Wall St gains, ANZ & MQG trades ex-div, CSR target price gets a boost: ASX to lift

Wall St extended its winning streak on a better-than-expected jobs report and positive results from trials of Pfizer’s Covid-19 antiviral pill. European markets rose as oil prices lifted energy stocks while International Airlines Group takes-off on Pfizer’s news. ASX had its best close on Friday since 16 September amid RBA’s November Statement on Monetary Policy. Morgan Stanley gives CSR’s (ASX:CSR) target price a boost.

The Australian sharemarket is to start the week on a positive note with the SPI futures pointing to a gain of 0.3 per cent.

Stocks hit record highs after strong jobs report

US stocks hit record highs after a better-than-expected jobs report with the S&P 500 rising for the 7th straight day. It was a very strong week for the major indexes on Wall St with October being a stellar month. We had the Nasdaq dance past the 16,000 milestone early in the session though it didn’t quite hold onto its gains, but still rose for the day.

The question is if the stockmarket has seen a level of exhaustion. With the strong gains so far, at least not last week, as investors continued to pile back into stocks.

Big jump in jobs for October as unemployment rate improves

Hiring bounced back in October much stronger-than-expected. The US economy added 531,000 jobs with leisure and hospitality leading with 154,000 new jobs added to the sector as per the Labor Department.

The unemployment rate dipped to a new pandemic low of 4.6 per cent in October but still high compared to pre-pandemic levels, that’s if you’re measuring this to 3.5 per cent from February 2020.

Meanwhile, the participation rate remained unchanged at 61.6 per cent which is the most disappointing part of the figures. The reason is that the unemployment rate fell while the participation rate stayed the same, where it would have been good to see it increase. This is the number of people in a job or looking for a job. So this report is unique in that you could just take the positive news with a grain of salt.

The average hourly earnings rose by 4.9 per cent from a year ago with concerns if higher wages will lead to higher inflation. For now, that argument is on the sidelines.

The figures show that the labour market is heading in the right direction though it will take months till the US sees maximum employment. However, if the supply chain bottleneck eases and we see success from the antiviral Covd-19 pill, we might see an acceleration of people coming back to the workforce as the nerves around the virus abate.

Pfizer’s new antiviral Covid-19 pill impresses

Shares in Pfizer surged 11 per cent after trial results from its Covid-19 antiviral pill claimed to prevent hospitalisations and death from the virus by 89 per cent. Shares in Merck tumbled almost 10 per cent on the news. In October, Merck released its anti-viral Covid-19 pill results claiming that it reduces hospitalisations and death from Covid-19 by 50 per cent. The White House pledged to order US$1.2 billion worth of the drug if the pill does get approved by the FDA. Let’s see if Pfizer gets on the radar in Washington given its efficacy rate compared to Merck.

Meanwhile crude oil prices helped energy stocks rise after OPEC+ stuck to their plans to limit the increase of oil to 400,000 barrels a day from next month. This week, Iran also flagged that they are set to resume nuclear talks this month. President Biden is weighing on tapping into its strategic reserves to put a lid on prices.

Stocks are rallying with the fight against Covid-19 coming closer on promising results from Pfizer’s anti-viral pill. The moves followed the formal announcement of the Fed’s taper program amid a strong earnings season. Let’s see how the major indexes perform as the attention shifts to the inflation figures this week.

Wall St gains as bond yields sinks

At the closing bell, the Dow Jones gained 0.6 per cent to 36,328, the S&P 500 gained 0.4 per cent to 4,698, while the Nasdaq closed 0.2 per cent higher at 15,972.

Over the week, the S&P 500 added 2.0 per cent to its biggest weekly rise since June, the Dow Jones rose 1.4 per cent, while the Nasdaq galloped 3.1 per cent to its best weekly performance since April.

Across the S&P 500 sectors, there was a wide spread gain with only health care as the laggard, down 1.0 per cent. Energy surged 1.4 per cent followed by industrials and materials.

The yield on the 10-year treasury note sank 7.0 basis points to 1.45 per cent, while gold rose on a stronger greenback.

European markets rally as oil prices rise

Across the Atlantic, European markets closed higher. Paris added 0.8 per cent, Frankfurt gained 0.2 per cent and London’s FTSE added 0.3 per cent lifted higher by oil giants.

BP rose 1.7 per cent while Shell added 1.5 per cent in tandem with rising oil prices. Miners were mixed. Rio Tinto fell 0.2 per cent while BHP rose 0.6 per cent.

Meanwhile, British Airways owner IAG took off over 6.0 per cent amid Pfizer’s antiviral pill announcement while AstraZeneca fell 1.2 per cent.

Over the week, Paris gained 3.3 per cent, Frankfurt added 2.4 per cent while London’s FTSE rose 1.2 per cent higher.

Asian markets dips amid payment hardship

Asian markets closed lower amid another property developer showing signs of hardship to make a coupon payment. Tokyo’s Nikkei fell 0.6 per cent after household spending fell in September, Hong Kong’s Hang Seng dropped 1.4 per cent, while China’s Shanghai Composite lost 1.0 per cent pressured lower by coal miners amid its pursuit to rein in coal prices.

Over the week, the Nikkei gained 2.5 per cent, the Shanghai Composite added 0.3 per cent while the Hang Seng lost 2.1 per cent.

ASX 200 has best close since Sept

On Friday, the Australian sharemarket closed 0.4 per cent higher at 7,457 for its third straight day. It was also the local bourse’s highest close since 16 September and the index rose 1.8 per cent over the week. So far, we are sitting at 13.2 per cent increase for the year.

The rally was nearly across the board with eight out of the 11 rising with communication services and consumer staples leading the way, while technology and energy fell while industrials closed flat.

The RBA’s November Statement on Monetary Policy gave investors the final view to economic forecasts that were flagged at Tuesday’s meeting. This is where the cash rate remained unchanged but scrapped its yield control curve target.

Inflation estimates have been revised higher while unemployment forecasts were lowered. Economic growth forecasts were lowered out to June 2022 due to the lockdowns. Post that, it rises to take into account a buoyant recovery.

Link (ASX:LNK) surged after private equity group Carlyle proposed a takeover at $3.00 a share. They also offered a pro rata distribution of Link’s 43 per cent stake in PEXA (ASX:PXA), its property registry business. Based on PEXA’s market cap of $2.8 billion, the Carlyle offer implies a value for Link of $5.29 a share or $2.8 billion. This is a premium of 13 per cent to Friday’s close. Shares in PEXA (ASX:PXA) fell 3.3 per cent on the news.

News Corp (ASX:NWS) shares surged 6.9 per cent at $33.90 after posting a 53 per cent rise in September-quarter operating earnings, thanks to a 18 per cent jump in revenue. Their record quarter was largely driven by its Dow Jones division who owns The Wall Street Journal. The company saw strong revenue growth in its digital real estate businesses where they have a 61 per cent stake in REA Group (ASX:REA) and a 80 per cent stake in realtor.com in the US.

Shares REA Group (ASX:REA) rallied 5.6 per cent at $176.81 after its first-quarter results saw listings growth and price rises. Revenue came in 35 per cent higher at $264 million year-on-year with EBITDA, up 28 per cent to $158 million. However, the company said that listings growth is expected to slow in the second half of the financial year while regulatory measures to slow house price inflation could impact listing volumes.

Elsewhere, shares in Wesfarmers (ASX:WES) jumped 2.1 per cent on news that Sigma Healthcare (ASX:SIG) withdrew its bid for Australian Pharmaceutical Industries (ASX:API), the owner of Priceline Pharmacy and Soul Pattinson. Sigma (ASX:SIG) added 1.8 per cent while API (ASX:API) lost 1.7 per cent.

The best-performing stock in the S&P/ASX 200 was Link Administration (ASX:LNK) closing 8.6 per cent higher at $4.70, followed by shares in News Corporation (ASX:NWS), and Northern Star Resources (ASX:NST).

The worst-performing stock in the S&P/ASX 200 was Clinuvel Pharmaceuticals (ASX:CUV), closing 12.5 per cent lower at $35.50, followed by shares in Virgin Money UK (ASX:VUK) and Afterpay (ASX:APT) after US giant Square’s results missed expectations on Wall St.

Local economic news

The focus this week is our jobs report, the labour force report from the Bureau of Statistics.

We will also see the October NAB business survey and its expected to show an improvement in business confidence and conditions.

Westpac and Melbourne Institute consumer confidence for November is slated. The figures are expected to rise amid the easing of restrictions.

Overseas, inflation readings in the US and in China will be in focus.

Broker moves

Morgan Stanley rates CSR (ASX:CSR) as overweight with a target price boost to $6.60. The first half results revealed “impressive” margins in the Building Products division. Residential and Property earnings are forecast to provide a solid boost to earnings and cash flow. The performance of the Aluminium and Property divisions were broadly in-line with the broker’s expectations. The overweight rating is maintained and the target is raised from $6.30 to $6.60. Shares in CSR (ASX:CSR) closed 0.3 per cent higher at $6.30 on Friday.

Ex-dividend

There are two companies trading ex-dividend today which are your banks

ANZ Banking (ASX:ANZ) is paying 72 cents fully franked
Macquarie (ASX:MQG) is paying $2.72 40 per cent franked

Dividend-pay

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

Fat Prophets Global Contrarian Fund (ASX:FPC)
Global Value Fund (ASX:GVF)
Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)

AGMs

There are three companies set to meet with shareholders today.

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

IPO

There is one company set to make their debut on the ASX today. Keep an eye out for SiteMinder (ASX:SDR) after raising $627 million. They are a hotel commerce platform that helps hotels to sell, market, manage their business online.

Commodities

Iron ore has lost 7.0 per cent to US$93.14. Its futures point to a 2.6 per cent gain.

Gold gained $23.30 or 1.3 per cent to US$1,817 an ounce, silver was up $0.25 or over 1.0 per cent to US$24.16 an ounce.

Oil was up $2.46 or 3.1 per cent to US$81.27 a barrel.

Currencies

One Australian Dollar at 7:25 AM has weakened from yesterday buying 73.96 US cents, 54.88 Pence Sterling, 83.76 Yen and 64.02 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.