Join our daily newsletter At The Bell to receive exclusive market insights
The ASX eased from nine-month highs as tonight’s US Thanksgiving holiday threw a temporary brake on the November rally.
The S&P/ASX 200 declined 20 points or 0.3 per cent during a low-key session. Gains in defensive sectors were outweighed by declines in the value stocks that have driven this month’s 12.7 per cent surge, the best in the index’s 20-year history .
What’s driving the market
Trading volumes halved in the US overnight as many market participants set off home for the holiday. The New York Stock Exchange is closed tonight and re-opens tomorrow night for a poorly-attended half-session. The absence of US traders was expected to have a knock-on effect across financial markets for the rest of the week.
US stocks closed mixed but mostly lower overnight. The Nasdaq Composite climbed 0.48 per cent to a record close, but the broader S&P 500 dipped 0.16 per cent. The Dow Jones Industrial Average shed 0.58 per cent. The Dow and S&P 500 fell from all-time highs after economic data underlined the impact of a stimulus stalemate in Washington.
“The crying need for additional fiscal support and sooner rather than later has been laid bare by some of the US statistics released overnight, chief among them the second consecutive rise in weekly jobless claims (to 778k, well above the 730k expected) and drop in Personal Income in October, by 0.7% (worse than the -0.1% expected),” NAB Head of FX Strategy Ray Attrill said.
US traders rotated out of value stocks back into growth, providing a blueprint for today’s ASX action. Here, the financials, industrials and materials sectors declined, offsetting gains in utilities, technology and consumer staples.
Going up
The dull but reliable utilities sector was the morning’s best performer as investors looked for safer stores of wealth following a month of extraordinary gains. The big three marched higher: APA Group +1.5 per cent, AGL Energy +1.8 per cent and Mercury NZ +1.8 per cent.
Technology was the morning’s other star. Software provider WiseTech rose 2.8 per cent after founder and CEO Richard White forecast revenue growth of 9-19 per cent to $470-$510 million this financial year. Technology One gained 4.6 per cent, Megaport 2.8 per cent and Afterpay 2 per cent.
Supermarkets Coles and Woolworths put on 1.1 and 0.8 per cent, respectively. Retail conglomerate Wesfarmers added 0.9 per cent.
Speculators dipped their toes in gold stocks at six-month lows. Newcrest bounced 1.1 per cent, Westgold 4 per cent and Silver Lake Resource 3.6 per cent.
Rare earths company Lynas climbed 3.6 per cent to a seven-year peak after finding more REE minerals below its current works at Mount Weld, near Laverton. CEO Amanda Lacaze told shareholders listening to today’s AGM that demand “appears to be returning to pre-Covid levels”.
News that Tarun Gupta will be Stockland‘s new CEO and Managing Director helped lift the diversified property group’s share price by 1.6 per cent. Gupta has held a number of senior roles at Lendlease, most recently Chief Financial Officer. Shares in Lendlease fell 1.5 per cent.
Going down
Banks suffered a rare setback after several weeks of strong gains. The big four hit eight-month highs yesterday amid optimism over the economic benefits of vaccines next year. This morning NAB fell 1.6 per cent, CBA 1.1 per cent, ANZ 1.1 per cent and Westpac 1.1 per cent. UK banking group Virgin Money skidded 9.2 per cent after reporting a 77 per cent collapse in underlying pre-tax profit.
The energy sector was mixed but lower overall as declines in Santos -2.1 per cent, Woodside -0.8 per cent and WorleyParsons -6.1 per cent outweighed gains in Viva Energy +0.4 per cent and Origin +0.9 per cent.
The industrials sector was weighed down by declines in beaten-up recovery prospects. Qantas sagged 2.5 per cent and Sydney Airport 0.7 per cent.
Pokie-market Ainsworth dived 8.6 per cent after reporting a $43 million after-tax loss of $43 million as sales revenue wilted by 36 per cent. Toy distributor Funtastic reversed initial losses to trade unchanged after completing the acquisition of e-commerce websites Toys “R’ Us, Babies “R” Us, Hobby Warehouse and Mittoni.
Other markets
A subdued session on Asian markets saw China’s Shanghai Composite dip 0.1 per cent, Hong Kong’s Hang Seng add 0.1 per cent and Japan’s Nikkei gain 0.3 per cent.
US index futures inched higher ahead of Friday’s truncated session. S&P 500 index futures were recently up seven points or 0.2 per cent.
Oil pushed ever closer to the US$50 a barrel level. Brent crude climbed 34 cents or 0.7 per cent to $US48.87 a barrel. Gold rallied $4.60 or 0.3 per cent to $US1,810.30 an ounce.
The dollar inched up 0.1 per cent to 73.7 US cents.
What’s hot today and what’s not
Hot today: Shares in Stealth Global (ASX:SGI) hit a two-year high on news the distribution company will acquire Brisbane tool distributor C&L Tool Centre. C&L has been servicing Brisbane since 1969. Stealth will pay $3.83 million – roughly three times C&L’s 2020 financial year earnings. Stealth shares more than doubled from 8.3 cents to 18 cents before paring their rise to 38.6 per cent at 11.5 cents.
Not today: Trouble at Otto Energy‘s (ASX:OEL) Green Canyon 21 oilwell in the Gulf of Mexico drove the share price down 16.7 per cent. Weather delays during hurricane season repeatedly slowed attempts to bring the well up to full production. A review is underway after production rates at the well halved in the wake of Hurricane Zeta.
