Investment Ideas From the Edge of the Bell Curve
The ASX 200 closed up +0.48%, trading at 7,069.2 with seven of the eleven sectors in the green.
Top performing sectors were Industrials (+1.37%) and Financials (+1.02%), while the worst performers were Utilities (-1.28%) which was dragged down by the selloff of Origin stock (-2.44%) after its board advised the rejection of the Brookfield-EIG last minute bid.
On top of the individual performers on the wider benchmark today, we had Iress surging 14.9% after upgrading its guidance and showing progress on its strategic transformation.
In the ASX 200, the top performer was Codan, up 4.26% and TELIX Pharmaceuticals, up 4.24%.
Here’s a great overview of the OPEC+ oil cuts in anticipation of the likely cuts that will come tomorrow.
Oil prices have climbed in the past couple of days, as traders pre-empt the extension of the cuts into 2024.
Brent Crude is currently up 0.18% to US$82.95, while WTI Crude is up 0.19% to US$77.71
Source: Rory Johnston (source image here)
Activity in China’s service sector and manufacturing shrank again in November. The official manufacturing Purchasing Managers Index (PMI) fell to 49.4 the second month down and below expectations.
The non-manufacturing activity, which measures construction and services sectors, also fell, but unexpectedly. The index fell to 50.2, just above the 50-below contraction mark. Services activity fell to 49.3, the first contraction for the gauge this year.
‘Today’s PMI reading will further raise the expectations toward policy support,’ said Zhou Hao, chief economist at Guotai Junan International in Hong Kong. ‘Fiscal policy will be under the spotlight and takes the centre stage over the coming year.’
Source: Shane Oliver
Never mind the Xmas rally; some bears have come in early to snatch your presents.
JPMORGAN: “.. we expect a more challenging macro backdrop for stocks next year with softening consumer trends .. lackluster global earnings growth .. For S&P 500, we estimate earnings growth of 2-3% next year with EPS of $225 and Price Target of 4,200 with a downside bias.” pic.twitter.com/A6V9mjnwTN
— Carl Quintanilla (@carlquintanilla) November 29, 2023
Casino operator Skycity Entertainment [ASX:SKC] saw its shares rise by 2.08% today, trading at $1.71 per share.
The jump comes as the High Court of New Zealand ruled in their favour in relation to a concession agreement with Macquarie over the termination of a deal in 2019 over car parks at its Auckland casino.
After the ruling, SkyCity said:
‘There remains uncertainty regarding the timing for the acquisition of the Auckland car park assets and therefore the associated impact on earnings for FY24.’
Origin Energy’s [ASX:ORG] board have rejected the revised plan-b takeover bid from the Canadian conglomerate led by Brookfield.
The board described the plan-b deal as ‘incomplete and complex‘ and recommended investors ignore it and focus on the previous offer.
Shares in Origin are down by 2.14% today as the likelihood of the deal passing now looks vanishingly small.
Jason Beddow, managing director of Argo Investments, a large shareholder of Origin commented on the chances:
“It could happen, but it’s not normal – it doesn’t normally happen. You’re basically now, I think, close to [requiring] 80 per cent of the rest of the shareholders [to vote yes]. So just doing the math, it’s going to be tricky.”
The ASX 200 has had a middling day, with the benchmark only breaking back into the positive around 1pm.
The benchmark is currently up 0.33%, trading at 7058.5.
Industrials, +1.12% and Financials, +0.88% were the biggest gainers in the early afternoon, while Utilities is facing heavy losses, down -1.44%, as Origin drags the sector down.
Financial technology company Iress [ASX:IRE] has seen its shares jump by 13% in this morning’s trading. The company, which has been under pressure since its disappointing half year results in August, has seen leadership changes and a strategy shakeup as the company strives to return to the ‘rule of 40’.
For software companies the rule of 40 states that a a company’s combined revenue growth and profit margin should equal or exceed 40%.
Iress CEO Marcus Price said today:
‘We are executing our significant transformation plan well and remain confident we’re on the right path towards the Iress Group operating at Rule of 40. Our refreshed leadership team is firmly in the driver’s seat under our new structure. Each business is now working to its five-year plan, with accountability resting with each CEO. Our remuneration structure is now directly aligned to the performance of each business unit and the Group as a whole.’
Revenue growth for 2H was 2.6% higher than 1H23, while the company upgraded guidance to EBITDA to $123-128m from $118-122 million.
Queensland copper explorer Cooper Metals [ASX:CPM] has seen its shares jump by an astonishing 73% in trading this morning. The move comes after the company announced a new copper discovery at its Brumby Ridge Prospect within its Mt Isa Project in NW Queensland.
Here are the details of the find below
Source: Cooper Metals
Liontown board has just welcomed Former Fortescue Metals [ASX:FMG] chief financial officer Ian Wells to its board.
Mr Wells was the CFO of FMG until his unexpected resignation in January.
‘We are delighted that Ian has agreed to join the Liontown Board at an exciting and very important time in the development of the Kathleen Valley Lithium Project,’ said chairman Tim Goyder.
‘He brings substantial development and operational experience that will be invaluable to the company as we complete construction of Kathleen Valley and move into commissioning and production,’ Goyder said.
Mr Wells is just one of around 12 senior executives who have left Fortescue in the past three years as the company makes the transition to green energy.
Mr Forrest has previously stated the revolving leadership should not be a surprise to shareholders.
‘I said at the start of this transition [to cleaner energy] 12 people would change,’ he said on Wednesday.
‘I announced that three years ago … if you’re not fully capable of managing the transition or don’t want to, they leave, simple as that.’
Good morning all, Charlie here
The ASX 200 opened up 0.10% to 7,042.1 this morning as markets are likely headed for another quiet day, reflecting a muted consolidation phase before the usual Santa rally.
Yesterday’s monthly CPI numbers for Australia came in at 4.9% in annual terms. That was well below analyst expectations of 5.2%, signalling some slowing of inflation.
Importantly to note, the October CPI numbers did not include surveys of the services sectors. Currently, a cause for concern is services inflation, so we will have to wait until next month’s data to get a better understanding of that.
Wall Street finished fairly flat as expectations of rate pauses balanced out concerns about the macroeconomic outlook.
US Dollar and bond yields continue to sell off on the bet that the Fed has finished raising rates. This should give equities more room to run, but so far, it’s modest.
US GDP was revised up to 5.2% from 4.9% for the third quarter as businesses purchased more equipment and warehousing, but momentum appears to have waned since then.
The growth rate was the fastest in two years but has yet to drive any bullish outlooks as consumer spending (which accounts for two-thirds of the US economy) was lowered to a 3.6% growth rate.
Wall Street: Dow flat, Nasdaq -0.16%, S&P 500 +0.40%
Overseas: FTSE -0.43%, STOXX +0.52%, Nikkei -0.26%, SSE -0.56%
The Aussie dollar fell -0.43% to US 66.19 cents.
US 10-year bond yield -7bps to 4.26%. Australian 10-year bond yields -15bps to 4.34%.
The US 10-year has now fallen -57 basis points in the past month. Overnight billionaire investor Bill Ackman said his firm Pershing Capital was ‘betting that the Federal Reserve is going to have to cut rates more quickly than people expect’.
Gold is flat at US$2,044.19, nearing record highs not seen since 2008. Silver is down -0.32% to US$25.00
Bitcoin fell -0.39% to US$37,748. Ethereum rose +1.30% to US$2,026
Oil Brent rose +1.54% to US$82.94, while WTI Crude rose +1.69% to US$77.70.
Iron ore up +0.7% to US$128.20 a tonne.
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Investment ideas from the edge of the bell curve.
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