Mixed market around the globe as Wall St digested a slew of economic data & FOMC meeting minutes. RBNZ interest rate hike weighs on inflation concerns. UBS rated Vulcan Steel (ASX:VSL) as a buy.
The Australian sharemarket is set to open higher with the SPI futures pointing to a gain of 0.1 per cent.
US stocks trade mixed as tech shares rally
Stocks closed mixed as tech shares pushed higher shrugging off inflation concerns. Investors also received a slew of economic data before the holidays painting a mixed picture on a low volume day. Adding to the mix were earnings from retail giants citing supply chain disruptions weighing on their profit outlook.
Best Buy shares tumbled over 12 per cent on Wednesday after the electronics retailer forecasted weak same store sales due to supply chain disruptions. Today Nordstrom and Gap cut their annual forecast on the same concerns. Share prices got punished plummeting 29 and 24 per cent respectively.
CEO Elon Musk sold another US$1 billion of stocks according to a regulatory filing. He is now at the halfway point on his pledge to sell 10 per cent of his stake. The billionaire has sold nearly US$10 billion of Tesla shares this month. Shares rose 0.6 per cent.
Fed minutes show that they are ready to lift rates
Meanwhile, the latest Fed meeting minutes revealed that the central bank is ready to raise interest rates if inflation runs hot. After the two day session this month, the Fed indicated it would cut back its bond buying program and said “substantial further progress had clearly been more than met with respect to inflation”. The central bank outlined that the bond buying program would be maintained through to at least December and into August next year.
Inflation at 30 year highs as consumer sentiment at 10 year lows
The Fed’s preferred inflation gauge, personal consumption expenditures price index rose 4.1 per cent from a year ago, the highest in 30 years as per the Bureau of Economic Analysis, while consumer sentiment is at its lowest in 10 years as per the University of Michigan.
Jobless claims falls to lowest level since 1969
Weekly jobless claims fell to its lowest level since 1969, more than half a century. Claims fell to 199,000, a drop of 71,000 from the week before. Analysts believe that this week’s figures could be due to the lead up to the Thanksgiving holiday. Jobless claims have been on a winning streak in setting new pandemic era lows for several weeks and if this continues, the labour market recovery could come sooner than anticipated.
US GDP slows Q3 though big rebound ahead
Meanwhile, America’s third quarter GDP showed the economy has slowed to an annual rate of 2.1 per cent, better than what was estimated. Economists forecast the current quarter to see a larger rebound while warning that inflation and a rise in Covid-19 cases could change the trajectory.
Wall St mixed as bond yields fell
At the closing bell, the Dow Jones shed 0.03 per cent lower or flat at 35,804, the S&P 500 gained 0.2 per cent to 4,702, while the Nasdaq added 0.4 per cent at 15,845.
Across the S&P 500, there were six losers to five winners. Real estate, energy, and tech were the biggest advance while materials were the worst.
The yield on the 10-year treasury note fell 3 basis points to 1.64 per cent. Gold rose on a firmer greenback.
European markets mixed as resources gain
Across the Atlantic, European markets closed mixed. Paris closed flat. Frankfurt fell 0.4 per cent as the Social Democrats, Greens and Free Democratic party reached a deal to lead the country’s next government. London’s FTSE added 0.3 per cent lifted by gains in energy and miners. BHP gained 0.8 per cent, Rio added over 1.0 per cent, BP rose 1.5 per cent, Shell climbed 1.3 per cent.
Telecom Italia soared 15.7 per cent on reports KKR is mulling increasing its offer for the company.
Asian markets mixed on Evergrande news
Asian markets closed mixed. Tokyo’s Nikkei tumbled 1.6 per cent after coming back from a public holiday, Hong Kong’s Hang Seng and China’s Shanghai Composite both edged higher by 0.1 per cent after Chinese Estates Holdings further cut its stake Evergrande.
ASX 200 falls on tech tumble
Yesterday, the Australian sharemarket closed 0.2 per cent lower at 7,399 amid rising treasury yields weighing on gold miners and tech stocks.
RBNZ interest rate hike weighs on inflation concerns
Concerns on the hike in the interest rates were compounded by news from across the Tasman. The Reserve Bank of New Zealand (RBNZ) raised its cash rate by quarter (0.25) of a per cent to 0.75 per cent, the second rise in two months.
To put this into perspective with our central bank, in New Zealand, inflation is running hot where it is now putting the economy in a vulnerable position. Currently inflation is at 4.9 per cent over the year and the Reserve Bank of New Zealand is expecting that inflation will rise to 5.7 per cent in the fourth quarter.
These figures are quite loud which makes it hard to turn a blind eye to, and is why the New Zealand bank has hiked interest rates. The bank is forecasting interest rates to rise to 2.0 per cent next year to help cool an overheating economy.
Though, back home we are in a different situation in comparison. Our inflation rate is at 2.1 per cent sitting in the central bank’s range of 2.0 to 3.0 per cent, and the central bank can be way more dovish.
Governor Philip Lowe has continued to reaffirm that the central bank is in no position to raise interest rates anytime soon, in speeches to the market to cool their jets. The markets are way more hawkish than the RBA pricing in rate hikes next year. As inflation continues to rise and our Aussie dollar falls, let’s see if their tone changes in the upcoming board meeting next month.
On this backdrop, technology shares were the biggest loser while energy, utilities, and healthcare were in the winners’ corner failing to offset the other sectors which closed lower.
Energy stocks continued to rally with Woodside Petroleum (ASX:WPL) jumping 1.6 per cent to $22.81 amid a number of brokers posting their projected returns from its Scarborough project. Origin Energy (ASX:ORG) rose 1.2 per cent to $5.17, Santos (ASX:STO) added 2.2 per cent to $6.89, while Oil Search (ASX:OSH) closed 0.7 per cent higher to $4.23.
On the resources front, Newcrest (ASX:NCM) lost 1.2 per cent, Rio Tinto (ASX:RIO) dipped 0.1 per cent, while Fortescue Metals (ASX:FMG) added 1.3% and BHP (ASX:BHP) rose 0.5 per cent.
Adding to the softness was Macquarie (ASX:MQG) falling 1.5 per cent with Westpac (ASX:WBC) and National Australia Bank (ASX:NAB) shedding 0.1 per cent. Meanwhile ANZ (ASX:ANZ) rose 0.9 per cent and Commonwealth Bank (ASX:CBA) gained 0.4 per cent.
The Foreign Investment Review Board approved the $5.2 billion takeover of Spark Infrastructure (ASX:SPK) by private equity giant KKR and the Ontario Teachers’ Pension Fund. Shares in Spark jumped 1.8 per cent at $2.87.
Harvey Norman (ASX:HVN) fell after the retailer posted a fall in sales revenue of 8.8 per cent over the four months to 21 November. Shares closed 1.7 per cent lower at $5.10.
Pinnacle Investment (ASX:PNI) sank after the company resumed trade following the completion of a $105 million institutional placement at $16.70 a share. The proceeds are set to fund its acquisition of a 25 per cent stake in private equity group Five V Capital.
The best-performing stock in the S&P/ASX 200 was PolyNovo (ASX:PNV), closing 3.5 per cent higher at $1.47. It was followed by shares in Lendlease Group (ASX:LLC) and Beach Energy (ASX:BPT).
The worst-performing stock in the S&P/ASX 200 was Technology One (ASX:TNE), closing 8.6 per cent lower at $11.47 amid several brokers trimming its rating after its full year results. It was followed by shares in Pinnacle Investment (ASX:PNI) and Netwealth Group (ASX:NWL).
Elsewhere, Bapcor (ASX:BAP) tumbled for its second day, down over 4.0 per cent. The CEO of the car parts provider of names like Autobarn, Autopro and Burson chains is set to step down next year in February after a decade of being in the company.
Whispr (ASX:WSP) galloped almost 15 per cent higher after the cloud communications platform software provider upgraded revenue guidance for this financial year to 34 to 42 per cent from 20 to 26 per cent.
Local economic news
The Australian Bureau of Statistics is set to release September quarter data on private capital expenditure, so business investment indicators as well as the weekly payroll figures for the fortnight ending 30 October.
Fisher & Paykel Healthcare (ASX:FPH) generated $900 million in operating revenue, down 1.0 per cent, and $222 million in net profit after tax, down 2.0 per cent, for the six months to September 30 compared to the same period a year ago. Keep an eye out for more details. Shares in Fisher & Paykel Healthcare (ASX:FPH) closed 1.1 per cent higher at $30.88 yesterday.
UBS rates Vulcan Steel (ASX:VSL) as a buy with a price target of $9. The broker highlights that the company consistently achieved financial metrics well above the industry average, and is focusing on maintaining or growing gross profit per tonne through steel price cycles.
UBS outlined the growth options included new customer wins, adding geographical regions and/or product categories through acquisitions. Gross profit per tonne from this financial year to financial year 2023 is expected to be broadly flat despite falling carbon steel prices.
In a highly fragmented Australian market, the broker feels the company has a range of options to grow market share.
Shares in Vulcan Steel (ASX:VSL) closed 1.4 per cent higher at $8.05 yesterday.
There are two companies trading ex-dividend today
Australian Vintage (ASX:AVG) is paying 2.7 cents 60 per cent franked
Nufarm (ASX:NUF) is paying 4 cents unfranked
There is one company set to pay eligible shareholders today. Acrow Formwork and Construction Services (ASX:ACF).
There are 26 companies set to meet with shareholders today including Evolution Mining, IOOF Holdings and Kogan.Com
1414 Degrees (ASX:14D)
Andromeda Metals (ASX:ADN)
Arena REIT (ASX:ARF)
Armour Energy (ASX:AJQ)
Artemis Resources (ASX:ARV)
BNK Banking Corporation (ASX:BBC)
EQ Resources (ASX:EQR)
Evolution Mining (ASX:EVN)
Global Energy Ventures (ASX:GEV)
Hansen Technologies (ASX:HSN)
Hastings Technology Metals (ASX:HAS)
IOOF Holdings (ASX:IFL)
Kingsgate Consolidated (ASX:KCN)
New Zealand Coastal Seafoods (ASX:NZS)
Northern Minerals (ASX:NTU)
Nova Minerals (ASXNVA)
NRW Holdings (ASX:NWH)
Optiscan Imaging (ASX:OIL)
Perseus Mining (ASX:PRU)
Propell Holdings (ASX:PHL)
Proteomics International Laboratories (ASX:PIQ)
Province Resources (ASX:PRL)
Ramelius Resources (ASX:RMS)
Regis Resources (ASX:RRL)
Aroa Biosurgery (ASX:ARX)
Straker Translations (ASX:STG)
Gentrack Group (ASX:GTK)
Peppermint Innovation (ASX:PIL)
Havilah Resources (ASX:HAV)
Virgin Money UK (ASX:VUK)
There is one company set to make their debut on the ASX today. Keep in out for Radiopharm Theranostics (ASX:RAD) after raising $50 million. They’re a biotech company targeting some of the largest markets in cancer treatment.
Iron ore has gained 4 per cent to US$103.45. Its futures point to a 4.4 per cent gain.
Gold gained $4.40 or 0.3 per cent to US$1791 an ounce, silver was up $0.09 or 0.4 per cent to US$23.59 an ounce.
Oil was down $0.26 or 0.3 per cent to US$78.24 a barrel.
One Australian Dollar at 8:15 AM has weakened from yesterday, buying 71.99 US cents, 54.00 Pence Sterling, 83.06 Yen and 64.26 Euro cents.