Trading Day: live markets coverage, plus analysis and opinion

The local sharemarket has closed deep in the green after an overnight lift in oil prices helped drive energy stocks higher.

The ASX is set for early gains.

Welcome to the Trading Day blog for Wednesday, November 22.

Samantha Woodhill4.32am: Energy oils strong ASX gains

The local sharemarket finished the session solidly higher following positive offshore leads and as oil price gains helped push energy stocks higher.

At the close of trade, the benchmark S & P/ASX200 was up 22.87 points, or 0.38 per cent, at 5986.4 points, while the broader All Ordinaries index was up 23.4 points, or 0.39 per cent, to 6067.6 points.

IG chief market strategist Chris Weston said that the ASX is gaining as momentum increases in markets across the region, with CSI in China and the Hang Seng in Hong Kong both on an upward trajectory.

“There’s a positive vibe going through markets at the moment,” he said.

“It feels like the rally before the inevitable Santa rally. Everyone was expecting a pullback, but it’s not happening.”

The banking sector was mixed, despite Prime Minister Malcolm Turnbull ruling out a royal commission into the sector.

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Rory Callinan 15.35pm: Austal trading halted before defence statement

West Australian ship builder Austal which partnered with European company Fassmer in a bid to build Australia’s offshore patrol vessels, has put it’s shares into a trading halt. The halt came in response to the imminent announcement of the winner of the $3 billion project which aims to replace Australia’s Armidale class vessels.

Federal Cabinet’s national security team was thought to have been meeting on Tuesday to decide which of the three short-listed contenders would be the winner of the contract to build the 12 ships but the decision has yet to be announced. Designs from European shipbuilders Fassmer, Lurssen and Damen had been short-listed for the bid process.

Fassmer, a family owned and operated German company, teamed with Austal, while Lurssen and Damen partnered with a subsidiary of engineering firm Civmec and government owned Australian ship builder ASC on their bids.

The vessels are to be mostly to be used for policing type missions but must also to be on call for primary defence force maritime patrol and response duties. Their build is due to start in Adelaide from 2018 and then transfer to Western Australian when the Future Frigates construction starts in Adelaide in 2020.

The trading halt will last until Friday or when the announcement is made. Austal shares were trading at $1.675 when stopped earlier today.

14.25pm: S & P/ASX 200 up 0.6pc as global equities, oil surge

Australia’s S & P/ASX 200 is up 0.6pc at 5998, heading for its best close in 7 days. The index is close to regaining the 6000 level amid strong gains in global markets and crude oil prices. WTI crude has surged 1.7pc to $US57.80 — heading for its best close in 2.5 years — amid expectations of lower US crude inventories, and Asian equities remain strong, with the Nikkei up 0.8pc, the Hang Seng up 0.9pc and the CSI 300 up 0.8pc. That follows solid gains in global equities and most commodities except iron ore yesterday.

13.35pm: Strike two for Mineral Resources

Chris Ellison’s Mineral Resources appears to have suffered a second strike against its remuneration report. Early voting on the remuneration at today’s annual general meeting in Perth recorded a 41.5 per cent vote against, following last year’s 58 per cent no vote. While votes in the room have yet to be cast, it looks unlikely that the company will avoid a second strike. However, a subsequent resolution to call a board spill in the event of a second strike recorded just 0.76 per cent in favour. Mr Ellison, a member of the Rich List, was given a 58 per cent increase is salary this year after five years of pay freezes and foregone incentives.

Shares in MIN have surged from $11.80 to $17.80 over the past year. Last up 7.2pc at $18.08.

13.20pm: S & P/ASX 200 up 0.5pc as crude oil jumps

Australia’s S & P/ASX 200 share index is pushing up again as crude oil jumps. The index is up 0.5pc at 5991, led by Energy, as WTI crude futures rise 1.6pc to $US57.70. WTI is heading for its best close since June 2015, after US industry data showed crude stockpiles resumed declines and as investors await a decision by OPEC on whether to extend cutbacks. Bloomberg says API data shows US crude inventories fell 6.36 million barrels last week. Government data today is forecast to show supplies fell 2.2 million barrels, the first fall in 3 weeks. WTI is close to break ing the 2.5 year peak of $US57.92 it hit early this month, ahead of the OPEC meeting in Vienna at month end. Saudi Arabia has cut its crude exports in September to the lowest since March 2011, according to official data.

11.50am: S & P/ASX 200 shies off 6000 points

Australia’s S & P/ASX 200 has shied off 6000 points this morning. The index is up 0.3pc at 5981 after rising 0.5pc to a 6-day high of 5995.6. It’s tracking US stock index futures which have turned slightly negative. Focus now turns to Asian markets after yesterday’s surge. So far so good, with the Nikkei 225 and the KOSPI both up 0.8 in early trading.

11.15am: Banks mixed as PM rejects Royal Commission

Bank share prices have been mixed today, but investors may be relieved after PM Malcolm Turnbull ruled out a Royal Commission into the sector. Earlier reports said the government had discussed the prospect in Cabinet. But Turnbull says the government’s position had not changed. “No, we’re not having a banking royal commission,” the Prime Minister told the Nine Network this morning. Even so, banks still face prospect of commission of inquiry into sector after Queensland Nationals senator Barry O’Sullivan has also indicated that as many four Coalition MPs, could provide the votes necessary for such a move.

11.00am: WiseTech shares hit record on upgrade

Home grown technology talent, WiseTech Global’s shares have hit an highest of $12.55 after it upgraded its full year 2018 guidance WiseTech has lifted its revenue range from $200-$210 million to $207-217m and maintained its EBITDA guidance for $71-75m.

“We are updating our FY18 revenue guidance to allow for additional organic growth and our recently announced acquisitions in the Netherlands and North America,” founder and CEO Richard White told shareholders in Wednesday at the company’s AGM.

It’s a modest uptick in guidance for WiseTech but enough to encourage investors to back the $3.5 billion local technology player. The company’s share price have more than doubled in the last 11 months, starting the year at $5.75. Growth through acquisition has been a big feature of the logistics software maker’s growth strategy and Mr White said the trend was likely to continue. “We will continue to buy more of these smaller, targeted, strategically valuable assets focused on customs vendors in non-English speaking countries particularly targeting those regions with significant manufactured trade flows.”

by Supratim Adhikari — Technology Editor

10.55am: NEXTDChas strong start to FY18

Data centre operator NEXTDC is confident of achieving its guidance for FY18 earnings it provided in August after recording a “strong start” to the year. Shares up 0.3pc at $5.43 after the announcement after rising 2pc earlier. NXT shares hit a record high of $5.51 on Friday after CFSGAM’s Dawn Kanelleas, speaking at the Sohn Hearts & Minds Conference, named it her top pick for the year ahead.

10.30am: Qube still sees higher underlying earnings

Ports and logistics operator Qube tells investors at annual meeting this morning that market conditions in financial 2018 to remain similar to 2017, with pressure to remain on shipping rates from competitive dynamics in Qube’s key markets. Still chairman Allan Davies says Qube “continues to expect to report an increase” in underlying earnings in the 2018 financial year, although is not specific. Qube chairman says the recently acquired Patrick ports business is expected to contribute to a “modest increase in underlying earnings for Qube in coming financial year. Qube shares last traded steady at $2.63 each. Qube in September delivered 18.2 per cent increase in annual profit to $102.2 million.

10.25am: S & P/ASX 200 hits 6-day high, led by resources

Australia’s S & P/ASX 200 share index rose 0.6pc at a 6-day high of 5994 in early trading.

The Energy and Materials sectors are leading gains in all sectors except Telcos and Utilities.

Renewed strength in crude and copper and fresh record highs on Wall Street are in focus along with impressive gains from emerging markets.

A2 Milk is leading the index with a 5.1pc rise amid upgrades from Citi and CLSA.

Lithium stocks are running hot with Orocobre up 3pc and Galaxy Resources up 2.5pc.

Santos leads Energy with a 1.6pc rise and BHP is up 1.5pc at $27.65.

Macquarie is flat after shying off the $100 mark in early trading.

Webjet is down 10pc after disappointing earnings guidance.

Overall the immediate focus is on whether the index can regain 6000 points.

10.00am: High valuation, thanksgiving may cap US

While US indices inched into new high ground last night, be a key question for the remainder of the week will be whether this can be parlayed into a decisive move higher, says CMC chief market analyst Ric Spooner. “Current high valuations and the thanksgiving holiday may yet prove barriers to a major risk on move at this stage,” he says.

He also points out that Macquarie is just 0.6pc away from $100 a share.

9.40am: S & P/ASX 200 expected to rise 0.5pc

Australia’s S & P/ASX 200 is expected to open up 0.5pc after solid gains on Wall Street. That will put the index near the 6000 level. The reaction there could affect sentiment. So far this month the index has bucked the usual pattern of a November sell-off. Macquarie today predicted it will rose to 6500 points next year.

Overnight the S & P 500 rose 0.7pc to a record lose at 2599 and the VIX hit a two-week low. Gains were led by tech but also broad based across sectors. US existing home sales and earnings from Lowes and Urban Outfitters beat expectations. Europe and Asia were strong with the euro Stoxx 50 up 0.5pc and the Hang Seng up 1.9pc.

Commodities mostly rose apart from spot iron ore which fell 1.5pc to $US62.50.

Brent crude rose 1pc to $US62.81, LME copper rose 1pc and spot iron ore was up 0.3pc.

BHP ADR’s equivalent close at $27.50 points to a 1pc rise in BHP.

9.15am: S & P/ASX 200 to hit 6500 next year-Macquarie

Australia is in a “sweet spot” and the S & P/ASX 200 share index should rise 9pc to 6500 points next year, underpinned by PE multiple stretch to 17 times and a 4pc rise in EPS, Macquarie equity strategists say.

The “surprise” will be Australian relative outperformance as US equities are “valuation constrained”. Top picks are ALL, BIN, BLD, CCL, COH, DOW, JHX, SEK, TWE and WOR.

8.40am: Analyst rating changes

Santos cut to Hold — Morningstar

GrainCorp raised to Hold — Bell Potter

Bendigo & Adelaide Bank raised to Neutral — Goldman Sachs

ALS cut to Underweight — JPMorgan

ALS cut to Neutral — Credit Suisse

ALS cut o Underperform — CLSA

A2 Milk raised to Outperform — CLSA

A2 Milk target price raised 16pc to $8.10; Hold kept — Deutsche

A2 Milk raised to Buy — Citi

A2 Milk cut to Hold — Bell Potter

GrainCorp raised to Hold — Bell Potter

Aconex cut to Neutral — Citi

Kathmandu target price raised 6pc to $2.65; Buy kept — Deutsche

Monadelphous target price raised 7pc to $11.15; Sell kept — Deutsche

Fisher & Paykel Healthcare cut to Underperform — Macquarie

Macquarie Atlas Roads raised to Buy — UBS

8.20am: Wall St ends at records

The Dow Jones Industrial Average, the S & P 500 and the Nasdaq Composite all notched fresh records, as shares of Apple and other technology companies pushed stocks higher.

Investors looking to eke out additional gains before the end of the year flocked to tech stocks, some money managers said, pushing shares in those businesses in the S & P 500 up more than 1 per cent. Tech firms, a big contributor to the market’s rally this year, are on pace to post double-digit gains for the quarter.

The market’s recent upswing has helped offset losses suffered over the past two weeks among stocks in the Dow industrials and the S & P 500, underscoring the rally’s strength amid concerns about lofty valuations and the unclear prospects for Republican tax-overhaul efforts.

“You have a resilient market that can shrug off a lot of bad news and continue to rally on any given good news,” said Jeff Mortimer, a director of investment strategy for BNY Mellon Wealth Management. “A lot of the individual names that continue to do well, and technology is clearly one of those winners, continue to move the market forward.”

The Dow Jones Industrial Average added 161 points, or 0.7 per cent, to 23590, while the S & P 500 gained 0.7 per cent. The Nasdaq Composite rose 1.1 per cent. All three indexes climbed high enough to set new records.

Shares of Apple rose 1.9 per cent, while International Business Machines added 1 per cent. Microsoft was also up, gaining 1.4 per cent, putting the three tech giants among the biggest contributors to the Dow industrials’ gains.

Mr. Mortimer and other money managers say they continue to favour US stocks and have no immediate plans to reduce their exposure. That has proven to be a tough sell to clients who are nervous of the market’s long, uninterrupted climb, even though stockmarket declines this year mostly have been short-lived, Mr. Mortimer said.

“We don’t see anything that’s going to change this ‘grind-it-out market,” added Lewis Piantedosi, vice president and director of growth equity at Eaton Vance. “It would take a big spike in interest rates or a downturn in the economy, and we don’t see either of those happening in the next six to 12 months.”

A batch of profit reports, among the last of the third-quarter earnings season, contributed to other individual stock swings.

Dow Jones

7.40am: Oil rises

Oil futures gained ahead of the thanksgiving holiday and a meeting next week of major oil producers to discuss a possible extension of output cuts.

Light, sweet crude for January delivery rose 41 cents, or 0.7 per cent, to $US56.83 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, advanced 35 cents, or 0.6 per cent, to $US62.57 a barrel.

The market has benefited from expectations that the Organization of the Petroleum Exporting Countries will extend a deal to reduce production and bring down global supply.

Prices also received a small boost from the partial shutdown of TransCanada’s Keystone pipeline after an oil spill last week, analysts said.

Dow Jones

7.20am: ASX set to open higher

The Australian share market looks set to open higher after technology and healthcare shares helped push Wall Street to fresh gains.

At 7am (AEDT), the share price futures index was up 20 points, or 0.33 per cent, at 5,999.

Overnight, US market indexes hit record intraday highs, lifted by technology stocks and healthcare shares, which were boosted by bullish results from medical device maker Medtronic.

At 7.06am (AEDT), the Dow was up 1.13 per cent, the S & P was up 0.67 per cent and the Nasdaq Composite was up 1.01 per cent.

Locally, in economic news today, the Australian Bureau of Statistics will release data on construction work done during the September quarter.

In equities news, REA Group, McGrath, Sonic Healthcare, Webjet, Virtus and Qube will hold their annual general meetings.

Yesterday, the Australian share market edged higher due to modest gains in most sectors.

The benchmark S & P/ASX200 index rose 17.8 points, or 0.3 per cent to 5,963.5 points, as the materials, industrial and retail sectors posted the best gains. The broader All Ordinaries index was up 16.2 points, or 0.27 per cent, at 6,044.2 points.

AAP

7.00am: US stocks advance on tech gains

Shares of Apple and other technology companies climbed, putting major US indexes on track to notch fresh records.

Investors looking to eke out additional gains before the end of the year flocked to tech stocks, some money managers said, pushing shares in those businesses in the S & P 500 up more than 1 per cent. Tech firms, a big contributor to the market’s rally this year, are on pace to post double-digit gains for the quarter.

The market’s recent upswing has helped offset losses suffered over the last two weeks among stocks in the Dow industrials and the S & P 500, underscoring the rally’s strength amid concerns about lofty valuations and the unclear prospects for Republican tax-overhaul efforts.

“You have a resilient market that can shrug off a lot of bad news and continue to rally on any given good news,” said Jeff Mortimer, a director of investment strategy for BNY Mellon Wealth Management. “A lot of the individual names that continue to do well, and technology is clearly one of those winners, continue to move the market forward.”

In US afternoon trade, the Dow Jones Industrial Average had added 179 points, or 0.8 per cent, to 23610, while the S & P 500 gained 0.7 per cent. The Nasdaq Composite rose 1 per cent. All three indexes were trading above their closing highs.

Australian stocks are set to open higher. At 7.10am (AEDT) the SPI futures index was up 18 points.

Shares of Apple rose 1.9 per cent, while International Business Machines added 1 per cent. Microsoft was also up, gaining 1.4 per cent, putting the three tech giants among the biggest contributors to the Dow industrials’ gains on Tuesday.

Dow Jones

6.55am: Iron ore price gains

The price of iron ore has jumped 2.7 per cent to $US64.00, according to The Steel Index.

6.50am: Aussie dollar recovers ground

The Australian dollar has recovered some ground against its US counterpart, which was weaker against major currencies and after the central bank governor reiterated confidence in the interest rate trajectory.

At 6.35am (AEDT), the Australian dollar was worth US75.81 cents, up from US75.42 cents yesterday.

The RBA yesterday highlighted the nation’s limp wages growth as a key issue occupying the central bank, in the minutes of its latest board meeting as well as a speech by governor Philip Lowe.

Mr Lowe, however, reiterated that interest rates will likely rise eventually.

The local currency was also helped by the US dollar remaining under pressure despite upbeat US data, FXStreet analyst Valeria Bednarik said. “The upward movement, however, seems just corrective, and with the pair below the 76.00 (US cents) mark, chances of a steeper recovery remain limited,” she said.

The Aussie dollar is also higher against the euro but down against the yen.

AAP

6.40am: Global stocks push higher

Global equities pushed higher despite continued political uncertainty in Germany, while EasyJet’s share price was propelled higher on a positive outlook.

While the euro remained under pressure as German Chancellor Angela Merkel struggled to form a coalition government, Frankfurt’s DAX pushed 0.8 per cent higher.

The leader of 12 years indicated she was ready to hold snap elections after the collapse of talks at the weekend shoved Europe’s biggest economy toward political turmoil.

“Merkel said she did not favour a minority government because it wouldn’t bring the stability necessary to govern effectively,” said Greg McKenna, chief market strategist at AxiTrader.

“That suggests more talks but an increased chance of fresh elections in early 2018. How that plays out is going to be interesting for the euro and certainly the Brexit process as well.” Financial analyst Connor Campbell at Spreadex said “it seems investors have faith that Germany will find a way to move past its current uncertainty without the kind of performance-damaging aftermath seen by some of its peers” such as Spain and the UK.

Shares in carmakers helped drive the DAX higher, with Volkswagen accelerating 3.0 per cent after the company was more optimistic about earnings thanks to an offensive on SUVs.

BMW rose 1.9 per cent and Daimler gained 1.6 per cent.

In Paris, the CAC 40 ended the day 0.5 per cent higher, while the FTSE 100 in London added 0.3 per cent.

EasyJet’s share price shot up 5.1 per cent despite annual net profit dropping by almost one third at the British no-frills airline on strong competition and a Brexit-fuelled slump in the pound.

AFP