Wall St rises shaking off Omicron fears, Tech leads, Rio is rated as Hold: ASX to rise


Investors bought Friday’s dip with major indexes around the globe closing mixed after reacting from the new strain of the coronavirus. Wall St & European major indexes rallied as nerves eased, while Asian markets plus the ASX closed lower on Omicron fears.

The Australian sharemarket is set to rebound with the SPI futures pointing to a jump of 0.6 per cent.

Wall St rebounds after panic selling on Black Friday

Wall St bounced back from red Friday as investors enjoyed a day of solid gains. The major indexes closed higher, off from its best levels of the session. Tech stocks led while the price of oil and iron ore rallied amid concerns of the latest covid-19 variant emerging from South Africa.

Market participants have been on a rollercoaster ride after the strain of Covid-19 surprised us, a reminder that the pandemic is not over. Leading into Winter, concerns that cases could rise amid this new strain certainly put markets into tears. We will learn over the coming weeks how deadly this strain is and the efficacy of the current vaccines.

Nerves were soothed after President Biden comforted markets that he had very little appetite to move back to the days of hard lockdowns.

Meanwhile, Moderna said that they could have their Omicron vaccine as soon as early next year. The pharma giant is also looking to advance its booster shot to take into account this new strain. Shares closed 11.8 per cent higher.

Citi downgraded antiviral Covid-19 pill-maker Merck to neutral from a buy after the drug maker shared results from the trial of their antiviral pill. The efficacy came in lower than expected with the broker noting that the lacklustre results meant that shares in vaccine pill makers are limited. This is the company that has agreed to a US$1.2 billion deal with the Whitehouse to supply the anti-covid pill and applied for emergency use authorisation with the FDA early last month.

Major travel stocks rebounded after investors bought the dip after red Friday with shares in United, Delta, and American Airlines taking off. United led the way adding 0.7 per cent. Cruise line stocks also set sail with Carnival and Norwegian closing up to 1.0 per cent higher after a sell-down amid concerns of the new strain of the coronavirus.

Twitter CEO Jack Dorsey officially stepped down with the board unanimously appointing the chief technology officer Parayg Agrawal to take over as CEO, effectively immediately. Mr Dorsey served as CEO for both Twitter and payments giant Square, the company set to acquire Afterpay (ASX:APT). He is still the CEO for Square, a company he founded after Twitter. The history of his term is quite interesting in that Mr Dorsey was the CEO of Twitter, got fired, then returned, and now he is leaving again. Shares closed 2.7 per cent lower.

Another executive shake up is Walmart’s CFO, Brett Biggs leaving the company after 22 years. Mr Bigg will remain on the board of Walmart's fintech start-up. Shares closed 1.6 per cent lower.

Meanwhile casino stocks took a tumble on news that shares in Suncity Group in Hong Kong was suspended after its chairman was arrested over allegations of illegal gambling and money laundering. Las Vegas-based operators MGM Resorts, Wynn Resorts, and Las Vegas Sands closed over 1.5 per cent lower.

In economic news, pending home sales rose unexpectedly at 7.5 per cent in October as rents surge despite a hike in mortgage rates according to the National Association of Realtors. The Dallas Federal Reserve manufacturing index fell from 14.6 to 11.8 in November coming in below expectations of a reading of 17. Despite this, the manufacturing industry has improved amid the spike in the price of raw materials.

Wall St gains as bond yields falls

At the closing bell, the Dow Jones gained 0.7 per cent to 35,136, the S&P 500 added 1.3 per cent to 4,655 while the Nasdaq closed 1.9 per cent higher at 15,783.

Across the S&P 500, every sector advanced. Information technology was the best performer up 2.6 per cent

The yield on the 10-year treasury note rose 3 basis points to 1.51 per cent. Gold dipped on a firmer greenback.

European markets shakes off Covid concerns

Across the Atlantic, European markets closed higher. Paris added 0.5 per cent, Frankfurt gained 0.2 per cent and London’s FTSE added 0.9 per cent as miners and oil giants bounced. BHP gained 2.9 per cent, Rio added 1.7 per cent while BP rose 3.2 per cent, and Shell jumped 2.4 per cent.

Asian markets mixed on Casino arrest

Asian markets closed mostly lower as fears about Omicron spooked investors. Tokyo’s Nikkei fell 1.6 per cent, Hong Kong’s Hang Seng lost almost 1.0 per cent after casino stocks tumbled on arrest of 11 people including a major junket organiser on money laundering charges. China’s Shanghai Composite closed flat, down 0.04 per cent or 1 point. Shares in casino operator MGM China tumbled 10 per cent.

ASX 200 falls from omicron woes

Yesterday, the Australian sharemarket closed 0.5 per cent lower at 7,240 haunted by the new Covid-19 strain.

Travel stocks got hit as new mobility restrictions to suppress the omicron variant were announced while materials and information technology shares bucked the trend as the only winners of the session, up 0.7 and 0.6 per cent respectively. Real estate and energy fared the worst while the other sectors closed lower.

Meanwhile the news boosted pathology and imaging services provider Sonic Healthcare and Healius jumped over 2.5 per cent on expectations of increased revenue from Covid-19 testing.

The best-performing stock in the S&P/ASX 200 was HUB24 (ASX:HUB) closing 4.8 per cent higher at $29.09. While stay at home stocks also took some attention with vehicle parts company Bapcor (ASX:BAP) faring second best followed by Domino Pizza (ASX:DMP).

The worst-performing stock in the S&P/ASX 200 was Unibail-Rodamco-Westfield (ASX:URW) closing 6.2 per cent lower at $4.70, followed by shares in EML Payments (ASX:EML) and Vicinity Centres (ASX:VCX), largely your shopping centres.

Local economic news

ANZ and Roy Morgan are set to release the weekly consumer confidence index.

The Australian Bureau of Statistics has slated the balance of payments report along with building approvals and government finance figures.

The Reserve Bank has scheduled the financial aggregates publication while the Reserve Bank Deputy Governor Guy Debelle is set to make an online speech at the ACI Australia conference.

Company news

AMP (ASX:AMP) provided an update saying that its plans to demerge its AMP Capital Private Markets business (PrivateMarketsCo) in the first half of 2022 is on track. The move is set to enable the two businesses to increase focus on their respective markets and growth opportunities. The company said a clear perimeter had been set with the agreed sale of the Global Equities and Fixed Income business and transfer of the Multi-Asset Group to AMP. Keep an eye out for more details. Shares in AMP closed 0.5 per cent higher at $1.00 yesterday.

Broker moves

Morgans rates Rio Tinto (ASX:RIO) as a hold with a price target of $104. The broker has deep concerns around the long-term impact of what has been a significant underspend in the Pilbara leading to its target price falling to $104 from $112. Morgan notes that the iron ore miner is constrained and believes there's an increasingly tight schedule to bring on new replacement mines. Also weighing on its view is the additional red tape after Juukan Gorge and covid travel restrictions. Shares in Rio Tinto (ASX:RIO) closed 1.0 per cent higher at $95.39.

Ex-dividend

There are eight companies trading ex-dividend today

Dalrymple Bay Infrastructure (ASX:DBI) is paying 4.5 cents unfranked
My Food Bag Group (ASX:MFB) is paying 2.9011 cents unfranked
Metrics Income Opportunities Trust (ASX:MOT) is paying 1.02 cents unfranked
Metrics Master Income Trust (ASX:MXT) is paying 0.74 cents unfranked
Partners Group Global Income Fund (ASX:PGG) is paying 0.6833 cents unfranked
Pengana International Equities (ASX:PIA) is paying 1.35 cents fully franked
Spark Infrastructure Group (ASX:SKI) is paying 12 cents unfranked
Sandon Capital Investments (ASX:SNC) is paying 1 cent fully franked

Dividend-pay

There are five companies set to pay eligible shareholders today.

Kelly Partners Group Holdings (ASX:KPG)
NAOS Ex-50 Opportunities Company (ASX:NAC)
NAOS Small Cap Opportunities Company (ASX:NSC)
Plato Income Maximiser (ASX:PL8)
VIP Gloves (ASX:VIP)

AGMs

There are 18 companies set to meet with shareholders today.

Argent Minerals (ASX:ARD)
Astron Corporation (ASX:ATR)
Bardoc Gold (ASX:BDC)
BBX Minerals (ASX:BBX)
Castillo Copper (ASX:CCZ)
DGO Gold (ASX:DGO)
Kingsrose Mining (ASX:KRM)
Leaf Resources (ASX:LER)
Lithium Energy (ASX:LEL)
Neometals (ASX:NMT)
Nuix (ASX:NXL)
Omni Bridgeway (ASX:OBL)
Orocobre (ASX:ORE)
PPK Group (ASX:PPK)
Southern Hemisphere Mining (ASX:SUH)
Spacetalk (ASX:SPA)
Starpharma Holdings (ASX:SPL)
Strandline Resources (ASX:STA)
Taruga Minerals (ASX:TAR)
Westar Resources (ASX:WSR)
Zenith Minerals (ASX:ZNC)

IPO

There are two companies set to make their debut on the ASX today. Keep an eye out for Biome Australia (ASX:BIO) after raising $8 million. Biome Australia is a biotherapeutics and complementary medicines developer. They also create food-based vitamins and weight management products. Also keep an eye out for Winsome Resources (ASX:WR1) after raising $18 million.

Commodities

Iron ore has gained 6.8 per cent to US$103.27 Its futures point to a 3.9 per cent gain.

Gold lost $3.40 or 0.2 per cent to US$1785 an ounce, silver was down $0.25 or 1.1 per cent to US$22.88 an ounce.

Oil added $1.58 or 2.3 per cent to US$69.73 a barrel.

Currencies

One Australian Dollar at 8:20 AM has weakened from yesterday, buying 71.37 US cents, 53.65 Pence Sterling, 81.08 Yen and 63.24 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.