Wall St falls, Iron ore under US$90, CSL’s rating gets upgraded: ASX to dip

Wall St falls after inflation soars to highest since 1990. European markets despite food operator Hello Fresh falling on rival’s US acquisition. Asian markets mixed on hot inflation figures. The ASX dips for the 3rd straight day ahead of the big jobs report expected to see a fall of 50k jobs in October. Macquarie upgraded CSL’s (ASX:CSL) rating.

The Australian sharemarket is to edge lower with the SPI futures pointing to a dip of 0.1 per cent

Stocks slip after inflation soars to highest since 1990

US stocks closed lower as investors digested inflation figures showing a large jump. We also saw a sell-off in semiconductor names, not just in the big tech names. Stocks are selling off, bond yields rise, investors turn cautious as consumer prices surged in October.

The consumer price index soared by 6.2 per cent from the same time last year, the biggest jump since the 1990s, more than 30 years ago. A sign that inflation is worse than expected as consumers are paying more for items.

The rise in prices were across the board with the biggest rise in energy, shelter, food, used cars and trucks, and new vehicles as per the Bureau of Labor Statistics. Take-away food prices rose 5.3 per cent over the year, the price of beef up 20.1 per cent and used cars, up 26.4 per cent. The Fed did note last week that the price gains have been higher and longer than anticipated. Consumers are now spending more trumping wage increases as price hikes are across the board.

All of this, a strong catalyst for gold that rallied. Looking at the labour market, the recovery to full employment is set to continue into next year. If we see inflationary pressures continue, we might see the gold price rise. However, if the Fed changes its tune and has to raise rates to put a lid on inflation and the pendulum swings the other way, we could see gold outshining equities.

The reason is if inflation persists, the sharemarket could be taken over by the bears. Persistent inflation may lead to this and central banks might be forced to tighten to lessen an inflationary labour market. A bear market and persistent inflation often coincides or could lead to economic recessions.

Weekly jobless claims hit new pandemic-era low

In other economic news, on a positive note weekly jobless claims hit a new pandemic era low to 267,000 last week as per the Labor Department. A move going in the right direction which came in below expectations. We usually talk about these numbers on a Friday morning but these numbers were released today.

DoorDash to acquire delivery platform Wolt for US$8.1b

DoorDash surged 11.6 per cent on a strong earnings report and its plan to acquire Finland-based food delivery service Wolt Enterprise for US$8.1 billion, in a move to forge ahead for overseas expansion. A rally amid a red market shows how bullish investors are about this stock.

Moves by EV-car makers Tesla & Rivian

Elsewhere, Tesla shares paused on its decline, closing over 4.3 per cent higher after a number of brokers upgraded the price target on the EV-car maker.

Rivian Automotive made its debut on the Nasdaq. The EV-car maker backed by Amazon has a market cap of more than $US100 billion, classifying it the world’s biggest initial public offering this year.

Oil slips as gold hedges

Looking at the price of oil down over 3.0 per cent after the Energy Information Administration showed supply rose by one million barrels last week. Gasoline and distillate inventories posted a fall in reserves more than expected. Amid this report is the pressure from the Biden Administration to increase supply to help put a lid on rising energy costs. For now, there is a market deficit in place which should help oil prices hold back from a significant drop.

Wall St falls as bond yields rise

At the closing bell, the Dow Jones lost 0.7 per cent to 36,080, the S&P 500 fell 0.8 per cent to 4,647 while the Nasdaq closed 1.7 per cent lower at 15,623.

Across the S&P 500 sectors, energy was the worst performer, down 3.0 per cent followed by information technology, and communication services. The only winners were utilities, up 0.7 per cent followed by marginal gains in consumer staples, and healthcare.

The yield on the 10-year treasury note rose 12 basis points to 1.57 per cent, gold rose against a stronger greenback.

European markets rally on miners

Across the Atlantic, European markets closed higher. Paris closed flat, up 0.03 per cent, Frankfurt added 0.2 per cent and London’s FTSE closed 0.9 per cent higher lifted by mining and oil giants.

BHP added 0.4 per cent, Rio gained 0.1 per cent, BP climbed almost 1.0 per cent, Shell rose 0.1 per cent.

Marks & Spencer surged 15.4 per cent after it beat profit expectations and raised its annual forecast. AstraZeneca rose 1.1 per cent on news it would create a separate vaccine and antibody therapy division. Meanwhile, bike retailer Halfords catapulted 20.1 per cent on raised earnings amid easing supply chain disruptions, while broadcaster ITV galloped 14.5 per cent after notching record advertising revenue.

Just Eat Takeaway.com tumbled 3.3 per cent and HelloFresh fell 0.7 per cent amid news of US peer DoorDash’s acquisition of rival Wolt.

Asian markets mixed on hot inflation

Asian markets closed mixed as China’s inflation heats up, the consumer price index rose 1.5 per cent from a year earlier, the highest since September last year while the producer price index climbed 13.5 per cent, the fastest pace in 26 years as per the National Bureau of Statistics.

Tokyo’s Nikkei fell 0.6 per cent, Hong Kong’s Hang Seng added 0.7 per cent, while China’s Shanghai Composite lost 0.4 per cent.

ASX 200 falls for 3rd straight day

Yesterday, the Australian sharemarket closed lower for its third straight session, down 0.1 per cent at 7,424 as iron ore players dragged amid concerns over demand for the steel-making ingredient in China.

BHP (ASX:BHP) fell 2.7 per cent, Fortescue Metals (ASX:FMG) dropped 2.1 per cent while Rio Tinto (ASX:RIO) closed 1.7 per cent lower as the price of iron ore dipped. Elsewhere, Mineral Resources (ASX:MIN) tanked 4.1 per cent.

National Australia Bank (ASX:NAB) did a U-turn surging 4.4 per cent to its highest close since March 2018. This was amid a number of broker upgrades raising its target price following its full-year result.

This saw financials as the best performer, switching positions from the prior session with materials registering as the worst performer. Utilities and industrials advanced, property closed flat while the other sectors closed in the red.

Shares in Bluescope Steel (ASX:BSL) wiped off its gains from this week after the steelmaker unveiled its plans to acquire US scrap steel supplier MetalX.

Chalice Mining (ASX:CHN) rallied for its second straight day, notching almost a 35 per cent gain after their discovery of the largest nickel sulphide deposit in over 20 years.

The best-performing stock in the S&P/ASX 200 was Chalice Mining (ASX:CHN), closing 4.9 per cent higher at $9.13. It was followed by shares in United Malt Group (ASX:UMG) and National Australia Bank (ASX:NAB).

The worst-performing stock in the S&P/ASX 200 was BlueScope Steel (ASX:BSL) closing 5.9 per cent lower at $20.00. It was followed by shares in Nearmap (ASX:NEA) and Orocobre (ASX:ORE).

Local economic news

The Australian Bureau of Statistics is set to release the jobs report, our labour force figures for October.

In September, we saw a fall in employment of 138,000 mainly due to the lockdowns with Victoria as the biggest drag, being the state that was impacted the most.

Though there was some silver lining, as hours worked notched higher, a more appropriate measure of the impact of the lockdowns. This was driven by the growth in Queensland and a recovery in hours worked in NSW, a highly positive sign that the state was on the right path.

Market expectations range is quite wide stretching from a fall of 50,000 jobs to a pop of 120,000 in the month. On the more realistic side, most economists are expecting a fall of 50,000 jobs to reflect a recovery in NSW offset by weakness in Victoria.

Broker moves

Macquarie upgraded CSL’s (ASX:CSL) rating to an outperform from neutral with a price target of $338. After the broker reviewed the opportunities and risks for the company’s immunoglobulin in spite of elevated multiples, Macquarie forecasts a favourable growth profile and believes the balance sheet remains attractive. Over the medium to longer term, the broker believes that growth is supported by increased diagnosis of conditions where the product is used. The new plasma collection platform could also improve efficiency. The rating is upgraded and the target price also gets a boost to $338.00 from $302.50. Shares in CSL (ASX:CSL) closed 0.2 per cent lower at $314.22 yesterday.

Ex-dividend

There is one company trading ex-dividend today.

Australian Pharm (ASX:API) is paying 2 cents fully franked

Dividend-pay

There are two companies set to pay eligible shareholders dividends today.

Cellnet Group (ASX:CLT)
KKR Credit Income Fund (ASX:KKC)

AGMs

There are 14 companies set to meet with eligible shareholders today.

Ansell (ASX:ANN)
Austal (ASX:ASB)
BHP Group (ASX:BHP)
Breville Group (ASX:BRG)
Computershare (ASX:CPU)
Cooper Energy (ASX:COE)
Estia Health (ASX:EHE)
Global Value Fund (ASX:GVF)
Ingenia Communities (ASX:INA)
Medibio (ASX:MEB)
Nearmap (ASX:NEA)
Nine Entertainment (ASX:NEC)
Qube Holdings (ASX:QUB)
REA Group (ASX:REA)

Annual & interim reports

There are 7 companies set to release reports today.

Ausnet Services (ASX:AST)
Graincorp (ASX:GNC)
Xero (ASX:XRO)
Orica (ASX:ORI)
NK Banking Corporation (ASX:BBC)
Raptis Group (ASX:RPG)
Infratil (ASX:IFT)

Commodities

Iron ore has lost 3.2 per cent to US$89.50. Its futures point to a 2.2 per cent gain

Gold gained $23.10 or 1.3 per cent to US$1854 an ounce, silver was up $0.41 or 1.7 per cent to US$24.73 an ounce.

Oil was down $2.93 or 3.5 per cent to US$81.22 a barrel.

Currencies

One Australian Dollar at 8:15 AM has weakened from yesterday, buying 73.25 US cents, 54.65 Pence Sterling, 83.47 Yen and 63.83 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 reserve your free online spot.