Wall St slips again on tech rout, Challenger names new CEO, Charter Hall rated as buy: ASX to fall

Major indexes around the globe decline ahead of central bank meetings amid US data showing the producer price inflation hitting a record high.

The Australian sharemarket is set to fall in a nervous wake of central banks meeting.

US stocks slip for 2nd day as Fed meets

Wall St closed lower for another day after the latest inflation data showed prices continuing to rise amid the Federal Reserve starting its two day meeting. We’re going to get an official decision from the Fed on this pace of the taper timeline tomorrow morning. So higher inflation on the first day of the two-day Fed meeting, interesting. Tomorrow we will hear comments about the economy, the coronavirus, and the taper timeline, which is expected to be sped up amid persistent and hotter than expected inflation.

We’re going to talk more about these rising prices shortly. I want to touch on the 10-year government bond yields that peaked during the session and closed higher, putting downward pressure on these tech names like Tesla and Microsoft, with the Nasdaq as the underperformer.

So we’ve seen December’s performance being a volatile one really since Black Friday, where we saw Wall St notch its worst day for the year as the Omicron variant started to spread around the globe. Amid the rise in the number of cases and the news of the first death in Europe, so did prices.

US producer prices hit annual record high

Producer prices rose at the fastest pace on record last month coming in at 9.6 per cent over the year, above the 9.2 per cent economists expected. It’s a new record high and a sign that inflation is having a loud and clear continuing impact on the economy. The Fed did remove the word “transitory” out of its language after saying for around a year that it has been transitory. The question is how long will these prices continue to rise? And at what pace? As costs across the board both for companies, so producers and consumers are starting to rise quite a bit.

Apple within striking distance while Musk sells

Apple is within striking distance of that US$3 trillion market value. It closed lower today by 0.8 per cent along with a broader market as the Fed begins this meeting. When Apple hits this market valuation, it will become the first publicly traded company to cross that milestone. It has the biggest weight in the major indexes like the S&P 500 and the Nasdaq, both market cap weighted indexes due to its market valuation. This comes after analysts from Bank of America upgraded its rating to a buy and popped its price target to a Wall Street high of US$210 a share, citing a likely upcoming augmented and virtual reality headset to be launched in 2023, slated to be a game changer in this space.

Meanwhile, a CNBC report showed that Facebook now has more than 2 billion monthly active users around the world. Shares of Facebook, its parent company Meta, were actually outperforming the market but then closed by 0.2 per cent lower.

More news from Tesla with CEO Elon Musk continuing to sell shares with the stock closing 0.8 per cent lower. Another filing showed that Elon Musk has sold another US$906 million worth of Tesla shares. Musk has been on a selling frenzy since he posted a poll on Twitter last month asking his followers if you should sell 10 per cent of his stake in the company. He has sold around US$3 billion worth in a month, and he has another US$15 billion to go. If we get there, that would put downward pressure on the shares.

Shares in Pfizer closed 0.6 per cent higher after the pharma giant said its antiviral Covid-19 pill could work against the new variant. Pfizer’s final analysis showed the drug was 89 per cent effective against hospitalization and death among adults at high risk of Covid-19.

It’s going to be an interesting end of the week with the Fed’s outcome tomorrow along with the ECB and BoE set to meet also. More volatility on the cards as investors prepare for how to respond.

Wall St falls for 2nd as bond yields rose

At the closing bell, the Dow Jones fell 0.3 per cent to 35,544, the S&P 500 lost 0.8 per cent to 4,634 while the Nasdaq closed 1.1 per cent lower at 15,238.

Across the S&P 500, financials were the only outperformer amid the climb in the bond yield. The rest closed lower with the laggard with information technology, in line with the tech heavy Nasdaq being the laggard out of the major indexes.

The yield on the US treasury note rose 2 basis points at 1.44 per cent as bonds, while gold dipped on a stronger greenback.

European markets fall amid UK strong jobs growth

Across the Atlantic, European markets closed lower. Paris fell 0.7 per cent, Frankfurt lost 1.1 per cent and London’s FTSE lost 0.2 per cent amid strong jobs growth in November, a sign that the labour market withstood the end of Britain’s unpaid leave program.

Miners gained over 2 per cent on higher aluminium prices due to tight supply. Shell added 0.3 per cent after revealing plans to buy US-based solar and energy storage developer Savion.

BHP gained almost 2 per cent, Rio added 2.2 per cent, BP rose 0.8 per cent, Shell added 0.3 per cent.

Telecom entrepreneur Patrick Drahi increased his stake in BT Group to 18 per cent, triggering a defensive response from the British Government. Shares sunk 5.4 per cent.

Asian markets fall amid China’s fresh outbreak

Asian markets closed lower amid the Omicron variant detected in north China. A major manufacturing province, Zhejiang suspended operations due to a fresh outbreak.

Tokyo’s Nikkei lost 0.7 per cent, Hong Kong’s Hang Seng fell 1.3 per cent, while China’s Shanghai Composite closed 0.5 per cent lower.

ASX 200 closes flat at its ‘session high’

Yesterday, the Australian sharemarket closed flat at 7,378 after spending most of the session in the red.

The crawl to the flat line was weighed down by consumer staples and consumer discretionary stocks as the worst performer. Energy and information technology stocks were also under pressure while the other sectors advanced. Real estate led the pack higher along with materials given the boost around the iron ore price.

Woolworths (ASX:WOW) dived 7.7 per cent after first-half earnings for its Aussie food business fell is slated to come in below market expectations by around 16 per cent. The company cited direct and indirect Covid-19 costs for the weaker guidance. Factors included the supply chain disruption, and bad weather limiting outdoor entertainment. Other players in the sector fell as we saw in the sectoral performance. Coles (ASX:COL) fell 2.7 per cent, Wesfarmers (ASX:WES) declined 2.3 per cent in the leaders, while in the wider sector, the owner of Dan Murphy and BWS, Endeavour (ASX:EDV) fell 3.4 per cent, while Harvey Norman (ASX:HVN) closed 1.6 per cent lower. Grocery wholesaler and hardware chain Metcash (ASX:MTS) bucked the trend rising 0.7 per cent.

In other news, Biotech giant CSL (ASX:CSL) confirmed the bid valued at $16.4 billion for Vifor. The Swiss pharma giant’s board unanimously recommended the CSL offer. CSL will fund the purchase through a $6.3 billion institutional placement and a $750 million share purchase plan, and $8.4 billion of new and undrawn debt and cash facilities. Shares were put into a trading halt to help fund the transaction.

Afterpay (ASX:APT) tumbled 4.1 per cent after shareholders approved the takeover of the by US payments giant Block formerly known as Square.

Across the wider banks, Macquarie (ASX:MQG) added 0.8 per cent, Westpac (ASX:WBC) and Commonwealth Bank (ASX:CBA) both rose 0.5 per cent, ANZ Bank gained 0.4 per cent, while NAB (ASX:NAB) closed 0.1 per cent lower.

Across the resources, Fortescue Metals (ASX:FMG) rose 1.3 per cent, BHP (ASX:BHP) added 0.6 per cent, Rio Tinto (ASX:RIO) and Newcrest Mining (ASX:NCM) both strengthened 0.1 per cent, while Woodside Petroleum (ASX:WPL) closed 0.2 per cent lower.

Polynovo (ASX:PNV) had a steller session after the producer of Novosorb, a synthetic skin used in the recovery of wound and burns said it had started the second quarter of financial year 2022 strongly, notching record sales in the US market.

The best-performing stock in the S&P/ASX 200 was PolyNovo (ASX:PNV) catapulted 15.4 per cent higher at $1.57, followed by shares in Blackmores (ASX:BKL) and Charter Hall Group (ASX:CHC) amid a number of broker upgrades which I’ll cover off in broker moves.

Mesoblast (ASX:MSB) sunk after drug giant Novartis ended a deal following disappointing trial results of Mesoblast’s remestemcel-L treatment in patients with Covid-19 related acute respiratory distress syndrome.

The worst-performing stock in the S&P/ASX 200 was Mesoblast (ASX:MSB) closed 17.4 per cent lower at $1.41, followed by shares in Woolworths Group (ASX:WOW) and Whitehaven Coal (ASX:WHC).

SPI futures

Taking all of this into the equation, the SPI futures pointing to a 0.4 per cent fall.

Local economic news

Melbourne institute is slated to release its monthly consumer confidence report for December.

Company news

Asset manager Challenger (ASX:CGF) has announced Nick Hamilton as its new chief executive officer to succeed Richard Howes, whose retirement was announced in August 2021. Shares in Challenger (ASX:CGF) closed 0.3 per cent lower at $6.60 yesterday.

Broker moves

Citi rates Charter Hall (ASX:CHC) as a buy with a boosted price target of $24 from $21.80. The upgrade in its target price followed the second upgrade to financial year 2022 guidance in two months. Around 75 per cent of the upgrade is estimated to be driven by performance fees, with the balance from higher funds under management. The broker retains the group as its top pick in the sector and believes guidance still appears conservative. As a result, the analyst raises the earnings per share forecast by 30 per cent, which is now 12 per cent ahead of guidance. The buy rating is maintained. Shares in Charter Hall (ASX:CHC) closed 5.3 per cent higher at $21.95 yesterday.

Ex-dividend

There is one company trading ex-dividend today, Grange Resources (ASX:GRR) is paying 10 cents fully franked.

Dividend-pay

There are ten companies set to pay eligible shareholders today.

Australian Pharmaceutical Industries (ASX:API)
Axiom Properties (ASX:AXI)
Fisher & Paykel Healthcare Corporation (ASX:FPH)
Kathmandu Holdings (ASX:KMD)
Liberty Financial Group (ASX:LFG)
Morphic Ethical Equities Fund (ASX:MEC)
National Australia Bank (ASX:NAB)
Pengana International Equities (ASX:PIA)
Qualitas Real Estate Income Fund (ASX:QRI)
Waterco (ASX:WAT)

AGMs

There are ten companies set to meet with shareholders.

Allegra Orthopaedics (ASX:AMT)
Althea Group Holdings (ASX:AGH)
Antisense Therapeutics (ASX:ANP)
Australian Potash (ASX:APC)
Cronos Australia (ASX:CAU)
Immuron (ASX:IMC)
Kogi Iron (ASX:KFE)
Roto-Gro International (ASX:RGI)
Shriro Holdings (ASX:SHM)
Westpac Banking Corporation (ASX:WBC)

IPO

There is one company set to make their debut on the ASX today. Keep an eye out for Armanda Metals (ASX:AMM).

Commodities

Iron ore has lost 1.8 per cent to US$108.25. Its futures point to a 0.2 per cent fall.

Gold dropped $16.80 or 0.9 per cent to US$1772 an ounce, silver was down $0.38 or 1.7 per cent to US$21.95 an ounce.

Oil lost $0.91 or 1.3 per cent to US$70.38 a barrel.

Currencies

One Australian Dollar at 8:15 AM has weakened since yesterday amid the weak NAB business confidence yesterday, the Aussie dollar is nearly down 1 per cent this week buying 71.06 US cents (Tue: 71.33), 53.74 Pence Sterling, 80.83 Yen and 63.13 Euro cents.