ASX to open flat, AMP $325m impairment, Australian Vintage is hold, Wall St closed


European markets saw a modest rise amid ongoing inflation and Covid-19 woes while US investor have a breather for Thanksgiving. Asian indices were mixed while the ASX marginally rose after muted trade.

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

The day before & what’s ahead

The Aussie sharemarket closed fractionally higher in muted trade while the Aussie dollar dropped amid soft capital expenditure yesterday mimicking Wall St’s performance ahead of Thanksgiving holiday.

Volumes are likely to be quite light today so we might see a bit of choppiness. Though looking at the XJO's performance in the recent months, the local sharemarket has pretty much been consolidating, reacting to news coming out of their AGMs or trading updates amid reinforcing or surprising market participants with its earnings guidance.

Given the moves from China, the iron ore price this week has recovered back to the US$100 mark boosting our miners, though today we might see a change. Iron ore futures are pointing to a fall of 6.0 per cent.

As stateside enjoys a day off, we will look to European markets for our lead.

European markets close higher

European stocks close higher as tech shares rose along with your defensive sectors despite the surge in Covid-19 cases and mobility restrictions we digested last week.

Paris added 0.5 per cent, Frankfurt rose 0.3 per cent and London’s FTSE closed 0.3 per cent higher.

A highly encouraging performance despite the Eurozone having to deal with fresh lockdowns. They also digested inflation in the US hitting 30 year high’s as consumer sentiment is at 10 year lows, the renomination of Fed Chair Jerome Powell, and the news about the release of oil from strategic reserves.

We are still in the thick of the recent lockdowns so prepare for further volatility in this region as we move into Christmas.

US economic data recap

There was a slew of US economic data to make up for today’s close which meant that we have another day to digest it. It was a mixed picture though the timeframe of the figures that the reports covered were different. Click here for a refresher.

The economy is strong, growing at a slower pace though supply chain disruptions are a huge burden especially for retailers. We saw retail giants get punished with Nordstrum’s share price tumbling almost 30 per cent, while Best Buy sank for a second day.

On the labour front, the weekly jobless claims have been on a winning streak hitting new pandemic era lows. Let’s hope that this translates to Americans rejoining the workforce and not leaving altogether. It would also be good to see retail sales figures lift given the savings in bank accounts at the moment.

As for the subject of inflation, the definition of “transitory” is widely debated especially after the Fed met this month and changed the wording focusing on the factors contributing to inflation. Back home, inflation spilled into the 2 to 3 per cent band, 2.1 per cent to be exact while across the Tasman, our Kiwi friends are living in the context of inflation at 4.9 per cent. If you want a refresher, click here and scroll to ASX section on what was covered.

The Stoxx 600 rose 0.4 per cent lifted by technology stocks offsetting the further drag in travel and leisure amid rising Covid-19 cases.

The FTSE rose thanks to gains in miners as iron prices rallied on hopes of a rebound in demand in China. BHP fell 0.3 per cent, Rio lost 1.1 per cent, BP added 0.1 per cent, while Shell fell 0.7 per cent.

Euro economic news

In economic news, Germany’s GDP grew 1.7 per cent in the third quarter slightly below the estimated 1.8 per cent according to Destatis. Germany's consumer confidence is on track to fall at a faster pace in December as households turned more cautious on concerns of the fourth wave of Covid-19 and high inflation.

The minutes of the latest European Central Bank showed staff projections in December are likely not to resolve all uncertainties around the medium-term outlook, and policymakers must keep sufficient options for future monetary policy actions.

Elsewhere, UK retailers posted a rise in sales as clothing and department stores recorded a big upward swing in sales volume in November according to Confederation of British Industry. The retail sales balance rose to 39 per cent in November from 30 per cent in October.

Asian markets mixed on inflation concerns

Asian markets closed mixed after minutes from the last meeting of the FOMC revealed they would not hesitate to raise interest rates “sooner than participants currently anticipated” in response to inflation.

Tokyo’s Nikkei added 0.7 per cent helped by tech shares. Hong Kong’s Hang Seng added 0.2 per cent amid Kaisa shares surging almost 14 per cent. The property developer said they will ask bondholders to extend the maturity value of US$400 million to avoid default, while China’s Shanghai Composite bucked the trend closing 0.2 per cent lower.

South Korea’s Kospi fell 0.5 per cent after the Bank of Korea raised interest rates for the second time since August and upgraded its 2022 inflation forecast lifting expectations for further policy tightening.

ASX 200 lifts as miners & tech names rise

Yesterday, the Australian sharemarket closed marginally higher adding 0.1 per cent at 7,407 as miners and technology stocks lifted the index. The local bourse traded close to the flat line chopping lower by 0.3 per cent in the morning before rising fractionally from lunchtime to close near session highs.

The muted trade was weighed down by a 0.9 per cent fall in financials with energy declining along with losses in consumer staples, and utilities. Tech names jumped 2.4 per cent after their lackluster performance this week.

The highlight of the day was EML Payments (ASX:EML) galloping after Ireland’s central bank gave the green light to allow EML’s Irish regulated subsidiary “to sign new customers and launch new programs whilst staying within the material growth restrictions”. Four months ago, the company flagged that they were concerned about the central bank’s limits to hinder their European operations.

Fisher & Paykel Healthcare (ASX:FPH) shares surged 4.6 per cent to $32.30 after the company posted a $222 million first-half profit amid strong demand for respiratory devices for hospitals. The company is set to pay a 17 cents dividend mid next month.

The Australian Competition and Consumer Commission will not block NAB’s (ASX:NAB) takeover bid of Citi’s consumer business locally. The deal will see NAB take on Citi's credit card, personal loans, and wealth management services. The watchdog said NAB would continue to face competition from a range of suppliers of credit cards. Shares in NAB (ASX:NAB) closed 0.5 per cent lower at $28.32.

NRW (ASX:NRW) is on track to hit the higher end of its profit guidance of $145 million to $155 million for financial year 2022. The construction and engineering company expects first-half earnings to be between $70 million to $75 million following several contract awards inked in the past few months. Shares soared 8.4 per cent at $1.73.

Pepper Money (ASX:PPM) unveiled a 12.5 per cent to 15 per cent lift in its profit guidance. Its net profit for this year is set land in the range of $135 million and $138 million versus a forecast net profit of $120.7 million as indicated in its prospectus. Shares closed 4.6 per cent higher at $2.30.

Meanwhile, Fortescue Metals (ASX:FMG) jumped 1.8 per cent, Rio Tinto (ASX:RIO) wasn’t far behind adding 1.6 per cent while BHP (ASX:BHP) closed 1.0 per cent higher.

Afterpay (ASX:APT) led the information technology sector surging 4.2 per cent after its US suitor Square rallied on Wall St. Technology One (ASX:TNE) soared 4.3 per cent, Wisetech (ASX:WTC) jumped 2.3 per cent, while Altium (ASX:ALU) closed 1.8 per cent higher.
The best-performing stock in the S&P/ASX 200 was EML Payments (ASX:EML) closing 31.3 per cent higher at $3.61. It was followed by shares in Nickel Mines (ASX:NIC) and Fisher & Paykel Healthcare (ASX:FPH).

The worst-performing stock in the S&P/ASX 200 was AMP (ASX:AMP) closing 5 per cent lower at $1.04. It was followed by shares in Kogan.com (ASX:KGN) and Bendigo and Adelaide Bank (ASX:BEN).

Local economic news

The Australian Bureau of Statistics is set to release retail trade figures with economists expecting a rise between 1.0 to 2.0 per cent as lockdowns were lifted in NSW and Victoria. This would follow from a rise of 1.3 per cent in September.

Company news

AMP (ASX:AMP) expects to recognise additional impairment charges of approximately A$325 million after tax its financial year results. Keep an eye out for more updates. Shares in AMP (ASX:AMP) closed 5 per cent lower to $1.04 yesterday.

Broker moves

Morgans lowered the rating for Australian Vintage (ASX:AVG) to a hold from an add with a price target of $0.90.

Higher-than-expected logistics costs have driven the company to a financial year 2022 underlying earnings guidance fall of 12 per cent, below the broker’s previous forecast. A pricing increase related to supply chain challenges are expected to add cost pressure in the first half.

Despite the softer guidance, Morgans notes that the metrics still demonstrate sustainable growth in recent years with guidance around 40 per cent above financial year 2020 results and just shy of 5 to 7 per cent below last year's record. Morgans expects limited potential for additional capital return in financial year 2022.

The rating is downgraded to a hold from add and the target price decreases to $0.90 from $1.06.

Shares in Australian Vintage (ASX:AVG) tumbled 7.8 per cent at $0.77.

Dividend-pay

There are five companies set to pay eligible shareholders today.

Bisalloy Steel Group (ASX:BIS)
Future Generation Investment (ASX:FGX)
1300 Smiles (ASX:ONT)
Vita Group (ASX:VTG)
WAM Global (ASX:WGB)

AGMs

There are 21 companies set to meet with shareholders today.

Ausgold (ASX:AUC)
Australian Finance Group (ASX:AFG)
Beston Global Food Company (ASX:BFC)
Canterbury Resources (ASX:CBY)
Celamin Holdings (ASX:CNL)
Centuria Capital Group (ASX:CNI)
Develop Global (ASX:DVP)
Dorsavi (ASX:DVL)
N1 Holdings (ASX:N1H)
Nanollose (ASX:NC6)
Ora Banda Mining (ASX:OBM)
Pacific Nickel Mines (ASX:PNM)
Rand Mining (ASX:RND)
Rumble Resources (ASX:RTR)
Sandfire Resources (ASX:SFR)
Tribune Resources (ASX:TBR)
Uniti Group (ASX:UWL)
Vango Mining (ASX:VAN)
West Wits Mining (ASX:WWI)
Westgold Resources (ASX:WGX)
White Cliff Minerals (ASX:WCN)

Annual & interim reports

Adslot (ASX:ADS)
Amplia Therapeutics (ASX:ATX)
CD Private Equity Fund II (ASX:CD2)
CD Private Equity Fund III (ASX:CD3)
Evolve Education Group (ASX:EVO)
Ikegps Group (ASX:IKE)
Kingsland Global (ASX:KLO)
Smartpay Holdings (ASX:SMP)
Thorn Group (ASX:TGA)
Wingara AG (ASX:WNR)

IPO

There is one company set to make their debut on the ASX today. Keep an eye out for Artrya (ASX:AYA) after raising $40 million. They’re a medical tech company developing software to assist in scanning for heart disease.

Commodities

Iron ore has lost 3.2 per cent to US$100.10. Its futures point to a 6 per cent fall.

By 12:59 pm EST time, Gold gained $3.90 or 0.2 per cent to US$1791 an ounce, silver was up $0.11 or 0.5 per cent to US$23.65 an ounce.

Oil was down $0.36 or 0.5 per cent to US$78.03 a barrel.

Currencies

One Australian Dollar at 7:40 AM has weakened from yesterday, buying 71.90 US cents, 53.98 Pence Sterling, 82.96 Yen and 64.15 Euro cents.


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