Wall St mixed, Seek's rating gets downgraded: ASX poised to lift


Major indexes around the globe were mixed. European markets fell on rising concerns on inflation. The local bourse continued to see weakness in banks. UBS downgraded Seek’s (ASX:SEK) rating but boosted target price.

The Australian sharemarket is set to lift with the SPI pointing to a 0.1 per cent gain.

US stocks mixed lifted by tech

Wall St closed mixed as concerns about inflation and rising Covid-19 cases offset retail earnings. Both S&P and Nasdaq got a lift from Nvidia after trading at record highs, amid the 10 year bond yield ticking lower giving tech names a boost, after jobless claims came in below expectations, though moving in the right direction.

The chipmaker posted record revenue despite the chip shortage after record close yesterday. America’s largest semiconductor company reported record revenue of US$7.1 billion, up 50 per cent from the previous quarter generating net income of US$2.46 billion attributed to high demand for video gaming and data centers.

Jobless claims hit new pandemic-era low as manufacturing jumps

Weekly jobless claims coming in at new pandemic era low for its seventh straight week. With 268,000 Americans filing for first time unemployment benefits last week. Jobless claims have been declining and getting close to its pre-pandemic level of 225,500.

The Philly Fed showed manufacturing activity jumped from 23.8 to 39.0 versus an estimate of 24.0. The report did show that high inflation had a role to play as price indexes remain near long-term highs, with companies looking to increase prices to cover for the inflation surge. As strong demand with record high job vacancies this bodes for support for further wage increases.

Macy & Kohl boosts earnings outlook

Macy shares jumped 18.2 per cent after the retailer posted strong third quarter results smashing through expectations. The department store giant is to launch a digital marketplace soon and boosted its earnings outlook as it continues to benefit from the reopening play.

Meanwhile Kohl also beat expectations closing 10.6 per cent higher after reporting blowout earnings and surging revenue. Sales rose 16 per cent with clothing and makeup sales as a huge contributor. The retailer also raised its forecast for the rest of the year.

Biden urges investigation into high gas prices

Looking at some politics, President Biden has asked the Federal Trade Commission to investigate oil giants in a bid to uncover any illegal activity to push up gas prices. The move comes after the consumer price index results last week showed that gas prices rose almost a 60 per cent surge over the year.

Elsewhere, crude prices recovered after the China National Food and Strategic Reserves Admin said that they are looking to release crude reserves. The price of crude has declined almost nine dollars since the recent highs.

Wall St mixed as bond yields fell

At the closing bell, the Dow Jones lost 0.2 per cent to 35,871, the S&P 500 added 0.3 per cent to 4,705 while the Nasdaq closed 0.5 per cent higher at 15,994.

Across the S&P 500 sectors, consumer discretionary and technology rose while utilities and energy fell.

The yield on the 10-year treasury note ticked lower by 1 basis points to 1.58 per cent, gold dipped against a stronger greenback.

European markets fall on inflation concerns

Across the Atlantic, European markets closed lower. Paris and Frankfurt both fell 0.2 per cent and London’s FTSE closed 0.5 per cent lower dragged lower by resources.

BHP dropped 1.1 per cent, Rio lost 1.7 per cent, BP fell 1.6 per cent, Shell lost 1.7 per cent.

Online gambling software provider Playtech received its third takeover bid from JKO Play, a firm co-owned by former F1 boss Eddie Jordan. Shares jumped 4 per cent. This is the same company that Aussie Aristocrat (ASX:ALL) offered $3.8 billion.

The Stoxx 600 rose 0.3 per cent as strong earnings offset concerns that high natural gas prices were contributing to inflationary pressures.

European wholesale gas rose almost 5.0 per cent after Germany temporarily paused the certification process for a major new pipeline bringing gas from Russia to Europe.

Asian markets slips on tech & property giants

Asian markets closed lower. Tokyo’s Nikkei lost 0.3 per cent on low export growth and flat machinery orders, ahead of plans for the government to finalize plans for new stimulus according to the Nikkei newspaper.

Hong Kong’s Hang Seng fell 1.3 per cent as tech players Baidu and Bilibili posted weak earnings amid crackdown on live-streaming and video games despite beating expectations.

China’s Shanghai Composite dropped 0.5 per cent as property giants step up plans to boost liquidity. Evergrande is set to raise about US$273 million by selling its film production and streaming arm HengTen Networks. According to Reuters, another property company Country Garden Services is set to raise US$1 billion via share sale.

ASX 200 snaps 2-day losing streak

Yesterday, the Australian sharemarket snapped its 2-day losing streak rising by a hairline to close 0.1 per cent higher at 7,379 as banks continued to show weakness.

Property shares were the best performer while energy shares were the worst performer amid news that the Biden administration has asked China to consider releasing oil reserves to put a lid on energy costs, with Whitehaven Coal ASX:WHC) the biggest drag in the sector.

Investors continued to sell out of Commonwealth Bank (ASX:CBA) with the share price closing 1.6 per cent lower at $97.46 amid several brokers downgrading its targets, extending its 8.1 tumble on Wednesday after the nation’s largest bank posted a shrinking net profit margin in a competitive home lending environment.

The decline trickled to the major four with National Australia Bank (ASX:NAB) shedding the least, down 0.7 per cent at $28.7. Meanwhile, Macquarie (ASX:MQG) rose 1.1 per cent to a record high of $205.77.

Evolution Mining (ASX:EVN) charged ahead after the gold miner cut a deal to take full control of Ernest Henry mine in Queensland for $1 billion, a move to increase their copper and silver exposure. The deal consists of a down payment of $800 million and $200 million after a year of owning funded from existing cash reserves? and a $275 million debt issue in the US private placement market that will mature in 2031. The acquisition is set to improve Evolution's three-year copper production outlook by around 40–60,000 tonnes per year and will reduce group all-in sustaining costs by around 12 per cent.

The best-performing stock in the S&P/ASX 200 was Evolution Mining (ASX:EVN), closing 9.7 per cent higher at $4.40. It was followed by shares in Nufarm (ASX:NUF) and Appen (ASX:APX).

The worst-performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC), closing 4.5 per cent lower at $2.35. It was followed by shares in Mesoblast (ASX:MSB) and ALS (ASX:ALQ).

To find out more about what happened on the M&A front yesterday with Treasury Wine Estates (ASX:TWE), Aristocrat Leisure (ASX:ALL), along with the action from Sonic Healthcare (ASX:SHL), Altium (ASX:ALU), and Goodman (ASX:GMG), click here.

Broker moves

UBS downgraded Seek’s (ASX:SEK) to neutral from a buy with a target price of $36 after reviewing Seek's trading update. The broker believes that the $1 billion of revenues in Australian and New Zealand for the next 5 years has already been priced in by the market. The target price rises to $36 from $35. Seek management expects to achieve the top-end of the financial year 2022 existing guidance range for underlying revenue, earnings, and profit. Shares in Seek (ASX:SEK) closed 0.7 per cent higher at $35.51 yesterday.

Ex-dividend

There are five companies trading ex-dividend today.

Future Generation Investment Company (ASX:FGX) is paying 3 cents fully franked
Kelly Partners Group (ASX:KPG) is paying 0.363 cents fully franked
Orica (ASX:ORI) is paying 16.5 cents unfranked
Soul Pattinson (W.H) (ASX:SOL) is paying 36 cents fully franked
WAM Global (ASX:WGB) is paying 5 cents fully franked

Dividend-pay

There are three companies set to pay eligible shareholders today.

Cromwell Property Group (ASX:CMW)
HomeCo Daily Needs REIT (ASX:HDN)
Medusa Mining (ASX:MML)

AGMs

There are thirteen companies set to meet with shareholders today.

Accent Group (ASX:AX1)
Gale Pacific (ASX:GAP)
Horizon Oil (ASX:HZN)
Middle Island Resources (ASX:MDI
Monash IVF Group (ASX:MVF)
Nanosonics (ASX:NAN)
NextDC (ASX:NXT)
Nyrada Inc (ASX:NYR)
PEXA Group (ASX:PXA)
Technology Metals Australia (ASX:TMT)
WiseTech Global (ASX:WTC)
Yandal Resources (ASX:YRL)
Zinc of Ireland NL (ASX:ZMI)

Reports

Toro Energy (ASX:TOE)
Orica (ASX:ORI)

IPOs

There are two companies set to make their debut on the ASX today. Keep an eye out for Cadence Opportunities Fund (ASX:CDO) after raising $25 million, and Cooper Metals (ASX:CPM), a copper and gold miner.

Commodities

Iron ore has lost 3.1 per cent to US$87.20. Its futures point to a 1.7 per cent fall.

Gold lost $7.90 or 0.4 per cent to US$1865 an ounce, silver was down $0.29 or 1.2 per cent to US$24.93 an ounce.

Oil was up $0.36 or 0.5 per cent to US$78.72 a barrel.

Currencies

One Australian Dollar at 8:15 AM has slightly gained since yesterday, buying 72.78 US cents, 53.92 Pence Sterling, 83.15 Yen and 64.02 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.