Wall St extends record high, NAB declares 67c div on profit beat, Orica’s is a neutral: ASX to lift

Mixed start to the week with the major indexes around the globe. Wall St pushed further into record territory after a bipartisan infrastructure investment bill was passed by the House of Representatives. European markets were mixed while Asian stocks reacted to China’s export figures. Back home, the local bourse snapped its 3-day winning streak as M&A emerged. Credit Suisse downgraded Orica’s rating (ASX:ORI).

The Australian sharemarket is to start on a mild note with the SPI futures pointing to a 0.1 per cent gain.

U.S stocks hit record high as industrials & materials lift

Wall St moved into record territory as industrials and material stocks led after lawmakers in Washington passed a US$1.2 trillion infrastructure bill late on Friday. The fractional gains are indicating some form of exhaustion, however the catalyst for the rally continued.

Shares in Tesla fell almost 5.0 per cent after CEO Elon Musk posted a poll on Twitter for their views on whether he should sell 10 per cent of his Tesla stocks. Over three million people voted with almost 58 per cent of people supporting a sale worth US$21 billion. Musk also said that he will follow through on the results from the poll. Amid this, the stock also got a boost in its target price to a new Wall St high of $US$1,400 from Jefferies, up from US$950. The move surpasses another broker which initially set a new Wall St high of US$1,300.

Google parent company Alphabet has joined the US$2 trillion club today. They are the third American company to have reached this market cap after Microsoft and Apple. Shares closed 0.1 per cent higher on the news.

Meanwhile, Fed Chair Jerome Powell spoke at the Gender and the Economy conference saying that the pandemic has led to a “widened deep-rooted inequities in the economy”. Mr Powell’s comment is about monetary policy and shows that an economic recovery is needed before interest rates rise. His note comes ahead of inflation figures and central banks set to speak which could shift the tone on inflation from persistent to transitory.

Wall St rises as bond yields rise

At the closing bell, the Dow Jones gained 0.3 per cent to 36,432, the S&P 500 gained 0.1 per cent to 4,702 while the Nasdaq closed 0.1 per cent higher at 15,982.

Across the S&P 500 sectors, materials was the best performer up 1.2 per cent followed by energy while utilities and consumer discretionary was the worst, down 1.4 per cent.

The yield on the 10-year treasury note added 4 basis points to 1.49 per cent as gold rose on a weaker greenback.

European markets mixed ahead of inflation note

Across the Atlantic, European markets closed mixed. Paris added 0.1 per cent, Frankfurt lost 0.1 per cent and London’s FTSE closed also 0.1 per cent lower.

Miners rose while oil players were mixed. BHP gained 0.7 per cent, Rio added 1.1 per cent, BP fell 0.04 per cent, Shell advanced 0.5 per cent.

Asian markets mixed on China’s record trade surplus

Asian markets closed mixed. Tokyo’s Nikkei fell 0.4 per cent on soft construction stocks amid downbeat corporate earnings, Hong Kong’s Hang Seng also lost 0.4 per cent, while China’s Shanghai Composite added 0.2 per cent lifted by travel and energy stocks.

Exports from China’s beat expectations in October and banked a record trade surplus. Exports surged 27.1 per cent to US$300.2 billion despite global supply-chain disruptions as per the General Administration of Customs. It’s the 13th straight month of double digit growth. Imports rose 20.6 per cent at US$84.54 billion.

ASX snaps 3-day winning streak as M&A emerges

Yesterday, the Australian sharemarket closed 0.1 per cent lower at 7,452 snapping its 3-day winning streak with ANZ (ASX:ANZ) and Macquarie (ASX:MQG) dragging the index as they traded ex-dividend. It was a mixed performance with five winners to six losers. Energy was the best performer while technology was the worst.

ANZ (ASX:ANZ) fell 1.6 per cent while Macquarie (ASX:MQG) shed 0.8 per cent as the two banks traded the difference to their final and first-half dividends, respectively. The other major banks rose with Westpac (ASX:WBC) adding the most, up 1.3 per cent.

BHP (ASX:BHP) shares added 0.8 per cent after inking a deal to divest its 80 per cent stake in the BHP-Mitsui metallurgical coal joint venture in Queensland to ?Stanmore Resources (ASX:SMR). The offer comes with a price tag of $1.8 billion. Shares in Stanmore shares (ASX:SMR) skyrocketed over 14 per cent on the news.

Aristocrat Leisure (ASX:ALL) fell 2.1 per cent at $47.25 after a rival bidder called Gopher Investments showed interest in UK listed Playtech. The online gambling company recently agreed to a $3.8 billion deal with the Aussie company.

Sydney Airport (ASX:SYD) accepted a takeover deal of $8.75 per share that is valued at $23.6 billion from a consortium of infrastructure investors, Sydney Aviation Alliance. It came after two earlier proposals were rebuffed for $8.25 and $8.45 per share. The takeover via a scheme of arrangement is subject to regulatory and shareholder approvals. Shares took-off 2.8 per cent higher at $8.46.

Amid the reopening of borders and optimism around Pfizer’s antiviral Covid-19 pill, travel stocks surged. Sydney Airport’s largest customer, Qantas (ASX:QAN) surged 4.1 per cent while Webjet (ASX:WEB) jumped 4.8 per cent.

The producer of NovoSorb, which is a ‘scaffolding’ to help skin recover in burns and wounds Polynovo (ASX:PNV) took a tumble after the surprise step down of CEO Paul Brennan citing “increasing differences with the board”.

The best-performing stock in the S&P/ASX 200 was Flight Centre Travel (ASX:FLT), closing 5.7 per cent higher at $21.12, followed by shares in St Barbara (ASX:SBM) and Webjet (ASX:WEB).

The worst-performing stock in the S&P/ASX 200 was PolyNovo (ASX:PNV) closing 9.7 per cent lower at $1.58. It was followed by shares in Clinuvel Pharmaceuticals (ASX:CUV) and Domain Holdings Australia (ASX:DHG).

Local economic news

NAB business survey results came in early with business conditions up 6.0 points to 11 index points in October, rising back above the long-run average.

Business conditions and confidence rose in October as lockdowns came to an end in both NSW and Victoria. Each of the trading conditions, profitability and employment subcomponents contributed to the improvement in conditions, which was driven by gains in NSW.

Confidence also rose building on the turnaround seen in September, driven by Victoria as businesses anticipated reopening at the end of the month.

All components of conditions rebounded with trading conditions at its strongest. NSW led the rebound in conditions,while Victoria, South Australia, and Western Australia all edged lower.

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

Company news

National Australia Bank (ASX:NAB) has declared a final dividend of 67 cents after reporting a strong rebound in profit during the 2021 financial year. The company’s cash earnings beat expectations and rose rose 76.8 per cent to $6.6 billion during the year, while statutory net profit climbed to $6.4 billion. Net interest margin shed 6 basis points to 1.71 per cent while gross loans and advances rose 5.9 per cent driven by non-housing lending. Expenses fell by 13.2 per cent. Shares in National Australia Bank (ASX:NAB) closed 0.6 per cent higher at $29.11 yesterday.

Broker moves

Credit Suisse downgraded Orica’s rating (ASX:ORI) to neutral from outperform with a target price of $17.23.The broker was constructive regarding Orica yet downgrades its rating ahead of the financial year 2021 result. Commodity cost pressures are likely to have increased throughout the second half and extend into the first half of financial year 2022. Higher import parity pricing is expected to create a more favourable environment allowing the company to increase prices and provide some offset. The broker upgrades the target price to $17.23 from $16.11. Shares in Orica’s rating (ASX:ORI) closed 2.11 per cent lower at $15.28 yesterday.

Ex-dividend

There are three companies trading ex-dividend today.

CSR (ASX:CSR) is paying 13.5 cents fully franked
EZZ Life Science (ASX:EZZ) is paying 0.45 cents fully franked
Waterco (ASX:WAT) is paying 4 cents fully franked

Dividend-pay

There are five companies set to pay eligible shareholders today.

Huon Aquaculture Group (ASX:HUO)
Jupiter Mines (ASX:JMS)
NB Global Corporate Income Trust (ASX:NBI)
New Hope Corporation (ASX:NHC)
Southern Cross Electrical Engineer (ASX:SXE)

AGMs

There are three companies set to meet with shareholders today.

Bendigo and Adelaide Bank (ASX:BEN)
Fortescue Metals Group (ASX:FMG)
MNF Group (ASX:MNF)

Interim update & reports

We have updates from three companies to keep an out for.

James Hardie Industries (ASX:JHX)
OFX Group (ASX:OFX)
Incitec Pivot (ASX:IPL)

Commodities

Iron ore has gained 1.2 per cent to US$93.85. Its futures point to a 0.1 per cent gain.

Gold is having a good day on news in Washington and amid 10-year UK bond yields falling to record lows. Let’s see how this safe haven metal performs after we receive the inflation figures.

Gold gained $9.30 or 0.5 per cent to US$1826 an ounce, silver was up $0.40 or 1.7 per cent to US$24.56 an ounce.

Oil was up $0.94 or 1.2 per cent to US$82.21 a barrel.

Currencies

The Australian dollar had its worst performance since mid August last week dragged down by the RBA cancelling the yield control target at their policy meeting. The Aussie dollar is back in positive territory and notched above the 74 mark. Let’s see how it moves today since we have received the NAB business condition results.

One Australian Dollar at 8:15 AM has strengthened from yesterday, buying 74.26 US cents, 54.75 Pence Sterling, 84.08 Yen and 64.07 Euro cents.

Investor event

The last event for the year is coming up on Tuesday 16 of November with four companies presenting from financial services, wireless technology to pharmaceutical companies. Make your way to fnn.com.au to register for your free spot.