon Musk sold more shares according to a regulatory filing worth more than US$1.2 billion. This portion follows the US$5.6 billion sale earlier last week. The move follows a tweet where he asked his followers if he should sell a portion of this stake. Shares in Tesla closed 2.8 per cent lower and fell 10 per cent over the week.

Oil price falls amid weaker demand

In the energy space, oil prices fell after OPEC+ said on Thursday that they are looking to cut its oil demand forecast by 330,000 barrels per day for the fourth quarter.

One of the reasons for this are the challenges on the demand side, with fresh Covid-19 outbreak in India and China, with mobility restrictions likely to have less demand on energy. Now, this lifts the pressure off OPEC+ to increase output. Less demand amid the outbreak.

Adding to other reasons why, the slowdown in factory activity in China, energy demand is less if factory activity is as well. Also not to mention, the power caps on factories.

Let’s see how this plays out with inflation amid the supply chain disruptions. The pinch in supply of textiles and toys made in China could put pressure on developed countries, if demand for toys and clothes is higher than supply. We are already seeing this in the semiconductors space and the impact on tech titans like Apple.

Wall St gains as bond yields rise

At the closing bell, the Dow Jones added 0.5 per cent to 36,100, the S&P 500 added 0.7 per cent to 4,683 while the Nasdaq closed 1.0 per cent higher at 15,861.

Across the S&P 500, energy and utilities were the only losers, down 0.3 and 0.2 per cent respectively. Communication services and technology were the best performers, while the other sectors advanced.

The yield on the 10-year Treasury rose one basis point to 1.57 per cent, gold rose against a weaker greenback.

European markets mixed on renewed Covid-19 restrictions

Across the Atlantic, European markets closed mixed after the European central bank cited that inflation may ease slower than anticipated partly due to supply chain bottlenecks. Travel stocks also fell amid renewed Covid-19 restrictions.

In company news, AstraZeneca tumbled 6.8 per cent after quarterly profits missed expectations.

Luxury giant Richemont skyrocketed almost 11 per cent after beating profit expectations and said it is set to divest its underperforming online business. LVMH rose 2.5 per cent after unveiling its plans to open its first duty-free store in China.

Paris added 0.5 per cent, Frankfurt gained 0.1 per cent and London’s FTSE closed 0.5 per cent lower, weighed down by commodity players and a strong dollar.

Miners and oil players fell in UK trade. BHP lost 0.7 per cent, Rio dropped 0.8 per cent, BP fell 1.2 per cent, Shell dipped 1.1 per cent.

Asian markets rally as Evergrande pays

Asian markets closed higher as property developer Evergrande averted another default on Friday boosting optimism. Tokyo’s Nikkei added 1.1 per cent, Hong Kong’s Hang Seng gained 0.3 per cent, while China’s Shanghai Composite rose 0.2 per cent.

ASX 200 snaps 4-day losing streak

On Friday, the Australian sharemarket closed 0.8 per cent higher at 7,443 snapping a four day losing streak, as iron ore miners advanced. The local bourse eased 0.2 per cent over the week.

The gains were almost across the board except healthcare. The materials sector jumped 2.3 per cent to close higher for its fourth session.

The healthcare sector weakened as Ramsay (ASX:RHC) and Ansell (ASX:ANN) fell amid a number of broker downgrades following disappointing results last Thursday.

Link Administration (ASX:LNK) got tapped on the shoulder by a syndicate led by Pepper European Servicing for its Banking and Credit Management business for $85.8 million (55 million euros). Shares surged 3.5 per cent at $4.77.

James Hardie (ASX:JHX) took the spotlight after investors continued to mull on its second quarter results. The building materials company’s net profit almost tripled to $366.5 million in the half ended 30 September this year. Net sales grew 28 per cent to $2.4 billion. Global adjusted EBIT rose 26 per cent to a record $281 million with the company’s adjusted EBIT margin expanding by 70 basis points to 22.8 per cent. The stock dropped 0.7 per cent last Thursday but on Friday, the wheels turned.

The best-performing stock in the S&P/ASX 200 was James Hardie Industries (ASX:JHX), closing 5.2 per cent higher at $56.48, followed by shares in IGO (ASX:IGO), and Champion Iron (ASX:CIA).

The worst-performing stock in the S&P/ASX 200 was Fisher & Paykel Healthcare (ASX:FPH) closing 3.2 per cent lower at $29.74, followed by shares in Nearmap (ASX:NEA), and Monadelphous Group (ASX:MND).

Economic outlook for the week

The central banks are back in focus with the minutes of the Reserve Bank board meeting slated tomorrow.

Eyes will be on these minutes as the minutes give the context to the central bank’s decision. Given that the RBA discontinued the three-year bond yield target which saw the bond yield rally, it may give us an insight to why they made that move.

Tomorrow, the RBA Governor Phillip Lowe is pencilled in to deliver a paper on “Recent Trends in Inflation”, a very timely topic given where inflation is around the globe.

Two senior Reserve Bank officials are also delivering speeches including Tony Richards, Head of Payments Policy and Luci Ellis, Assistant Governor (Economic).

Other things to keep an out for this week include consumer confidence numbers, wage price index figures expected to show signs of upward pressure in hospitality and construction.

Overseas, we have figures coming from China today on their activity. It will be interesting to see how high costs of raw material prices, freight costs, electricity shortages will play a role for October.

Company news

Incitec Pivot (ASX:IPL) posted a 91 per cent jump in its net profit after tax to $359 million in the 2021 financial year as its fertilisers business were the beneficiary of the upswing in commodity prices. Revenue came in 10 per cent higher to $4.34 billion. Final dividend 8.3 cents per share. Keep an eye out for more updates.

Broker moves

Ord rates MA Financial (ASX:MAF) as a buy with a boosted price target of $10.50. The company is currently enjoying strong operating momentum, with three upgrades to earnings guidance over the last six months.

Additionally, the financial group is a key beneficiary of the re-opening theme and Ords expect ongoing growth in asset management, long term optionality in lending and a steady contribution from corporate advisory. The target price got a boost by 90 per cent from $5.53 to $10.50.

Shares in MA Financial (ASX:MAF) closed over 2.0 per cent lower at $8.76 on Friday.

Ex-dividend

There are three companies trading ex-dividend today.

National Australia Bank (ASX:NAB) is paying 67 cents fully franked
Plato Income Maximiser (ASX:PL8) is paying 0.5 cents fully franked
QV Equities (ASX:QVE) is paying 1.2 cents fully franked

Dividend-pay

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

ALE Property Group (ASX:LEP)
Autosports Group (ASX:ASG)
Charter Hall Long WALE REIT (ASX:CLW)
Harvey Norman Holdings (ASX:HVN)
Qualitas Real Estate Income Fund (ASX:QRI)
Waypoint REIT (ASX:WPR)

AGM

There are four companies set to meet with shareholders today.

3D Oil (ASX:TDO)
Academies Australasia Group (ASX:AKG)
Kyckr (ASX:KYK)
Rincon Resources (ASX:RCR)

Annual report

Elders (ASX:ELD)

Commodities

Iron ore has lost 4.7 per cent to US$89.75. Its futures point to a 0.4 per cent fall.

Gold gained $4.60 or 0.3 per cent to US$1,869 an ounce, silver was up $0.05 or 0.2 per cent to US$25.35 an ounce.

Oil was down $0.80 or almost 1.0 per cent to US$80.79 a barrel.

Currencies

One Australian Dollar at 7:30 AM has strengthened since Friday, buying 73.26 US cents, 54.63 Pence Sterling, 83.39 Yen and 64.01 Euro cents.

Investor event

The last event for the year is tomorrow with four companies presenting from financial services, wireless technology to pharmaceutical companies. Make your way to fnn.com.au to reserve your free online spot.

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