Mixed market around the globe as Covid-19 jitters emerge. European markets fell while Alibaba dragged the Hang Seng while Japanese shares rallied on fresh stimulus. ASX closed higher on Friday though lower for the week. Macquarie boosted City Chic’s (ASX:CCX) target price.
The Australian sharemarket is poised to fall with the SPI futures pointing to a dip of 0.6 per cent.
Nasdaq hit record highs amid Covid-19 relapse
On Friday, Wall St closed mixed with the Nasdaq hitting a record high as investors monitor surging Covid-19 cases in Europe. Austria re-entered a lockdown as restrictions were placed on the unvaccinated in Germany, sparking renewed fears about the virus and the outlook for the global economic recovery. Before this, the week was led by better-than-expected corporate results and strong macroeconomic figures.
The biggest laggard on the Dow were travel stocks with Boeing tumbling almost 6.0 per cent as the 10-year treasury yield fell, giving room for technology stocks to rise.
As fears resurface energy and financial stocks fall, travel and airline shares fly into the red as the industrial sector feels the pain. A similar pattern we saw from the start of the pandemic.
Oil drops on demand concerns as supply rises
Meanwhile, oil prices plunged on concerns of demand in the short-term, a turnaround from the past few weeks where we talked about the mounting jitters on a supply shortage with oil prices poised to rise, now it’s on worries for demand.
Adding to the tension was the downward revision of global demand forecasts by the International Energy Agency. Only last week we saw China considering tapping into its strategic reserves, a joint move with the US.
As the virus spreads in Europe, equities pulled back amid Germany’s health minister saying that they won’t rule out a lockdown, weighing on the outlook of the post pandemic recovery.
If restrictions tighten, given that Europe plays a key role in the global economy, there are likely to be headwinds for global markets.
Wall St mixed as bond yields fall
At the closing bell, the Dow Jones lost 0.8 per cent to 35,602, the S&P 500 fell 0.1 per cent to 4,698 while the Nasdaq closed 0.4 per cent higher at 16,057.
Across the S&P 500, energy sank 3.9 per cent, then financials, and healthcare. Information technology was the best performer, up 0.8 per cent followed by utilities, and consumer discretionary. All the other sectors closed in the red.
The yield on the 10-year treasury note fell four basis points to 1.55 per cent. Gold slipped on a firmer greenback.
European markets fall on Covid jitters
Across the Atlantic, European markets closed lower, compounded by worries around hiking interest rates on “unwelcome and painful” inflation, said ECB Christine Lagard.
Paris lost 0.4 per cent, Frankfurt also fell 0.4 per cent and London’s FTSE lost 0.5 per cent as miners rose, while energy players fell.
BHP gained 0.9 per cent, Rio added 1.8 per cent, BP dropped 2.9 per cent, Shell lost 3.2 per cent.
Asian markets mixed as Alibaba tumbles
Asian markets closed mixed. Tokyo’s Nikkei added 0.5 per cent after Japan’s Prime Minister unveiled the US$490 billion stimulus package.
Hong Kong’s Hang Seng tanked 1.1 per cent after Alibaba’s results missed expectations. Shares in the eCommerce giant fell 10.7 per cent.
China’s Shanghai Composite rallied 1.1 per cent on reports that Beijing is likely to introduce more tax and fee reductions to the value of more than US$78.31 billion.
ASX 200 gains on Crown’s rally
On Friday, the Australian sharemarket closed 0.2 per cent higher at 7,397 after a mixed day of trade, ending the week lower by 0.6 per cent. For the year, the local bourse is up 12.7 per cent. Six winners out of the 11 sectors, industrials weighed while healthcare rose lifted by CSL (ASX:CSL) and Sonic Healthcare (ASX:SHL).
Sonic (ASX:SHL) added another 3.0 per cent after last Thursday’s AGM. Over the week, Sonic rose almost 5.0 per cent. The pathology provider said that revenue grew by 5.0 per cent to over $3 billion while EBITDA rose 16 per cent to $991 million in the four months to October, with over one million Covid-19 jabs administered across the nation.
CSL (ASX:CSL) rose 1.0 per cent amid a broker recommending strong returns on invested capital. Click here and make your way to broker moves.
Though the limelight was on Crown Resorts (ASX:TWE) surging 16.6 per cent to $11.54 after Blackstone came to the table with a $12.50 a share offer, worth $8.5 billion. This bid followed previous attempts by Crown’s second-largest shareholder of $11.85 a share in March and $12.35 a share in May. The proposed scheme of arrangement is subject to general offer conditions, and regulatory approvals.
Treasury Wine Estates (ASX:TWE) surged over 4.0 per cent amid a boosted target price on plans to acquire Napa Valley- based Frank Family Vineyards for US$315 million. The highlight noted from these brokers were the attractive margins set to be earned by the Californian wine-maker.
Altium (ASX:ALL) soared 5.2 per cent as the circuit-board software designer is poised for growth in the enterprise market. Brokers also noted that earnings and revenue are on track to meet guidance.
The best-performing stock in the S&P/ASX 200 was Crown Resorts (ASX:CWN) closing 16.6 per cent higher at $11.54, followed by shares in Altium (ASX:ALU) and Treasury Wine Estates (ASX:TWE).
The worst-performing stock was Nanosonics (ASX:NAN) closing 4.9 per cent lower at $5.80, followed by shares in ALS (ASX:ALQ) and Orocobre (ASX:ORE).
Elsewhere, Aristocrat Leisure (ASX:ALL) fell 1.6 per cent amid a number of brokers downgrading its target prices following its financial year results last Thursday. Upon review, most of the brokers had reservations around higher spend and investments for the financial year 2022.
The week ahead
Locally we will see business investment and construction work figures that will veer into the calculations for the September GDP figures.
Other than that, consumer confidence numbers, weekly payroll, and retail spending figures are on the table this week.
Overseas is a different story, President Joe Biden is expected to announce the Fed board moves this week. In the next 24 hours expect the Eurozone consumer confidence figures and existing home sales figures in the US.
Big day on Wednesday with FOMC minutes, personal consumption expenditure numbers,
US GDP figures and a New Zealand rate decision.
On Thursday, it’s Thanksgiving in the US with Wall St closed and then Black Friday, spending spree time on discounts galore.
On the earnings front, Mesoblast (ASX:MSB), TechnologyOne (ASX:TNE), Virgin Money UK (ASX:VUK), Webjet (ASX:WEB), and Fisher & Paykel Healthcare (ASX:FPH) are due to post figures this week.
Macquarie rates City Chic (ASX:CCX) as an outperform with a price target of $7.50. Even though the fashion retail experienced headwinds from the supply chain jam in Europe and the UK ahead of Christmas, the company has two months’ worth of inventory in the US and Australia and New Zealand which the broker sees as a positive despite the increase to working capital. Expansion offshore has meant the company’s traditional earnings skewed to the first half has now spilled to the second. The broker notes the fashion group’s moves into new marketplaces is providing organic growth momentum. The outperform rating is retained and the target rises to $7.50 from $6.70. Shares in City Chic (ASX:CCX) closed 2.2 per cent higher at $6.50.
There is one company trading ex-dividend today
Elders (ASX:ELD) is paying 22 cents 20 per cent franked
There are four companies set to meet with shareholders today
Growthpoint Properties Australia (ASX:GOZ)
Lovisa Holdings (ASX:LOV)
McMillan Shakespeare (ASX:MMS)
Spark Infrastructure Group (ASX:SKI) – Scheme meeting
There is one company set to make their debut on the ASX today. Keep an eye out for Nimy Resources (ASX:NIM).
Iron ore is up 5.1 per cent at US$91.69 a tonne.
Gold lost $9.70 or 0.5 per cent to US$1,854 an ounce, silver was down $0.12 or 0.5 per cent to US$24.84 an ounce.
Oil sank $2.91 or 3.7 per cent to US$76.10 a barrel.
One Australian Dollar at 7:24 AM is slightly weaker from Friday, buying 72.46 US cents, 53.93 Pence Sterling, 82.51 Yen and 64.22 Euro cents.