The ASX is set to open higher this morning on the back of a solid Wall St performance led by strong corporate earnings.
Here’s what we saw:
- The Aussie dollar lifted from lows near US74.79 cents to highs near US75.22 cents and was near US75.20 cents at the US close.
- Global oil prices surged again, this time by 1% yesterday as US crude stockpiles dropped.
- The Brent crude price rose by US74 cents or 0.9% to 3-year highs of US$85.82 a barrel.
- The US Nymex crude price added US91 cents or 1.1% to 7-year highs of US$83.87 a barrel.
- Base metal prices were mixed.
- Aluminium was down 1.2%.
- Copper dropped 0.1% after China announced policies aimed at stabilising power supplies for the winter.
- Nickel rose 4.5% to 7-year highs after Vale cut its nickel output.
- The gold futures price rose by US$14.40 or 0.8% to U$1,784.90 an ounce.
- Spot gold was trading near US$1,785 an ounce at the US close.
- Iron ore finally had a win this week up US95 cents or 0.8% to US$124.45 a tonne.
Australian markets
The S&P/ASX200 closed 0.5% higher yesterday, with tech stocks and banks leading the way.
Momentum is set to continue this morning with ASX futures up 0.3% to 7407 at around 6.30am AEDT.
Financials and Materials are expected to lead the way.
That should keep investors as happy as Victorians who are about to come out of lockdown at midnight tonight.
Looking at company news this morning, Crown Resorts has been forced to withdraw a resolution offering shareholders to vote on the appointment of proposed new chairman Ziggy Switkowski.
The withdrawal came just an hour before the company’s annual general meeting and is due to Switkowksi not yet having regulatory approval to take up the position.
"Dr Switkowski's election was conditional on receiving all necessary regulatory approvals. As at today’s date, Dr Switkowski's regulatory approvals have not been received," Crown says.
Shares in the $6.5 billion capped Crown last traded at $9.52.
BlueScope has lifted its earnings guidance for the first half of FY22.
The steel giant has done so as governments worldwide pour their stimulus dollars into infrastructure projects, which has lifted steel prices.
BlueScope expects underlying earnings before interest and tax (EBIT) to be around $2.1 billion to $2.3 billion, compared with previous guidance of between $1.8 billion and $2 billion.
"The business continues to benefit from strong spreads, prices and demand. Amidst the ongoing challenges of the COVID-19 pandemic, the BlueScope team continue to do an outstanding job," managing director and CEO Mark Vassella said.
"The performance continues to demonstrate the value of our business model, and further underpins our capacity to invest for long-term sustainable earnings and growth, to position the business for a low carbon future and to deliver solid returns to shareholders."
Shares in the $10 billion capped BlueScope last traded at $20.13.
Woodside Petroleum increased sales by revenue 19% to $1.53 billion in the September quarter.
The increase comes despite production slipping slightly as the price of oil and gas soared.
The other big news for Woodside this quarter was its merger agreement to combine with BHP’s oil and gas units during the quarter.
“We expect in the fourth quarter to see the benefit of stronger pricing on our realised prices, reflecting the oil price lag in many of our contracts and recent increases in gas hub prices,” Woodside CEO Meg O’Neill said.
“Global oil and gas prices have continued their upward trajectory, underlining the rebound in demand as economic activity has picked up in Asia and elsewhere,” she said.
It was a good quarter for energy majors. Santos had a record quarter, delivering a quarterly sales record of $US1.14 billion, a 6% increase on the same period last year, while free cash flow of $US359 million was one-third higher.
“Our disciplined, low-cost operating model continues to drive strong performance with $US931 million of free cash flow generated in the first nine months of 2021,” CEO Kevin Gallagher said.
“At current commodity prices, Santos should generate close to $US1.3 billion in free cash flow for the full year.”
Australian indices
- ASX 200 rose 0.16% to 7,424.80.
- ASX24 futures rose 0.2% to 7,396.
- S&P/ASX Small Ordinaries rose 0.062% to 3,552.30.
- All Ordinaries rose 0.13% to 7,737.10.
US markets
It was the major players in the IT and Consumer Discretionary sectors that held the Nasdaq back.
This was as the US 10-year bond yield rose 2 basis points to a 5-month high of 1.6567% on a soft 20-year bond auction and as the Fed's Beige Book highlighted "elevated" prices.
Overall, it was a good day for US investors, led by Tesla Inc (NASDAQ:TSLA).
The electric vehicle player’s profits almost quadrupled in the September quarter.
Revenues surged 57% to $US13.8 billion compared to the year-ago period.
According to Josh Gilbert, an analyst at the multi-asset investment platform eToro, “Leading EV manufacturer Tesla today reported its Q3 earnings of US$1.86 per share on revenues of US$13.76 billion, compared to analyst expectations of US$1.50 per share on revenue of US$13.15 billion.
“During the quarter, Tesla broke its record by delivering over 241,300 vehicles, up 20% from Q2 at 201,250. Tesla notched a record net income of US$1.6 billion and earnings grew by 145% year-over-year.
“The company’s delivery numbers combined with this earnings beat illustrates how Tesla is adequately filling the unambiguous demand for EV and weathering the production storm better than the rest of the automotive industry.
"Tesla’s sales were up 67% in Q3, whilst US automotive sales were down 13%. This soaring demand has also been reflected in the fact that Tesla was the most held stock globally for eToro investors in both Q2 and Q3 2021.
“Once again, the standout for this report was Tesla’s gross margins. Tesla reported automotive gross margins of 30.5% and gross margin excluding tax credits of 28.8%. This is impressive for Tesla amidst the global chip shortage and supply chain headaches.
“Tesla’s performance in China rebounded after a problematic H1 2021 with delayed deliveries and domestic competition. In August, Tesla delivered a record number of 44,264 vehicles, cementing the region as its main export hub. China is a crucial region for Tesla’s success, with 40% of its sales expected to be generated from the region by 2022.
“With the development of new factories in Berlin, Germany and Austin, Texas anticipated to conclude at the start of 2022, Tesla is expected to double its current capacity, which should ultimately support further profitability. In terms of future guidance, the company still plans to achieve 50% annual growth on deliveries, which is completely achievable when looking at Tesla’s track record.”
US indices
- Dow Jones rose 0.4% to 35,609.34.
- S&P 500 rose 0.4% to 4,536.19.
- Nasdaq dipped 0.1% to 15,121.68.
European markets
Another good day in Europe.
Leading the way was Swedish power products manufacturer Husqvarna, which jumped 8.4% after beating third-quarter profit expectations.
Not so good for Rio Tinto dropping 3.3% and BHP sliding 0.3%.
European indices
- STOXX 600 rose 0.32% to 470.07.
- German Dax rose 0.1% to 15,522.92.
- UK FTSE rose 0.1% to 6,223.10.