Wall St roars in relief rally, Tech shares jump, CSL's rating gets upgraded: ASX to rise


Wall St roars after a red start led by technology stocks after the Fed unveiled the speed up of its taper plans. European markets mixed ahead of the ECB and BoE meeting. Qantas' full year results set to take-off.

The Australian sharemarket is set to rise after the much anticipated outcome from the Fed Reserve.

US stocks turn higher as Fed speeds up taper

US stocks turned higher after the Fed kept interest rates or borrowing costs unchanged. Wall St was in the red before the announcement, then rose in the aftermath closing at session highs. The Fed gave the markets what they were expecting, a sped up taper timeline.

The Fed said they’re committed to using its full range of tools to continue to support the US economy and decided to double its current pace of tapering starting in mid January, which was also expected. They said that a similar pace is likely to be appropriate in the coming months paving the way for the first interest rate hike next year, and more in 2023 amid the hot inflation we have seen. The consumer price index is at 39 year highs, while producer price surged to a record history high.

The 10-year treasury bond yield ticked a hairline higher, this didn’t stop the tech heavy Nasdaq being the outperformer in the relief rally today after two days of declines.

Inflation eats at November retail sales

Oil prices rose in the wake of the announcement while investors also digested retail sales figures for November. Sales inched higher by 0.3 per cent, a miss from the 0.8 per cent expected. A sign that the inflation at four decade highs is eating away at the consumer’s pocket.

The nervous moves saw a pivot from the red with a rally into the green. The outcome today could set the tone for the next 24 hours as we have more central banks set to meet. Keep an eye out for tech stocks today to see if they will mimic the moves.

Wall St roars as bond yield lifts

At the closing bell, the Dow Jones gained 1.1 per cent to 35,927, the S&P 500 added 1.6 per cent to 4,710 while the Nasdaq closed 2.2 per cent higher at 15,566.

Across the S&P 500, all sectors advance with only energy as the laggard despite the oil price rising, with the sector down 0.4 per cent. Technology stocks galloped as the best performer by 2.8 per cent.

The yield on the US treasury note rose 3 basis points at 1.47 per cent as bonds, while gold rose on a weaker greenback.

European markets mixed on central bank talks ahead

Across the Atlantic, European markets closed mixed ahead of the European central bank meeting tonight.

Paris added 0.5 per cent, Frankfurt gained 0.2 per cent and London’s FTSE lost 0.7 per cent ahead of the Bank of England meeting with a data point the central bank needs to digest.

The U.K. consumer price index, their headline figure rose to a record decade year high of 5.1 per cent, faster than expectations of 4.7 per cent hiked by fuel and second-hand car prices according to the Office for National Statistics.

In London trade, miners and oil heavyweights fell. BHP fell 1.8 per cent, Rio dropped 2.3 per cent, BP lost 2 per cent, Shell dipped 1.6 per cent.
Elsewhere tech stocks recovered by 1.4 per cent while retail stocks lost 1.7 per cent. Zara owner Inditex tumbled 5.2 per cent, while H&M fell 2.8 per cent.

Asian markets weak on slowing China growth

Asian markets closed mixed as home price data and retail sales point to a slowing growth in China’s economy. Tokyo’s Nikkei added 0.1 per cent, Hong Kong’s Hang Seng fell 0.9 per cent, while China’s Shanghai Composite closed 0.4 per cent lower.

ASX 200 lower ahead of central bank talks

Yesterday, the Australian sharemarket closed 0.7 per cent lower at 7,327 with all sectors declining ahead of the Fed meeting with only utilities closing higher.

Westpac (ASX:WBC) rose 0.3 per cent amid a broker upgrade citing an improved revenue outlook for the smallest of Australia's big four banks in financial year 2022. Macquarie analysts said that the improvement is underpinned by a margin recovery in its home-loan book as its mix of new and existing mortgage customers rebalanced in line with its peers.

Commonwealth Bank (ASX:CBA) fell 0.6 per cent while National Australia Bank (ASX:NAB), and ANZ Bank both rose 0.5 and 0.4 per cent respectively. Macquarie (ASX:MQG) closed 0.2 per cent lower.

In the miners space, BHP (ASX:BHP) and Fortescue Metals (ASX:FMG) both lost 0.3 per cent, while Rio Tinto (ASX:RIO) added 0.2 per cent.

Gold and energy stocks fell with the likes of Newcrest Mining (ASX:NCM) down 2.2 per cent, while Woodside Petroleum (ASX:WPL) closed 0.7 per cent lower.

Wesfarmers (ASX:WES) added 0.1 per cent after the conglomerate said it would vote its 19.3 per cent stake in API (ASX:API) against a rival $1.75 a share bid from Woolworths (ASX:WOW) for the owner of the Priceline Pharmacy and Soul Pattinson brands. Wesfarmers also noted that it had the right to match any offer considered superior to its own bid by the API board. Woolworths lost 0.1 per cent while API added 0.3 per cent.

The best-performing stock in the S&P/ASX 200 was Virgin Money UK (ASX:VUK), closing 4.1 per cent higher at $3.08, followed by shares in Alumina (ASX:AWC) amid a broker upgrade based on valuation grounds and Whitehaven Coal (ASX:WHC).

More on the broker upgrade, the spot alumina price is now at US$360 a tonne and offering strong support in Ord Minnett’s view. The broker sees the current share price levels representing an attractive entry point to buy Alumina (ASX:AWC) shares forecasting a dividend yield of around 10 per cent, and is trading on a low enterprise value to operating earnings multiple of 5 times.

The worst-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH) closing 7.6 per cent lower at $6.83 followed by shares in PolyNovo (ASX:PNV), and HUB24 (ASX:HUB).

In M&A news, Helloworld (ASX:HLO) soared 16.2 per cent after agreeing to sell its corporate and entertainment travel division to Corporate Travel Management (ASX:CTM) for $175 million. The deal comprises $100 million in cash and $75 million in Corporate Travel scrip. Based on pre pandemic financial year 2019 numbers, the deal is highly attractive with the company value to operating earnings acquisition multiple of 8 times for Helloworld assets.

SPI futures

Looking at the SPI futures after all this, it's pointing to a 0.6 per cent gain.

Local economic news

It’s a jammed pack agenda today with times in Australian eastern standard time kicking off with IHS Markit PMI data coming out at 9am, two speeches from RBA officials from 10-10.30am, labour force figures for November at 11.30am with economists expecting 205,000 new jobs to be added and unemployment rate to improve to 5 per cent. When we are sleeping, we have the European central bank and their policy decision at 12.30am.

Company news

Qantas has forecasted a loss at the earnings level of $250 million to $300 million for the first half of financial 2022. The company has been able to accelerate the repair of its balance sheet and expects to finish the first half of financial year 2022 with a materially better net debt position than it had prior to the start of Delta variant lockdowns in June. In the pre open, time of filming, the price is up over 8 per cent. As of yesterday, shares in Qantas (ASX:QAN) closed 0.6 per cent lower at $4.87.

Broker moves

Citi upgraded CSL (ASX:CSL) to buy from neutral with a price target of $340. CSL is slated to purchase Vifor Pharma at a 65 per cent premium to the company's trading price. Citi estimated that the purchase will be roughly 9 per cent accretive to CSL's net profit after tax prior to amortisation, given CSL's higher trading multiple. Vifor's products focus on iron deficiency, renal and cardio-renal therapies. The rating got a hike and the target price as well to $340 from $325. Shares in CSL were placed on a trading halt on Tuesday and last traded at $297.27.

Ex-dividend

There is one company trading ex-dividend today, Plato Inc Max (ASX:PL8) is paying 0.5 cents fully franked.

Dividend-pay

There are nine companies set to pay eligible shareholders today including ANZ Banking Group, Incitec Pivot, Pendal Group and Resmed.

ANZ Banking Group (ASX:ANZ)
Ausnet Services (ASX:AST)
Dalrymple Bay Infrastructure (ASX:DBI)
EZZ Life Science Holdings (ASX:EZZ)
Incitec Pivot (ASX:IPL)
My Food Bag Group (ASX:MFB)
Partners Group Global Income Fund (ASX:PGG)
Pendal Group (ASX:PDL)
Resmed Inc (ASX:RMD)

AGMs

There are fourteen companies set to meet with shareholders including ANZ, Elders and Orica.

AD1 Holdings (ASX:AD1)
ANZ Banking Group (ASX:ANZ)
Auroch Minerals (ASX:AOU)
Elders (ASX:ELD)
Elevate Uranium (ASX:EL8)
ICS Global (ASX:ICS)
Lion One Metals (ASX:LLO)
Mayur Resources (ASX:MRL)
Orica (ASX:ORI)
Parkway Corporate (ASX:PWN)
Resource Base (ASX:RBX)
Sky Metals (ASX:SKY)
South Harz Potash (ASX:SHP)
Synertec Corporation (ASX:SOP)

IPOs

There are three companies set to make their debut on the ASX today. Keep an eye out for XPON Technologies (ASX:XPN). A cloud based software provider after raising $12,500,000, Ronin Resources (ASX:RON) and real estate fund manager Qualitas (ASX:QAL) after raising $335,000,000.

Commodities

Iron ore has gained 1.3 per cent to US$109.70. Its futures point to a 0.5 per cent gain.

Gold gained $6.30 or 0.4 per cent to US$1779 an ounce, silver was up $0.16 or 0.7 per cent to US$22.08 an ounce.

Oil added $0.83 or 1.2 per cent to US$71.56 a barrel.

Currencies

One Australian Dollar at 8:15 AM has strengthened since yesterday, buying 71.77 US cents (Wed: 71.06), 54.09 Pence Sterling, 81.82 Yen and 63.54 Euro cents.
 

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