A mixed move around the globe as Wall St marched higher on positive earnings results. The local bourse closed in the red, for the first time since Tuesday last week. China’s curb on steel pressured resources & energy stocks lower. Credit Suisse boosted Oil Search’s target price.
The Australian sharemarket is poised to lift with the SPI futures pointing to a 0.2 per cent gain.
Nasdaq and S&P 500 hit record highs
The Nasdaq and S&P 500 hit a new record high as stocks were in rally mode ahead of Apple’s earnings result. The three major indexes rose despite disappointing GDP figures while earnings results continued to roll. Tech shares impressed even as the yield on the 10-year treasury note ticked higher, a sign of confidence behind these tech names amid the concerns we have been seeing around inflation.
Official name change by Facebook, Merck, Ford & Caterpillar moves
Facebook closed 1.5 per cent higher after they officially announced that they will change its name to Meta. They will change their ticket code from FB to MVRS in December.
Merck shares surged 6.1 per cent after raising its full-year forecast. Their pill to treat Covid-19 was a highlight as they expect FDA approval by year end. They are expecting to bank up to US$7.0 billion of sales by the end of next year. The White House has committed to buy US$1.2 billion worth of the drug if the pill does get approved.
Investors revved up after Ford released strong earnings after market close yesterday. Ford raised its full-year guidance for the second time this year on expectations of strong demand in new cars, as supply chain concerns abate. Shares in the automaker rose 8.6 per cent.
A tune that we are familiar with is the passing down of price hikes due to inflation. Shares in construction giant Caterpillar closed 4.1 per cent higher, helping lift the Dow. They reported a miss on revenue but a spike on profit as supply chain issues weigh. The company said that due to increased demand in construction and rising commodity prices, sales did rise 30 per cent in the quarter.
The construction giant also warned that current inflation levels may force them to raise prices for the third time this year. We are seeing quite a few companies pass down higher prices to consumers, and we saw this in the GDP figures.
US GDP slows down while jobless claims falls to new pandemic low
Meanwhile, the weekly jobless claims, so Americans filing for unemployment benefits at the state level fell to a new pandemic era low at 281,000 as per the Labor Department. It fell below estimates which is a good sign, you want this figure to miss estimates, it’s an indicator that the labor market is moving in the right direction.
The US GDP slowed down sharply to a 2.0 per cent rate in the third quarter as per the Commerce Department. Its quarterly growth was the slowest since the pandemic mid last year. Consumer spending slowed down last quarter as Covid-19 cases rose while supply chain disruptions continued to challenge which led to shortage of goods, like cars and food.
During the quarter, federal stimulus payments also ended. Personal core inflation rose 4.5 per cent in the period. Let’s see how market participants react to tonight’s personal spending data. It’s a measure of inflation based on consumer spending.
Wall St gains as bond yields tick higher
At the closing bell, the Dow Jones added 0.7 per cent to 35,730, the S&P 500 gained almost 1.0 per cent to 4,596 while the Nasdaq closed 1.4 per cent higher at 15,448.
The yield on the 10-year treasury note rose by 4.0 basis points to 1.57 per cent, gold gained on a weaker greenback.
Across the S&P 500 sectors, every sector advanced. Communication services was the best performer, up 1.5 per cent, followed by consumer staples and utilities. Real Estate added the least at 0.3 per cent followed by consumer discretionary.
European markets mixed on earnings
Across the Atlantic, European markets closed mixed. Paris added 0.8 per cent, Frankfurt fell 0.1 per cent and London’s FTSE closed 0.1 per cent lower.
Mining and oil giants closed mixed in UK trade. BHP added 0.2 per cent, Rio fell 1.3 per cent, BP declined 1.6 per cent, Shell dropped 3.5 per cent after reporting lower than expected earnings.
Asian markets falls on curb in coal prices
Asian markets closed lower as China looks to curb the spike in coal prices. Tokyo’s Nikkei dropped almost 1.0 per cent after the Bank of Japan lowered its annual growth forecasts. Hong Kong’s Hang Seng fell 0.3 per cent, while China’s Shanghai Composite closed 1.2 per cent lower.
ASX 200 falls on commodity weakness
Yesterday, the Australian sharemarket fell as weakness in the commodity markets dragged the resources giants lower amid a raft of AGM’s and trading updates. It closed 0.3 per cent lower at 7,430, it’s first decline since Tuesday’s session last week. The index saw energy and materials drag the index while there were gains in financials, healthcare and consumer discretionary.
The nation’s third largest bank ANZ (ASX:ANZ) closed 0.7 per cent higher at $28.60 after posting a better than expected earnings update for its second-half of the financial year 2021 period. Westpac (ASX:WBC) led out of the major four adding 1.1 per cent at $26.23 ahead of their financial year 2021 results on Monday next week.
Fortescue Metals (ASX:FMG) outperformed its mining peers after posting record quarterly shipments. However, the iron ore miner received less per tonne due to a fall in commodity prices in the September quarter. It closed 0.1 per cent higher at $14.02. BHP (ASX:BHP) fell 1.1 per cent while Rio Tinto (ASX:RIO) closed 1.5 per cent lower.
Oil prices tumbled over 2.0 per cent after Iran and the European Union agreed to resume talks on the 2015 nuclear accord. Meanwhile, China’s decision to monitor surging coal prices dragged stocks with the likes of Whitehaven Coal (ASX:WHC) tumbling 5.0 per cent at $2.69.
Newcrest Mining (ASX:NCM) bucked the trend adding 0.8 per cent at $25.56 after investors digested the upbeat gold production and its Cadia mine in NSW. They shrugged off the performance at its Lihir operation in Papua New Guinea.
Reliance Worldwide (ASX:RWC) continued to rally to be the best performer for the session. Investors continued to mull on the plumbing parts company’s benefit from acquiring EZ-FLO after several brokers upgraded its rating and target price for the company yesterday. To find out what Macquarie said, click here.
Boral (ASX:BLD) jumped 4.6 per cent at $6.61 after the building materials producer over-estimated the impact of costs and concrete volumes due to the lockdowns during the September quarter. Investors piled back after they realised the difference it would make to the top line.
Reece (ASX:REH) was the index’s third best performer after the company posted a 13.2 per cent surge in sales revenue to $1.8 billion in the first quarter of financial 2022. The plumbing parts supplier said that jump was driven by strong growth across its US business.
Pointsbet Holdings (ASX:PBH) was the worst performer after its September-quarter trading update came in below expectations. The online bookmaker revealed that its market share in the US fell led by New Jersey, its most largest and established market.
Coles (ASX:COL) added 0.1 per cent at $17.36 despite its September-quarter sales growth falling below expectations. Investors appeared to have focused on its outlook for hope which was a stark contrast to Woolworth’s tumble after they released results on Wednesday. Woolworths (ASX:WOW) closed 1.0 per cent lower at $38.76.
The best-performing stock in the S&P/ASX 200 was Reliance Worldwide (ASX:RWC), closing 5.2 per cent higher at $5.72, followed by shares in Boral (ASX:BLD) and Reece (ASX:REH).
The worst-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH), closing 18.3 per cent lower at $8.63, followed by shares in IOOF Holdings (ASX:IFL) and Nickel Mines (ASX:NIC).
Local economic news
Today the producer price index for the September quarter, so the inflation at the business level is due from the Australian Bureau of Statistics. It is expected to rise by 1.3 per cent for the quarter.
Retail sales figures are due and it’s expected that it will be either flat or up to 0.5 per cent growth for September.
The private sector credit, so the loans outstanding for September will also be out and it’s expected to rise by 0.5 per cent for the month.
Sleep treatment business ResMed (ASX:RMD) has posted a 20 per cent jump in revenue to US$904 million for the September quarter. The medical product maker said it excluded the impact from Covid-19 related respirator demand. Keep an eye out for further updates.
Credit Suisse rates Oil search (ASX:OSH) as a neutral with a price target of $4.72. The company’s September-quarter met Credit Suisse’s estimates, as the merger with Santos (ASX:STO) continues. Credit Suisse suspects asset sales will be needed to shore up the balance sheet, and to align the joint ventures but questions the wisdom of selling the best assets to support weaker assets. Target price rises to $4.72 from $4.38 to reflect higher prices and merger synergies. Shares in Oil search (ASX:OSH) closed 1.4 per cent lower at $4.39 yesterday.
There are five companies trading ex-dividend today.
Autosports Group (ASX:ASG) is paying 7 cents fully franked
Kkr Credit Income Fund (ASX:KKC) is paying 1 cent unfranked
Metrics Income Opportunities Trust (ASX:MOT) is paying 0.89 cents unfranked
Metrics Master Income Trust (ASX:MXT) is paying 0.68 cents unfranked
Partners Group Global Income Fund (ASX:PGG) is paying 0.6833 cents unfranked
There are 19 companies set to pay eligible shareholders today.
Beacon Minerals (ASX:BCN)
Cadence Capital (ASX:CDM)
CI Resources (ASX:CII)
Cedar Woods Properties (ASX:CWP)
Duxton Water (ASX:D2O)
Gowing Bros (ASX:GOW)
Kelly Partners Group Holdings (ASX:KPG)
Plato Income Maximiser (ASX:PL8)
PTB Group (ASX:PTB)
Rural Funds Group (ASX:RFF)
Ridley Corporation (ASX:RIC)
Spheria Emerging Companies (ASX:SEC)
Seven Group Holdings (ASX:SVW)
Virtus Health (ASX:VRT)
WAM Active (ASX:WAA)
WAM Capital (ASX:WAM)
There are six companies set to see their shareholders for their AGMs
Cobram Estate Olives (ASX:CBO)
GUD Holdings (ASX:GUD)
GWA Group (ASX:GWA)
Skycity Entertainment Group (ASX:SKC)
Templeton Global Growth Fund (ASX:TGG)
Annual & trading updates
There are 42 companies set to deliver their annual report today.
Iron ore has lost 6.0 per cent to US$112.65, so we are seeing China’s steel curbs here. Its futures point to a 1.4 per cent fall.
Gold gained $1.70 or 0.1 per cent to US$1,801 an ounce, silver was down $0.07 or 0.3 per cent to US$24.12 an ounce.
Oil was up $0.49 or 0.6 per cent to US$83.15 a barrel.
One Australian Dollar at 7:30 AM keeps rallying, buying 75.44 US cents, 54.69 Pence Sterling, 85.69 Yen and 64.60 Euro cents.