Wall St gains, Iron ore jumps, Sydney Airport says no dividend, Mirvac rated as buy: ASX to rise

 

Global rally seen as Omicron jitters abate as tech titans leapt. Confidence was restored with moves in China boosting optimism for metal and mining stocks. The ASX rallied for a 2nd day as the RBA kept monetary policy unchanged. Tech bulls are waiting for the opening bell.

The Australian sharemarket is set to open higher with the SPI futures pointing to a gain of 0.3 per cent.

US stocks gain for 2nd day on tech bull run

US stocks rallied for the second day as concerns about the Omicron variant continue to abate. Despite news that a “stealth” version of the virus has been identified in the UK, meaning that it can’t be distinguished from other variants, Wall St bulls were out.

The Nasdaq was on fire with its one day rally despite the volatility we saw in the past week. The red Friday reaction we saw on black Friday appeared to have faded as investors prepared for the santa rally. We saw a lot of confidence across the market, recovering from the Omicron concerns. Dr Anthony Fauci’s comments restored optimism, saying that initial data shows that the symptoms of the new variant are milder than initially expected, though it’s still early days.

With stocks taking off, Boeing flew higher adding 1.5 per cent. Boeing unveiled a US$3.7 billion order for new 737 MAX jets to Miami-based private investment group 777 Partners. This adds to an earlier order from the group indicating deeper trust with its products. The move follows two deadly crashes that happened within five months between 2018 and 2019, a bid to restore faith in the aircraft.

Target price boost for Apple as virtual reality hits

Apple shares hit a new record high after Morgan Stanley boosted its price target for the company lifting the overall market. Analysts unveiled a price target of US$200 a share from US$164 valuing the titan to the value of more than US$3.2 trillion. The overweight or buy rating was due to the company’s augmented reality, so AR and virtual reality, ie Metaverse had not been priced in.

Oil prices surge as Omicron fears abate

Meanwhile, oil prices rose on easing concerns about Omicron as energy traders rule out the chances of lockdowns. Amid this, President Biden and Russian President Putin had a video call for two hours. They discussed escalating tensions between Russia and the Ukraine, ransomware, so hacking concerns, and issues relating to Iran. President Biden delivered a clear warning that the US would respond with strong economic sanctions and other responses if a military escalation mounts in the Ukraine.

Wall St & bond yields rise

At the closing bell, the Dow Jones added 1.4 per cent to 35,719, the S&P 500 gained 2.1 per cent to 4,687 while the Nasdaq closed over 3 per cent higher at 15,687.

Across the S&P 500, all sectors advanced. Information technology surged 3.3 per cent followed by consumer discretionary, and energy. Consumer staples added the least by 0.2 per cent.

The yield on the 10-year treasury note added 5 basis points to 1.48 per cent. Gold rose on a weaker greenback.

European markets gain on commodity rally

Across the Atlantic, European markets closed higher. Paris gained 2.9 per cent, Frankfurt added 2.8 per cent and London’s FTSE added 1.5 per cent thanks to miners Anglo American, Antofagasta, and Glencore rising almost 4.0 per cent due to rising metals prices after China eased its monetary policy. In UK trade, commodity highlights were BHP surging over 5.0 per cent while Shell added 0.8 per cent.

BHP surged 5.6 per cent, Rio jumped 4.8 per cent, BP gained 1.3 per cent, Shell added 0.8 per cent.

Europe's Stoxx 600 rebounded 2.2 per cent as fears over Omicron faded amid Germany’s factory production firming up on a backdrop of weakened consumer confidence in October.

Volkswagen surged 8.6 per cent on reports its chief executive officer is likely to stay on, while Porsche and Piech families are considering selling part of their stake in the company to increase their stake in Porsche.

Asian markets gains on China’s monetary support

Asian markets closed higher on the PBoC’s easing in monetary policy. Tokyo’s Nikkei gained 1.9 per cent, Hong Kong’s Hang Seng jumped 2.7 per cent boosted by tech shares, while China’s Shanghai Composite closed 0.2 per cent higher.

ASX 200 taps best day since October

Yesterday, the Australian sharemarket closed almost 1.0 per cent higher at 7,314 with a late afternoon rally after the RBA kept interest rates at record lows despite the economy showing signs of inflation.

The central bank kept the official cash rate at 0.1 per cent, maintained its quantitative easing through bond purchases at $4 billion a week till February next year, when they meet again.

The Reserve Bank board acknowledged the uncertainty around the Omicron virus though viewed the economic recovery to be on solid grounds in the statement following the decision.

Even though we have seen an emergence of this new strain, the central believes that it is unlikely to hamper the economic rebound to a pre-Delta growth path in the first half of next year.

The rally was the local bourse’s best day since October, to be exact, in nine weeks with utilities as the only laggard while the other sectors advanced. Energy led the pack after the oil price rose on stalled nuclear talks with Iran pushing back a return of oil exports from the Persian Gulf state, followed by a rebound in information technology, and healthcare.

Woodside Petroleum (ASX:WPL) jumped 2.0 per cent, Beach Energy (ASX:BPT) surged 4.3 per cent, while Oil Search (ASX:OSH) leapt thanks to shareholders approving its takeover by Santos (ASX:STO) closing 3.5 per cent and 2.0 per cent respectively.

Meanwhile, moves from China boosted local iron ore miners after the PBoC’s policy adjustment in to support the economy through a property market crunch brought about an enthusiasm. Fortescue Metals (ASX:FMG) added 1.5 per cent, while BHP (ASX:BHP) and Rio Tinto (ASX:RIO) closed 0.9 per cent higher.

Across the major banks, ANZ Bank (ASX:ANZ) gained 1.5 per cent, Westpac (ASX:WBC) and National Australia Bank (ASX:NAB) rose 1.0 per cent, while Commonwealth Bank (ASX:CBA) closed 0.4 per cent higher. Macquarie (ASX:MQG) added 0.2 per cent.

Zip Co (ASX:Z1P) rebounded, clawing back its losses from the day prior, surging almost 10 per cent on a stronger-than-expected performance in the Australasian market in the November trading update. The tech giant posted a record monthly transaction volume of $906.5 million during November. This is a 52 per cent surge or $310.5 million over the prior corresponding period. The company’s transaction volume is now annualising at over $10 billion.

The best-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH) closing 9.9 per cent higher at $7.31, followed by shares in Zip Co (ASX:Z1P), and PolyNovo (ASX:PNV).

The worst-performing stock was Magellan (ASX:MFG) after their CEO stepped down closing 6.4 per cent lower at $29.10, followed by shares in Nickel Mines (ASX:NIC), and Lynas Rare Earths (ASX:LYC).

Local economic news

The Australian Bureau of Statistics is set to release a September labour account report which will provide an insight into the number of Aussies working multiple jobs. Joining them will be the job vacancies report from the National Skills Commission for November

Elsewhere, keep an eye out for Life360 (ASX:360) as they arrive into the ASX 200. The Dow Jones is slated to remove Oil Search (ASX:OSH) from the top 200 prior to 13 December amid their merger with Santos (ASX:STO). For more info, click here. 

Company news

Sydney Airport (ASX:SYD) has confirmed that there will be no final distribution paid for 2021 given the “continued significant impact of COVID-19 on the business performance of Sydney Airport over the second half of the calendar year.” Shares in Sydney Airport (ASX:SYD) closed 0.5 per cent higher at $8.40 yesterday.

Broker moves

Morgan Stanley rates Mirvac (ASX:MGR) as overweight with a price target of $3.30. The broker notes that the company is set to more than 1,000 apartment sales in the next 12 months. Morgan believes that the timing couldn't have been better, estimating that the nation could have the lowest number of new apartment completions in a decade in financial years 2023-2025. Even though apartment purchases have been less favoured over the last 12 months, the analyst expects tailwinds from the reopening of borders, and the return of foreign buyers and students. Adding to the momentum is a rise in inner urban living with relative affordability slated to assist. Shares in Mirvac (ASX:MGR) closed 1.0 per cent higher at $2.95.

Ex-dividend

There is one company trading ex-dividend today, Maxiparts (ASX:MXI) is paying 62.5 cents fully franked.

Dividend-pay

There are six companies set to pay eligible shareholders today.

Cobram Estate Olives (ASX:CBO)
Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)
Spark Infrastructure Group (ASX:SKI)
Z Energy (ASX:ZEL)

AGMs

There are six companies set to meet with shareholders.

Camplify Holdings (ASX:CHL)
Hazer Group (ASX:HZR)
Jatcorp (ASX:JAT)
Kinetiko Energy (ASX:KKO)
Knosys (ASX:KNO)
Yowie Group (ASX:YOW)

Commodities

Iron ore has gained 8.1 per cent to US$108.55. Its futures point to a 3.1 per cent gain.

Gold gained $6.30 or 0.4 per cent to US$1,786 an ounce, silver was up $0.27 or 1.2 per cent to US$22.53 an ounce.

Oil gained $2.05 or almost 3.0 per cent to US$71.54 a barrel.

Currencies

One Australian Dollar at 8:15 AM has strengthened since yesterday, buying 71.20 US cents (Tuesday: 70.50), 53.78 Pence Sterling, 80.83 Yen and 63.18 Euro cents.
  
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