Wall St hits record highs, Westpac trades ex-div, Pendal’s price target gets a boost: ASX to rise

S&P 500 & Nasdaq hit fresh record highs amid strong earnings results and optimism after the Fed’s announcement. The Bank of England keeps rates unchanged. The local bourse extended its winning streak for the 2nd day on tech surge. Morgan Stanley boosted Pendal’s (ASX:PDL) price target

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

S&P 500, Nasdaq hit fresh record highs

A mixed closed across the major indexes with record highs from the S&P 500 and the Nasdaq. There have been six straight days of gains for the S&P 500 which comes after a rough September which is usually followed by choppy October, not this time round. October has blown past expectations as stocks continued to rise, resetting record highs.

Growth stocks outperformed as the treasury yield dipped after investors digested the Federal Reserve’s decision to pull back stimulus this month, and keep interest rates low. All of this comes amid better-than-expected earnings as companies continue to impress.

Jobless claims fall to new pandemic-era low

Meanwhile, investors also enjoyed new weekly jobless claims numbers that have fallen to a new pandemic-era low at 269,000, coming in better-than-expected, these figures are moving in the right direction. The numbers come ahead of the jobs report for October tonight. We also received a better-than-expected ADP private sector employment data where 571,000 private jobs were added into the sector last month.

The closely watched jobs report will include roles from other sectors like the government, workers from schools, hospitality like cafes and restaurants, and vehicle drivers. Let’s see if these industries saw workers come back into the labour market in October.

OPEC+ keeps oil supply unchanged despite pressure to boost

Looking at the energy market, OPEC+ and its allies agreed to keep their oil supply unchanged, despite increasing pressure from the Biden Administration and other oil consumer countries like India and Japan to pump more oil to help reduce the cost of gas prices.

The group will boost oil production by 400,000 barrels of oil per day, which has been their consistent message and it seems that the alliance are comfortable with the current pricing level, as part of the plan, to gradually return output to pre-Covid19 levels.

This could all change when they meet next month if demand remains strong and if prices jump, however with the narrative we have been seeing, it may not be a firm enough reason to see oil supply change.

Gold prices have jumped close to the 2.0 per cent mark and came close to the US$1,800. This is despite the greenback performing well today defying their usual inverse relationship.

Best outcome for stocks this week

It’s been a big week of central banks meeting. Back home we had the Reserve Bank keep rates at record lows and shifted gears on the likelihood of rate hikes in 2024. In the UK, the Bank of England left monetary policy unchanged despite inflationary pressures, a move that came a day after the European Central Bank reassured markets that they were not predicting a rate hike in 2022.

With support still around from the central banks, stocks got the best outcome this week.

Wall St mixed as bond yield falls

At the closing bell, the Dow Jones fell 0.1 per cent to 36,124, the S&P 500 gained 0.4 per cent to 4,680, while the Nasdaq closed 0.8 per cent higher at 15,940.

Across the S&P 500, it was a mixed performance. Technology was the best performer adding 1.5 per cent followed by consumer discretionary, and industrials. Financials felt the pressure as the bond yields ticked lower as the worst performer, down 1.3 per cent, followed by real estate, and healthcare.

The yield on the 10-year treasury note fell 8.0 basis points to 1.52 per cent as gold jumps on a stronger greenback.

European markets gains as BoE keeps rates unchanged

Across the Atlantic, European markets closed higher after the Bank of England surprised market participants leaving rates unchanged as mentioned earlier. Paris added 0.5 per cent, Frankfurt gained 0.4 per cent and London FTSE added 0.4 per cent as bond yields fell amid a weaker pound while oil giants buoyed the index.

BP gained 1.4 per cent, Shell rose 1.7 per cent, while mining giants closed mixed. BHP gained 0.8 per cent, Rio fell 0.6 per cent,

Asian markets gains on stockpiling necessities

Asian markets closed higher. Tokyo’s Nikkei gained 0.9 per cent on strong growth in the services sector, Hong Kong’s Hang Seng added 0.8 per cent after consumer staple stocks surged on Beijing’s directive to stockpile necessities while China’s Shanghai Composite also gained 0.8 per cent.

ASX 200 rises for 2nd day

Yesterday, the Australian sharemarket closed 0.5 per cent higher at 7,428 continuing its winning streak for a second day in a row as technology stocks surged and energy stocks sank.

Afterpay (ASX:APT) jumped 2.4 per cent to $124.38 after shareholders in US payments giant Square voted in favour to acquire the BNPL Aussie company. In August, the $39 billion deal consisted of a scrip offer from Square, where 0.375 Square shares for each Afterpay share was offered at an implied price of $127.24 for each Afterpay share based on Wednesday’s night closing price.

CSR (ASX:CSR) surged 4.7 per cent at $6.28 after the building materials producer reported a 41 per cent increase in first-half financial year 2022 earnings compared to a year ago, thanks to a 6.0 per cent rise in revenue.

Adbri (ASX:ABC) rose 3.0 per cent at $3.16 after the concrete manufacturer purchased the Queensland-based Zanows’ Concrete and Quarries business for $58 million.

Domino’s Pizza (ASX:DMP) highlighted the uneven sales growth performances across its operating regions in the first 18 weeks of financial year 2022, with a particular mention to the Japanese market. The company said that the strength of the Australian dollar meant that the offshore earnings deposited into the local accounts came in lower. They also flagged headwinds from rising electricity and gas prices along with a rise in food costs.

Chicken group Inghams (ASX:ING) tumbled 5.0 per cent at $3.60 after the company also flagged inflation worries. The company said that feed costs increased above previous expectations due to northern hemisphere drought, an uplift in global demand and higher transport costs. Inghams flagged that input cost pressures could place upward pressure on market pricing.

NIB Holdings (ASX:NHF) surged 5.8 per cent after the health and travel insurer reported an 8.5 per cent rise in first-quarter financial year 2022 premium revenue. Investors looked past the severe lockdown restrictions and its impact on its travel insurance arm.

The best-performing stock in the S&P/ASX 200 was Nufarm (ASX:NUF) and NIB Holdings (ASX:NHF) both adding 5.8 per cent followed by Chalice Mining (ASX:CHN).

The worst-performing stock in the S&P/ASX 200 was Domino Pizza Enterprises (ASX:DMP), closing 18.4 per cent lower at $116.12. It was followed by shares in Beach Energy (ASX:BPT) and Inghams Group (ASX:ING).

Local economic news

The Reserve Bank is set to release the quarterly Statement on Monetary Policy. Also the AiGroup is to publish the details of a survey of purchasing managers.

Broker moves

Morgan Stanley rates Pendal (ASX:PDL) as overweight with a boosted price target of $9.00. The broker assessed the Thompson, Siegel & Walmsley acquisition and saw that it would help drive upgrades to earnings to the tune of 20 per cent in the financial year 2022 to 2023.

Morgans believes it will add $33 billion in funds under management with little overlap of funds or clients with the existing US business. The broker rating is retained and the price target rises to $9.00 from $8.50.

Shares in Pendal (ASX:PDL) closed 3.1 per cent higher at $6.95 yesterday.

Ex-dividend

There are two companies trading ex-dividend today.

Janus Henderson (ASX:JHG) is paying 50.5992 cents unfranked
Westpac Banking (ASX:WBC) is paying 60 cents fully franked

Dividend-pay

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

360 Capital Enhanced Income Fund (ASX:TCF)
Boom Logistics (ASX:BOL)
Dexus Convenience Retail REIT (ASX:DXC)
Dexus Industria REIT (ASX:ADI)
MFF Capital Investments (ASX:MFF)
Perpetual Credit Income Trust (ASX:PCI)
Rand Mining (ASX:RND)
Sandon Capital Investments (ASX:SNC)
Tribune Resources (ASX:TBR)

AGMs

There are six companies set to meet with shareholders today.

Great Northern Minerals ASX:GNM
Integral Diagnostics (ASX:IDX)
Ioneer (ASX:INR)
Qantas Airways (ASX:QAN)
Ragnar Metals (ASX:RAG)
Spark New Zealand (ASX:SPK)

Reports & updates

Macquarie Group (ASX:MQG) and Aura Energy (ASX:AEE) are set to release an update today.

Commodities

Iron ore futures point to a 3.8 per cent fall.

Gold gained $30.00 or 1.7 per cent to US$1,794 an ounce, silver was up $0.61 or 2.6 per cent to US$23.85 an ounce.

Oil was down $1.62 or 2.0 per cent to US$79.24 a barrel.

Currencies

One Australian Dollar at 7:30 AM has weakened from yesterday buying 73.99 US cents, 54.82 Pence Sterling, 84.18 Yen and 64.03 Euro cents.