ASX to rise, Wall St rallies, iron ore leaps

Australian shares are poised to start the final quarter of the calendar year on a positive note, as Wall Street rallied on hopes for another stimulus package.

House of Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin met in a bid to broker a deal, Reuters reported. In an interview with MSNBC, Pelosi said: “I’m hopeful. We’ll just see what they come back with today and how our negotiations go next.”

ASX futures were up 43 points or 0.7% to 5845 near 4.30am AEST. The currency was 0.5% higher.

Shares rallied on Wall Street with all three benchmarks solidly higher in afternoon trade. At 2.42pm, the Dow was up 354 points or 1.7%. Both the S&P 500 and the Nasdaq were each a bit more than 1% higher.

While it’s hard to quantify the impact of the first presidential debate on markets, polling in the wake of the debate showed that the odds of Joe Biden winning increased. That could help ease uncertainty of a potential contested election.

Capital Economics’ Jonas Goltermann said the limited market reaction to the debate isn’t a shock. “Biden has led the race for several months, and a Democratic win is probably at least partly discounted at this point.”

In a note, BCA Research said: “The first presidential debate does not change our subjective judgment on Trump’s odds of victory (35%), but our quantitative election model is flagging a major risk to this view.”

BCA also said it would “upgrade” Trump’s chances if the Republicans agree to a fiscal bill that removes the risk of further financial turmoil in the final month of the campaign. “A stock market selloff combined with rising COVID-19 cases is a deadly combination for a president whose re-election bid is on thin ice.

“The best outcome for financial markets is a stimulus deal now, a Biden victory, and a Republican Senate,” BCA also said. “The worst outcome is no stimulus and a Democratic sweep, but there would be a silver lining in the form of major fiscal expansion in 2021.”

As for iron ore, it surged 5% to $US123.47 a tonne, according to Fastmarkets MB. The move came on the final session before a week of holidays in China.

Today’s agenda

Local: AiG performance of manufacturing September, CoreLogic dwelling prices September

Overseas data: Japan Tankan large manufacturers index third quarter, Nikkei manufacturing September final; Euro zone August PPI, Unemployment rate August; UK Markit manufacturing PMI September final; US August personal income and spening, ISM manufacturing PMI September

Market highlights

ASX futures up 43 points or 0.7% to 5845 near 4.30am AEST

  • AUD +0.5% to 71.66 US cents
  • On Wall St near 2.40pm: Dow +1.3% S&P 500 +1.5% Nasdaq +1.1%
  • In New York: BHP +0.5% Rio +0.2% Atlassian +1.1%
  • Tesla +2.1% Nikola +17.8% Apple +2.2% Netflix +1.8%
  • In Europe: Stoxx 50 -0.6% FTSE -0.5% CAC -0.6% DAX -0.5%
  • Spot gold -0.2% to $US1893.43/oz at 2.20pm New York time
  • Brent crude -0.2% to $US40.93 a barrel
  • US oil +2.4% to $US40.25 a barrel
  • Iron ore +5% to $US123.47 a tonne
  • 2-year yield: US 0.12% Australia 0.15%
  • 5-year yield: US 0.28% Australia 0.28%
  • 10-year yield: US 0.69% Australia 0.78% Germany -0.52%
  • US prices as of 2.18pm New York

From today’s Financial Review

PM picks winners in $1.5b manufacturing strategy: Resources and critical minerals, as well as food and medical products, are among the priorities as Scott Morrison seeks to boost six key sectors.

Chanticleer: Investors target male-heavy boards: The lack of progress on diversity has prompted prominent fund managers to set a 40 per cent gender target. There is an implicit threat laggards will suffer votes against directors.

Fund managers wait for signs of recovery after listless quarter: The ASX has struggled, trading sideways for the best part of three months before ending the quarter at the end of September with a 1.4 per cent loss.

AMP’s buyback back in the spotlight: Given recent history, investors are sceptical AMP’s $200 million buyback will actually eventuate.

Wall Street

A spate of economic data on Wednesday mostly surprised to the upside, with ADP National Employment index blowing past analyst expectations and pending home sales surging to an all-time high.

The major indexes were on track to wrap up September with their first monthly declines since March, when mandated shutdowns slammed the economy.

But the indexes are expected to show third-quarter gains, with the S&P and the Nasdaq were on course for their biggest two-quarter winning streaks since 2009.

Shares of Palantir Technologies, the U.S. data analytics firm known for its work with the Central Intelligence Agency and other government bodies, jumped 38% in their market debut on Wednesday, valuing the company at nearly $US22 billion.

Moderna rose after researchers said the company’s COVID-19 vaccine candidate produced encouraging results.

Nikola stock soared after CEO Mark Russell said he was close to a deal with an energy partner and defended the company against a short-seller’s fraud allegations.

Europe

Johnson pleads with grumpy Britons to ‘stick together’ in COVID fight: The PM saw off a parliamentary rebellion against his lockdown measures, which are not yet having an impact on the second wave.

European shares closed nearly flat on Wednesday. The continent’s bourses trimmed their morning losses, and the pan-European STOXX 600 ended the day 0.1% lower while euro zone stocks slipped 0.3%.

The STOXX 600 closed out a volatile third quarter nearly flat, and posted a 1.5% decline for September as worries about a second wave of COVID-19 infections hampering Europe’s economic recovery and doubts about a Brexit trade deal came to the fore.

Bayer announced plans for more than €1.5 billion of cost cuts as of 2024 and said it would take impairment charges on its agricultural business as it battles with low commodity prices.

Asia

Hong Kong shares ended higher on Wednesday as sharp gains in China Evergrande Group boosted property stocks, after the developer secured investments to ease some of its liquidity crunch worries.

At the close of trade, the Hang Seng index was up 183.52 points or 0.8% at 23,459.05. The Hang Seng China Enterprises index rose 1.3% to 9397.37.

Hong Kong’s financial markets will be closed for National Day on Thursday, October 1 and for the Chinese Mid-Autumn Festival on Friday October 2. Markets will resume trading on Monday, October 5.

China shares closed lower on Wednesday as losses in real estate and materials stocks outweighed optimism from upbeat factory activity surveys, with the markets recording their worst monthly loss since May 2019.

The Shanghai Composite index ended down 0.2% at 3218.05 and the blue-chip CSI300 index 0.1%. For the month, the Shanghai Composite index lost 5.2% and the CSI300 index 4.8%.

China’s markets will be closed for the national holiday from October 1 to October 8.

Currencies

Sterling rallied in late London trading on Wednesday as market makers adjusted their positions on the last day of the month and the third quarter.

The pound, which had earlier weakened against both the U.S. dollar and the euro, changed course less than an hour before the 1600 GMT “fixing” time, when traders at major banks give their final reading of the currency.

“It’s month end, it’s quarter end, and you’re in very dangerous territory when you’re trying to find a fundamental explanation to spot moves in the afternoon of that final trading session,” said Derek Halpenny, head of research at MUFG.

Still, he said that in the past couple of days short-term traders had positioned themselves for a stronger U.S. dollar and given that those expectations had not materialised they were likely to reverse the positions, pushing the pound up.

Sterling had edged lower at the start of the day after Britain’s lower house of parliament approved legislation on Tuesday giving ministers the power to break its divorce agreement with the European Union.

Commodities

Chile expects $US74 billion in mining investment in the next decade, driven mainly by the copper industry, the country´s top exporter, state copper agency Cochilco, said on Wednesday.

The roster of investments includes sprawling projects from such top global miners as Antofagasta, Lundin Mining, Teck Resources and Kinross Gold. But the agency noted that 23 projects valued at $US44 billion have been delayed because of coronavirus.

OPEC oil output has risen for a third month in September, a Reuters survey found, as a restart of some Libyan installations and higher Iranian exports offset strong adherence by other members to an OPEC-led supply cut deal.

The 13-member Organisation of the Petroleum Exporting Countries pumped 24.38 million bpd on average in September, the survey found, up 160,000 bpd from August’s revised figure and a further boost from the three-decade low reached in June.

OPEC+ from May 1 made a record cut of 9.7 million bpd, or 10% of global output. Since August, the group has been pumping more as the cut tapered to 7.7 million bpd due to a partial demand recovery, of which OPEC’s share is 4.868 million bpd.

Australian sharemarket

Australian shares fell heavily on the last day of the third quarter, with the daily loss dragging what had been a largely flat quarter to date into the red.

In its worst one-day performance since September 4, the S&P/ASX 200 index fell 2.3 per cent, or 136 points, to 5815.90, with the sell-down sealing a quarterly loss of 1.4 per cent.

    Street Talk

    PE taste tests My Food Bag; PwC ramps up auction

    The death of the mega deal: M&A nose dives

    Potentia Capital’s Linkly buys online payments platforms

    Read More

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here