Wall St mixed on tech drag, US to release oil from reserves: ASX to open flat


Major indexes around the globe closed mixed as the tech rout continued. The local bourse bucked the trend rising on strength in the iron ore price. Macquarie upgraded Nickel Mines’ (ASX:NIC) rating. Webjet (ASX:WEB) delivered a cash surplus as high booking volumes return. 

The Australian sharemarket is set to open flat with the SPI futures pointing to a gain of 0.01 per cent.

US stocks mixed on tech rout

Wall St closed mixed after investors as the technology rout continues. The Nasdaq was under pressure closing off session lows amid the 10-year treasury yield rising following Fed Chair’s reappointment for another term. Investors digested retail earnings which showed a beat on the top and bottom line though stocks pulled back on headwinds as the economy continues to reopen.

Zoom shares tumbled almost 15 per cent after the videoconferencing company warned of a slowdown in revenue leading to a number of brokers slashing its price target. Analysts said that they expect lower growth as lockdown ends. Meanwhile, Best Buy shares fell 12.4 per cent after the electronics retailer forecast weak same store sales due to supply chain disruptions.

Flash PMIs show that the US economic recovery strengthened though vulnerable to supply chain issues and labor shortages The November manufacturing reading rose to 59.1 matching expectations, while the service sector dropped to 57.0 missing expectations.
Meanwhile, the Richmond Fed manufacturing index fell to a reading of 11, missing expectations as inventory levels fell while new order volumes eased.

Despite the mixed figures, it shows that the economic recovery is still moving forward. With supply chain disruptions set to ease, next year is looking optimistic. Given the pricing pressures we have seen, the figures are encouraging.

US to tap into oil reserves to lower prices

President Biden ordered the release of 50 million barrels of reserves in a bid to reduce energy and gas prices. They plan to move more barrels into the market next month. The coordinated move was with five other countries. Gas prices are more than 50 per cent higher than a year ago and are one of the biggest contributors to inflation.

The focus is now back on OPEC+ and it will be interesting to see if they taper back their production plans given the backdrop or even in a comeback due to the tapping of oil reserves, as market participants know that OPEC+ control the energy markets.

Wall St mixed as bond yields jump

At the closing bell, the Dow Jones added 0.6 per cent to 35,814, the S&P 500 gained 0.2 per cent to 4,691 while the Nasdaq closed 0.5 per cent lower at 15,775.

Across the S&P 500, energy led the way while financials also rose thanks to a higher bond yield. Consumer discretionary was the worst performer with tech also in the red.

The yield on the 10-year treasury note rose six basis points to 1.68 per cent. Gold fell on a steady greenback.

European markets mixed despite commodity lift

Across the Atlantic, European markets closed mixed. Paris lost 0.9 per cent, Frankfurt fell 1.1 per cent and London’s FTSE added 0.2 per cent after being in the red for most of the session. Compass Group jumped 6.3 per cent, boosting the FTSE. The meal providers in schools, offices and football stadiums are set to bounce back from Covid now that sports events and company conferences are back on.

Miners and energy players rose in the order of 1.5 and 3.0 per cent.

BHP gained 3.0 per cent, Rio added 2.9 per cent, BP rose 1.5 per cent, Shell climbed 1.4 per cent.

Meanwhile in UK trade, Whiteware retailer AO World sank 15.6 per cent after the company cut profit estimates citing supply chain issues and product shortages.

The UK’s economy is recovering more quickly in November from the pandemic than eurozone countries as British consumers take rising inflation in their stride as per the IHS Markit PMIs. The UK’s score of 57.7 topped the 55.8 across the eurozone with any number above 50 showing growth. The UK’s all-important services sector outpaced manufacturing, which also saw its strongest expansion in three months.

Asian markets mixed on weakness in tech

Asian markets closed mixed. Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng fell 1.2 per cent as tech stocks fell, while China’s Shanghai Composite gained 0.2 per cent amid continued optimism on hopeful policy moves from the PBoC.

ASX 200 lifted by miners on tech drag

Yesterday, the Australian sharemarket closed 0.8 per cent higher at 7,411 as iron ore miners pushed higher thanks to a rise in commodity prices. Since Friday last week, the price of the steel making ingredient rallied over 9.0 per cent attributed to policy moves in China. The improvement in oil prices helped the energy sector jump with information technology as the laggard for the session.

The mining giants took the spotlight with BHP (ASX:BHP) surged 4.0 per cent to $38.05, Rio Tinto (ASX:RIO) jumped 3.6 per cent to $95.13, and Fortescue Metals (ASX:FMG) galloped 9.8 per cent higher to $17.35.

While the energy players Beach Energy (ASX:BPT) surged 4.6 per cent to $1.25, Santos (ASX:STO) rose 2.1 per cent to $6.74, while Woodside (ASX:WPL) added 3.5 per cent to $22.45.

Major banks rose with enthusiasm with CBA (ASX:CBA) adding 1.1 per cent to $96.82, ANZ (ASX:ANZ) up 1.9 per cent to $27.27, NAB (ASX:NAB) gained 0.9 per cent to $28.47, while Westpac (ASX:WBC) closed 0.6 per cent higher to $21.81.

Bapcor shares (ASX:BAP) sunk after Darryl Abotomey, the CEO of the car parts provider of names like Autobarn, Autopro and Burson chains, is set to step down next year in February after a decade of being in the company.

The worst-performing stock was Bapcor (ASX:BAP) closing 9.6 per cent lower at $7.46, followed by shares in WiseTech Global (ASX:WTC), and Silver Lake Resources (ASX:SLR).

The best-performing stock in the S&P/ASX 200 was Fortescue Metals Group (ASX:FMG), closing 9.8 per cent higher at $17.35, followed by shares in Champion Iron (ASX:CIA), and Mirvac Group (ASX:MGR).

In M&A news, Life360 (ASX:360) was in a trading halt as it unveiled its plans to buy bluetooth-tracking device company Tile for up to US$205 million ($283 million). The payment is made up of US$132.4 million of cash, up to US$37.6 million of new Life360 shares issued to Tile shareholders, and up to US$35 million in retention awards. The tech company will raise the funds for the acquisition via an entitlement offer. Shares closed at $13.51.

Pinnacle (ASX:PNI) was also in a trading halt, after the fund manager agreed up to $75 million for a 25 per cent stake in private equity firm Five V. The company also announced a larger $105 million equity raising to fund the deal.

Meanwhile, TechnologyOne (ASX:TNE) sunk 2.9 per cent to $12.55 after posting a 19 per cent jump in profit before tax, the top end of its guidance for the year ended September 30. Its annual recurring revenue jumped 43 per cent to $192.3 million.

Local economic news

The Bureau of Statistics is set to release the construction work data for the third quarter. This figure will feed into the GDP figures.

It will be interesting to see the results given that construction work was boosted by policy simulus and gains of 3.2 per cent so far for the year. The recovery was interrupted in the third quarter due to the lockdowns in NSW and Victoria. To recap, the construction industry was shut down for two weeks in NSW and workers from regions in Sydney were limited in movement until they were fully vaccinated.

Market estimates are in the range of 3.0 to 3.2 per cent drop for the third quarter.

Broker moves

Macquarie upgraded Nickel Mines’ (ASX:NIC) rating to outperform from a neutral with a boosted price target of $1.45. The broker estimates the miner’s share of contained nickel production will rise to circa 87 kilo-tonnes per annum by 2024. This comes as the company secures the rights to acquire a 70 per cent stake in the Oracle Nickel Project. Macquarie upgraded the miner’s production by 32 per cent for 2024-2026 as full production rates for Oracle are expected from 2024. The broker lifts its price target to $1.45 from $1.10. Shares in Nickel Mines (ASX:NIC) closed 2.3 per cent higher at $1.32 yesterday.

Company news

Webjet (ASX:WEB) has taken off after the travel booking company delivered a cash surplus of $3.5 million per month in the first half of the 2022 financial year as high booking volumes return. Keep an eye out for more updates.

Ex-dividend

There are three companies trading ex-dividend today

GrainCorp (ASX:GNC) is paying 10 cents fully franked
HGL (ASX:HNG) is paying 1 cent fully franked
Whitefield (ASX:WHF) is paying 10.25 cents fully franked

Dividend-pay

There are two companies set to pay eligible shareholders today.

Brickworks (ASX:BKW)
Janus Henderson Group (ASX:JHG)

AGMs

There are 24 companies set to meet with shareholders today include Harvey Norman Holdings, Ramsay Health Care and Shopping Centres Australasia Property Group.

Airtasker (ASX:ART)
Auctus Alternative Investments (ASX:AVC)
Bigtincan Holdings (ASX:BTH)
Castile Resources (ASX:CST)
Corum Group (ASX:COO)
Fe (ASX:FEL)
FSA Group (ASX:FSA)
Golden Cross Resources (ASX:GCR)
Harvey Norman Holdings (ASX:HVN)
Hills (ASX:HIL)
Imperial Pacific (ASX:IPC)
Integrated Research (ASX:IRI)
Investigator Resources (ASX:IVR)
Liontown Resources (ASX:LTR)
London City Equities (ASX:LCE)
M8 Sustainable (ASX:M8S)
Ramsay Health Care (ASX:RHC)
Red 5 (ASX:RED)
Rhythm Biosciences (ASX:RHY)
Ridley Corporation (ASX:RIC)
Shopping Centres Australasia Property Group (ASX:SCP)
Silk Laser Australia (ASX:SLA)
Urbanise.Com (ASX:UBN)
Warrego Energy (ASX:WGO)

Reports

Orica (ASX:ORI)
Fisher & Paykel Healthcare Corp (ASX:FPH)
Smartpay Holdings (ASX:SMP)
Volpara Health Technologies (ASX:VHT)
Tower (ASX:TWR)

Commodities

??Iron ore has gained 5.0 per cent to US$99.45. Its futures point to an almost 2.0 per cent gain.

Gold dropped $16.00 or 0.9 per cent to US$1793 an ounce, silver was down $0.64 or 2.6 per cent to US$23.72 an ounce.

Oil jumped $2.00 or 2.6 per cent to US$78.75 a barrel.

Currencies

??One Australian Dollar at 8:15 AM is steady buying 72.27 US cents, 54.01 Pence Sterling, 83.21 Yen and 64.25 Euro cents.
 

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