Wall St mixed, Aurizon offers $2.4b for One Rail, Webjet rated as Neutral: ASX to open flat

Mixed market across the globe as investors digested company earnings, trading updates and AGMs. Concerns on Evergrande’s future reignited after the deal to divest fell through. Macquarie downgraded Webjet’s (ASX:WEB) rating. Online panel discussion with RBA Governor Philip Lowe today.

The Aussie sharemarket is set to open flat with the SPI futures pointing to a gain of 0.03 per cent to be precise.

S&P 500 hits record high as Dow skids

The S&P 500 hit a record high, continuing its winning streak for the seventh day. The Nasdaq gained, while the Dow scratched lower closing the day on a mixed note. Investors continued to shift through a pile of earnings, looking at how companies have been impacted by rising costs, supply chain disruptions, and labour shortages.

Flight carriers flags concerns as Tesla takes-off

American Airlines closed 1.9 per cent higher after posting a profit thanks to federal aid. The carrier did report its smallest quarterly loss since the pandemic started. The company is looking at lower profit levels in the fourth quarter compared to 2019.

Southwest Airlines fell 1.7 per cent after posting a slimmer than expected loss. Rising costs are expected to impact its profitability despite more flight bookings. Revenue and bookings have been on the rise since September. However, due to the recent cancellations, this is expected to cost US$75 million in October sales.

Tesla rose 3.3 per cent lifting the S&P 500 after the EV giant reported record revenue and profit for the quarter. The company’s strong results come after improved growth margins. There were multiple setbacks, such as the microchip shortages and congestion at ports. Looking ahead, the EV car maker still plans to achieve 50 per cent annual growth and vehicles over the next few years.

AT&T fell 0.5 per cent despite an uplift in subscriber growth as customers look towards 5G. The telecom giant also saw subscriber growth in its HBO service. They expect to reach their subscriber growth target of 70 to 73 million by the end of year.

Weekly jobless claims falls to new pandemic low

Elsewhere, weekly jobless claims fell to a new pandemic low of 219,000. Last week’s numbers have attracted a bit of attention as it will be part of the next jobs report from the Labor Department. Meanwhile, existing home sales jumped 7.0 per cent last month as mortgage rates fell prompted the spur to buy homes.

For now, the economy is moving forward on solid grounds, though inflation could derail this. Higher commodity prices amid rising production costs, and unexpected delta outbreaks could put a handbrake on expansion.

Wall St mixed as bond yields rose

At the closing bell, the Dow Jones lost 0.02 per cent to 35,603, the S&P 500 added 0.3 per cent to 4,550 while the Nasdaq closed 0.6 per cent higher at 15,216.

The yield on the 10-year treasury note rose by 5 basis points to 1.68 per cent, gold dipped on a stronger greenback.

Across the S&P 500 sectors, there were seven winners to four losers. Consumer discretionary added 1.4 per cent, followed by health care adding 0.4 per cent and then technology. Energy was the worst performer, down 1.8 per cent followed by financials and materials.

European markets mixed on miners

Across the Atlantic, European markets closed lower. Paris fell 0.3 per cent, Frankfurt lost 0.3 per cent and London’s FTSE closed 0.5 per cent lower weighed by miners and rate hike concerns.

Oil and mining giants fell. Rio Tinto sank 4.8 per cent, BHP dived 3.7 per cent, while BP lost 1.9 per cent and Shell fell1.6 per cent as metals and oil prices declined.

Asian markets reacts to Evergrande’s tumble

Asian markets closed mixed. Tokyo’s Nikkei lost 1.9 per cent on weakness in electronic makers, Hong Kong’s Hang Seng fell 0.5 per cent as tech and healthcare stocks fell, while China’s Shanghai Composite bucked the trend adding 0.2 per cent.

Evergande resumed trading tumbling 12.5 per cent after a three week halt on talks around its $3.5 billion asset sale. The property giant did secure an extension on a defaulted bond after it fell through.

ASX 200 closes flat as AGM season heats up

Yesterday, the Australian sharemarket closed flat at 7,415 after investors digested a raft of trading updates as AGM season heats up.

Gains in technology and real estate stocks offset declines in the energy, consumer stocks and material as the local bourse faded in the afternoon amid Evergrande woes.

Perpetual (ASX:PPT) jumped 7.8 per cent after the investment manager reported September-quarter net inflows of $100 million. It also posted a 2.7 per cent rise in total assets under management to $101 billion.

Cimic (ASX:CIM) surged 5.6 per cent after reiterating its calendar year 2021 net profit guidance. The construction group also cancelled a controversial supply-chain finance program as part of a balance sheet refresh.

Healius (ASX:HLC) added 4.4 per cent after posting a 44 per cent jump in revenue and earnings for the September quarter. The diagnostic imaging and pathology operator attributed the lift due to a high demand of Covid-19 testing.

Super Retail Group (ASX:SUL) fell 4.4 per cent on the back of a broker recommendation. Ords downgraded the owner of Super Cheap Auto, Rebel and BCF on valuation grounds following a steep rise in the share price over the past two weeks.

The best-performing stock in the S&P/ASX 200 was Perpetual (ASX:PPT), closing 7.8 per cent higher at $40.38. It was followed by shares in Cimic Group (ASX:CIM) and Healius (ASX:HLS).

The worst-performing stock in the S&P/ASX 200 was Flight Centre Travel Group (ASX:FLT), closing 5.8 per cent lower at $20.39 on the back of broker recommendation. It was followed by shares in Super Retail Group (ASX:SUL) and The A2 Milk Company (ASX:A2M).

There stocks that celebrated record milestones including Santos (ASX:STO), and Brainchip (ASX:BRN). Join me at Stock of the Hour here to find out why.

To also get a helicopter view of the slew of trading updates, more than dozen of them, make your way here to view the news from the likes of Aristocrat Leisure (ASX:ALL), Ramelius Resources (ASX:RMS), Woodside Petreloum (ASX:WPL) and more.

Local economic news

Today there is an online panel participation by Reserve Bank Governor Philip Lowe at Universidad de Chile’s Conference on Central Bank Independence, Mandates and Policies.

Also IHS Markit is set to release the early flash estimates of manufacturing and services activity for purchasing managers in October.

Company news

Rail operator Aurizon (ASX:AZJ) has unveiled a $2.35 billion deal to acquire One Rail Australia from Macquarie Asset Management (ASX:MQG) using existing and new debt facilities. Shares in Aurizon (ASX:AZJ) closed flat at $3.89. Shares in Macquarie (ASX:MQG) closed at $197.84. Keep an eye out for further updates.

Broker moves

Macquarie downgraded Webjet (ASX:WEB) to neutral from an outperform with a lift in its price target to $6.65.

The broker has cut its rating due to the recent share-price strength. At its AGM, the broker believes that the global uncertainty persists. However, signs of a strong and instant recovery have arised where borders have re-opened. At this stage, international leisure bookings are outpacing domestic bookings.

The broker has pushed out the growth profile six to nine months to reflect the Australia and New Zealand border closures. Target price rises to $6.65 from $6.45.

Shares in Webjet (ASX:WEB) closed 3.1 per cent lower at $6.31 yesterday.

Ex-dividend

There are two companies trading ex-dividend today.

Rand Mining Ltd (ASX:RND) is paying 10 cents fully franked
Tribune Res Ltd (ASX:TBR) is paying 20 cents fully franked

Dividend-pay

There are 14 companies set to pay eligible shareholders dividends today.

Apiam Animal Health (ASX:AHX)
ARB Corporation (ASX:ARB)
Capitol Health (ASX:CAJ)
COG Financial Services (ASX:COG)
Eildon Capital (ASX:EDC)
Future Generation Global Investment Co (ASX:FGG)
Imperial Pacific (ASX:IPC)
London City Equities (ASX:LCE)
Macmahon Holdings (ASX:MAH)
Qube Holdings (ASX:QUB)
Swick Mining Services (ASX:SWK)
WAM Research (ASX:WAX)
WAM Alternative Assets (ASX:WMA)
Wam Microcap (ASX:WMI)

AGMs

There are nine companies slated to meet with shareholders virtually today.

Cleanaway Waste Management (ASX:CWY)
Equity Trustees (ASX:EQT)
Event Hospitality and Entertainment (ASX:EVT)
Insurance Australia Group (ASX:IAG)
McMillan Shakespeare (ASX:MMS)
Megaport (ASX:MP1)
Steadfast Group (ASX:SDF)
Sunrise Energy Metals (ASX:SRL)
Event Hospitality and Entertainment (ASX:EVT)

Quarterly Report

Orocobre (ASX:ORE) is set to release a quarterly update.

Commodities

Iron ore has lost 5.8 per cent to US$116.93. Its futures point to a 3.8 per cent fall.

Gold lost $1.20 or 0.1 per cent to US$1784 an ounce, silver was down $0.23 or almost 1 per cent to US$24.21 an ounce.

Oil was down $0.77 or 0.9 per cent to US$82.65 a barrel.

Currencies

One Australian Dollar at 7:30 AM has weakened from yesterday, buying 74.64 US cents, 54.14 Pence Sterling, 85.13 Yen and 64.22 Euro cents.

Investor event

Please join us for our next online investor event on Tuesday 26 October with six companies presenting. From lithium explorers to marketing service providers. Make your way to fnn.com.au to reserve your free online spot.