Wall St loses steam closing lower as Santa Rally takes a breather. Dow snaps winning streak. Evergrande tumbles further on missed coupon payment. Magellan Financial (ASX:MFG) surges as best performer on the ASX on Thursday. Local bourse set to open lower for the last trading day of the year. ASX reopens on Tuesday 3 January 2022. Wishing you a Happy New Year!
The Australian sharemarket is set to open lower after a mixed close around the globe.
Dow snaps 6-day winning streak in penultimate session
The Santa Claus rally has taken a breather as Wall St closed lower, with the Dow snapping its six day winning streak. There are three more trading days for the official end of the US Santa Rally, one more for the current year and two for the new year.
The major indexes lost steam and closed at session lows on thin volumes despite fresh economic data showing the surge in Omicron cases yet to play a role in denting the labour market amid job openings at record highs of 11 million.
Weekly jobless claims fall to lowest level since 1969
Weekly first time unemployment claims fell to 198,000 coming in below market expectations. The number also came in at the lowest level since 1969, while continuing claims fell to its lowest level of March last year as per the Labor Department. These numbers are moving in the right direction and the first figures since the new variant of Covid-19 came into the picture despite seasonality factors.
The wall of worries appear to be waning this week as investors focus on the mild severity, yet highly transmissible Omicron variant. Health authorities and governments around the world are focusing on hospitalisations versus case numbers, but by sheer mathematics, if there are more cases, despite the lighter symptoms, the ratio of hospital cases would rise due to the sheer volume of patients coming through, leading to pressure on the hospital system which we’re starting to see here in Australia.
Chicago PMI grows as expansion continues
In other economic data, the Chicago purchasing managers’ index rose 1.3 points above expectations to 63.1 in December. A number over 50 indicates growth from the month before, another sign that the economy is moving forward.
So we have one more trading day left for the year with returns from the major indexes rising between the range of 20 to 30 per cent. The S&P 500 has surged over 29 per cent for the year. We haven’t seen a correction this year, that’s defined as a fall of 10 per cent from a recent peak, a healthy move that tends to occur every couple of years.
What should we expect for next year? Maybe a sell-off is slated now for 2022 from these massive numbers with the action in the bond market. Analysts expect the 10-year to rise to 2 per cent. With less accommodative policy support from the Fed to tame inflation, this could mean company earnings and stock prices are set to rise at a milder pace.
Wall St falls on thin volumes
At the closing bell, the Dow Jones lost 0.3 per cent to 36,398, the S&P 500 also fell 0.3 per cent to 4,779 while the Nasdaq closed 0.2 per cent lower at 15,742.
Across the S&P 500 sectors, there were four winners to seven losers. Take note of this today as the company news was light.
Your defensives rallied with real estate and utilities leading the gains by 0.4 per cent, followed by healthcare adding 0.2 per cent then communication services. Tech and energy stocks led the declines both falling 0.7 per cent with the rest closing lower.
The yield on the 10-year treasury note fell 3 basis points 1.51 per cent, gold rose on a firmer greenback.
European markets mixed as UK oil majors fell
Across the Atlantic, European markets closed mixed amid Spanish data showing consumer prices rose 6.7 per cent in December from the same month last year. The fastest annual pace of inflation since 1989.
Paris and Frankfurt both added 0.2 per cent despite France posting a record number of new Covid-19 cases, over 200,000 cases on Wednesday, while London’s FTSE fell 0.2 per cent amid oil players BP and Royal Dutch Shell falling 0.9 per cent and 0.6 per cent respectively after a top importer from China cut its quotas.
UK miners closed mixed as BHP fell 0.3 per cent while Rio added 1.1 per cent.
Asian markets mixed as Evergande woes reignite
Asian markets closed mixed amid embattled property developer Evergrande plunging a further 9 per cent after missing new coupon payments.
Tokyo’s Nikkei fell 0.4 per cent, Hong Kong’s Hang Seng added 0.1 per cent, while China’s Shanghai Composite closed 0.6 per cent higher.
ASX 200 rises for 6th straight days
Yesterday, the Australian sharemarket closed 0.1 per cent higher at 7,513 ekeing out a gain after a choppy session rising for its sixth straight day, lifted by gains in miners and banks offsetting losses in technology names.
The thin volume exacerbated the volatile performance on the local bourse with muted moves across the sectors. There was a mixed finish with five sectors advancing to six sectors declining. Utilities led the losses, followed by technology, and energy. Communication services led the gains, followed by materials, and financials.
Bank of Queensland (ASX:BOQ) shares fell 0.4 per cent to $8.20 after the company denied speculation around a possible takeover of buy now, pay later firm Humm Group (ASX:HUM). Shares in Humm Group (ASX:HUM) surged 5.1 per cent to 93.5 cents.
Other buy now, pay later stocks weren’t as strong, Afterpay (ASX:APT) fell 3 per cent to $82.50 while Zip Co (ASX:Z1P) closed 1.8 per cent lower to $4.31.
Meanwhile, Magellan Financial (ASX:MFG) was the best performer of the session. The company has been clawing back its losses after the loss of its biggest investment mandate. Since then, chief investment officer and chairman Hamish Douglass reassured investors through a video interview, MorningStar analysts released a note citing the strength of its investing calibre, while Zenith Investment Partners reiterated its confidence in the company.
The stock closed 3.7 per cent higher at $21.72, followed by shares in Bega Cheese (ASX:BGA), and Life360 (ASX:360).
The worst-performer was Imugene (ASX:IMU) closing 8.1 per cent lower at $0.40, followed by shares in IDP Education (ASX:IEL), and Ramelius Resources (ASX:RMS).
In other news, billionaire Andrew Forrest splurged over $108 million to increase his stake in Bega Cheese (ASX:BGA) to 6.6 per cent. His holding company, Tattarang AgriFood Investments snapped up more than 20 million shares in a three-week period from the start of November. Shares closed 3.2 per cent higher at $5.50.
Sandfire Resources (ASX:SFR) has received the nod from the Spanish competition authorities on its $2.6 billion takeover of a copper mining complex, MATSA. The competition authorities waved through its two approvals with the transaction to complete by the end of January next year. Shares closed 0.9 per cent higher at $6.65.
Science and device company Trajan Group (ASX:TRJ) celebrated the completion of its acquisition of California-based Neoteryx, a leader in blood micro sampling devices. Shares closed 0.8 per cent lower at $3.94.
Investors also digested the change in isolation rules to curb the surge in Omicron cases. The national cabinet has agreed on a federal definition for a close contact of a Covid-19 case to mean someone who has spent four hours or more with a confirmed case in a household or household-like setting. Those contacts would be required to isolate for seven days, and leave after receiving a negative rapid antigen test with the new definition slated to come into effect at midnight last night in NSW, Victoria, Queensland, South Australia, and the ACT.
Travel stocks closed lower with Qantas (ASX:QAN) closing at session lows, down 0.8 per cent in tandem with Webjet (ASX:WEB), while Flight Centre (ASX:FLT) lost 0.6 per cent.
The iron ore miners closed mixed with Fortescue Metals (ASX:FMG) down 0.7 per cent lower wiping almost two day’s worth of gains, BHP (ASX:BHP) was the best performer adding 0.9 per cent while Rio Tinto (ASX:RIO) closed 0.8 per cent higher.
Oil players fell after the Energy Information Administration said U.S. crude oil inventories fell more than expected last week. Woodside Petroleum (ASX:WPL) trading 0.4 per cent lower while Santos (ASX:STO) fell 0.3 per cent.
Gold miners also softened with Evolution Mining (ASX:EVN) down 1.2 per cent while Northern Star (ASX:NST) closed 1.1 per cent lower.
Looking ahead for the last day, a short one to close off the year, the SPI futures are pointing to a 0.1 per cent fall.
There are 5 companies trading ex-dividend today.
Metrics Income Opportunities Trust (ASX:MOT) is paying 1.75 cents unfranked
Metrics Master Income Trust (ASX:MXT) is paying 0.77 cents unfranked
Perpetual Credit Income Trust (ASX:PCI) is paying 0.3482 cents unfranked
Partners Group Global Income Fund (ASX:PGG) is paying 0.6833 cents unfranked
Regal Investment Fund (ASX:RF1) is paying 10 cents unfranked
There are two companies set to pay eligible shareholders today, Kelly Partners Group Holdings (ASX:KPG), and Plato Income Maximiser (ASX:PL8).
Iron ore has lost 0.7 per cent to US$117.25. Its futures are flat.
Gold added $11.10 or 0.6 per cent to US$1817 an ounce, silver was up $0.26 or 1.1 per cent to US$23.12 an ounce.
Oil fell $0.01 or 0.01 per cent to US$76.55 a barrel.
One Australian Dollar at 8:15 AM has weakened since yesterday, buying 72.49 US cents (Thu: 72.51), 53.71 Pence Sterling, 83.42 Yen and 64.01 Euro cents.
The market will close at 2.10pm AEST and reopens on Tuesday 3 January. Happy New Year!