Wall St gains, BoE keep rates steady, Why Kina Securities is a buy: ASX to rise

Major indexes around the globe broadly rose shrugging off contagion concerns from China's Evergrande saga. Bank of England failed to impress investors as European markets closed mixed. The ASX rallied for the 3rd day. Morgans rates Kina Securities (ASX:KSL) as a buy despite not proceeding with Westpac to buy their Asia Pacific businesses.

The Australian sharemarket is set to rise with the SPI futures pointing to a gain of 0.1 per cent.

Rally-mode is on barring Monday’s sell-down

We have been in rally mode for most of the week with Monday as the exception, after Wall St booked their worst day in several months amid concerns about China’s property developer, Evergande. We saw a steep sell-off amid concerns that there would be contagion spilling over to other parts of the world. Now some of these concerns have faded for now as stocks try to get back to all time high.

Easy monetary policy is still in place after the Fed said that they are looking to taper at the end of the year with investors taking yesterday’s decision in stride.

Bank of England kept rates steady while PMIs shows slowdown

Bank of England kept rates at record lows, but they've indicated that rate hikes are expected to happen from March next year. It shows that the economy is recovering from the pandemic, as they look to temper inflation sitting at 3.2 per cent, above the bank’s target of 2 per cent.

Global flash PMIs hit the decks which broadly showed a slow down in September, however, back home, the manufacturing PMI jumped to a three-month high from August.

Even though manufacturing across the U.S. and in Europe pointed to a deceleration due to the supply chain bottleneck, the outlook looks bright as this is seen as short term.

With the major central banks keeping their stance for now, investors were optimistic as their appetite for risk sweetened around a clearer outlook ahead.

Jobless claims trends in the right direction amid talks in Congress

Americans filing for initial jobless claims rose for a second straight week, however we are still heading in the right direction for a month which has seasonal elements, that have contributed to the volatility we have seen.

In the backdrop, talks in Congress as to how to address the debt ceiling, and settle different views on the infrastructure bill are still ongoing.

For now, stocks are clawing their way back, knowing that the Evergande saga is contained for now, however caution lingers on what risk it could bring.

Energy & materials rise, bond buyers price in future taper

At the close, the Dow Jones gained 1.5 per cent to 34,765, the S&P 500 added 1.2 per cent to 4,449 while the Nasdaq closed over 1 per cent higher at 15,052.

The yield on the 10-year treasury note jumped 10 points to 1.43 per cent after investors priced in future tapering, the greenback weakened while commodities got a boost.

Across the S&P 500 sectors, energy was the best performer, up 3.4 per cent followed by financials, up 2.5 per cent, and materials. Utilities was the only outlier, down 0.5 per cent. The rest of the sectors advanced.

Mixed European markets as latest rate move fails to excite

Across the Atlantic, European markets closed mixed as the latest interest rate outcome failed to boost optimism.

Paris gained almost 1 per cent, Frankfurt added 0.9 per cent and London’s FTSE closed 0.1 per cent lower.

Oil stocks BP fell 0.5 per cent while Shell rose 0.7 per cent. Miners rose with Rio Tinto added 0.4 per cent and BHP eked out a 0.01 per cent gain.

Asian markets rally as Evergrande’s latest payment moves remains unknown

Asian markets closed higher as Evergrande concerns faded for now.

The stock surged 17.6 per cent. There has been no news on whether the property developer paid bond holders the coupon payment.

Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng gained 1.2 per cent and China’s Shanghai Composite added 0.4 per cent.

ASX 200 lifts for the 3rd day

Yesterday, the Australian sharemarket clawed back their losses from Monday closing 1 per cent higher at 7,370 shrugging off global concerns we have seen of late.

There was not one sight of red across the sectors with technology and energy stocks as the best performers by 3 per cent and 2.8 per cent respectively. Utilities were not far behind, up 2.1 per cent. There were a few sectors that marginally rose with healthcare, materials, and consumer staples marginally adding over 0.2 per cent.

The best-performing stock in the ASX 200 was News Corporation (ASX:NWS) closing 8.4 per cent higher at $32.56 after Rupert Murdoch’s media empire doubled its share buy-back program to $1.4 billion (US$1 billion). It was followed by shares in Whitehaven Coal (ASX:WHC) and Corporate Travel Management (ASX:CTD).

The worst-performing stock was Reliance Worldwide (ASX:RWC), closing 2.4 per cent lower at $5.30 followed by shares in Ramelius Resources (ASX:RMS) and Northern Star Resources (ASX:NST).

To find out more about the stocks that made headlines yesterday, pop onto the Stocks of the Hour segment I did yesterday featuring Premier Investments (ASX:PMV), Washington H. Soul Pattinson (ASX:SOL) and Brickworks (ASX:BKW).

Broker moves

Morgans rates Kina Securities (ASX:KSL) as an add with a price target of $1.28. Kina Securities and Westpac Bank (ASX:WBC) have dropped the deal for the purchase of the nation’s oldest bank’s Asia Pacific businesses, in what Morgans describes as a disappointing outcome.

After allowing for transaction costs and lost deal revenue, Kina’s management guided to an FY21 result in-line with FY20. The analyst makes similar allowances for costs, lifts FY21 underlying EPS by 2 per cent and makes no changes to FY22 EPS.

The broker maintains its add rating but drops its price target to $1.28 from $1.31.

Shares in Kina Securities (ASX:KSL) closed 2.9 per cent higher at $0.90 yesterday.

Ex-dividend

Atlas Arteria Group (ASX:ALX) is paying 15.5 cents unfranked
BSP Financial Group (ASX:BFL) is paying 12.9225 cents unfranked
Sigma Healthcare Ltd (ASX:SIG) is paying 1 cent fully franked

Dividend-pay

We have over 20 companies paying eligible investors dividends today including Woodside Petroleum, QBE, Netwealth, Pental, Appen, Bega, EBOS Healthcare, IRESS, Michael HIll, Dusk, SkyCity, ClearView, AusWide Bank, Blackmores, Vita Group, Senex, Easton, Jumbo Interactive, FFI Holdings, and Perpetual.

Commodities

Iron ore has added 3 cents to US$108.67. Its futures are pointing to 0.6 per cent gain.

Gold has lost $29.00 or 1.6 per cent to US$1750 an ounce while silver has fallen $0.23 or 1 per cent to US$22.68 an ounce.

Oil was up $1.07 or 1.5 per cent to US$73.30 a barrel on growing demand and a draw in U.S. crude inventories as production remained at a stand still in the Gulf of Mexico after two hurricanes.

Currencies

One Australian Dollar at 7:25 AM has strengthened from yesterday, buying 72.95 US cents, 53.18 Pence Sterling, 80.51 Yen and 62.13 Euro cents.

Source: Finance News Network