Despite US President Joe Biden backing in Fed chair Jerome Powell for another term, a late tech sell off hit Wall St stocks last night.
Results in the US were thus mixed across the board and with ASX futures down 12 points or 0.2% to 7341 near 8am AEDT, it’s not looking like a good start for the local market this morning.
Here’s what we saw:
- The Aussie dollar fell from highs near US72.70 cents to lows near US72.20 cents and was near the lows in afternoon US trade.
- Global oil prices were approximately 1% higher on Monday. According to Reuters, oil rebounded from recent losses "on reports that OPEC+ could adjust plans to raise oil production if large consuming countries release crude from their reserves or if the coronavirus pandemic dampens demand".
- The Brent crude price was higher US81 cents or 1.0% to US$79.70 a barrel.
- The US Nymex crude price lifted US81 cents or 1.1% to US$76.75 a barrel.
- Base metal prices firmed by up to 3.6% with zinc up the most while aluminium rose just 0.2%.
- The gold futures price fell by US$45.30 or 2.4% to US$1,806.30 an ounce.
- Spot gold was trading near US$1,805 an ounce at the US close.
- Iron ore rose by US$3.40 or 3.7% to US$94.70 a tonne.
Australian markets
The ASX is likely to open lower this morning.
As tech stocks dragged down Wall St last night, we could see something similar here.
Despite that, there’s a couple of big news stories to report.
Northern Star acquisition almost complete
One of the biggest stories is Northern Star Resources’ acquisition of Newmont Australia’s power business for US$95 million (A$135 million).
Northern Star paid $US25 million for an option to buy the Newmont power business as part of its 50% purchase of Kalgoorlie Consolidated Gold Mines (KCGM) and associated assets.
The parties have entered a binding agreement for Northern Star to acquire all the shares in GMK Investments, which holds a 100% interest in Newmont Power and NP Kalgoorlie, which owns 50% of Goldfields Power, the holder of the Parkeston Power Station.
Northern Star will pay the balance of $US70 million after the cost of the option is deducted.
Completion of the acquisition is expected in December.
“The purchase means our Kalgoorlie power supply will now form part of our studies into ways to meet our commitment to becoming carbon-neutral,” Northern Star managing director Stuart Tonkin said.
Northern Star last traded at $10.06.
BHP and Woodside seal the deal
Woodside Petroleum Limited (ASX:WPL) will become a top-10 global oil and gas producer, with its $41 billion merger deal with BHP Group Ltd being finalised.
According to new CEO Meg O’Neill, Woodside will have production capacity across Australia, the US, Africa and the Caribbean and financial firepower to invest in near-term growth projects and new energy projects.
“I’m ecstatic, and I think this is an extraordinary day for Woodside,” Ms O’Neill told The Australian Financial Review shortly after releasing the formal statements late on Monday afternoon.
“To announce a merger that will double the size of the company and make us a top 10 independent energy company on the same day that we take FID [final investment decision] on a project we’ve been working extremely hard on for the last four years is just phenomenal.”
O’Neill called the merger and the green light for a giant gas project off the West Australian shore as the most significant day in Woodside’s 67-year corporate history.
Westpac buyback
According to Joseph Palmer & Sons director Alex Moffat, “Westpac’s buyback is still in play but, quite frankly, unless a zero rate taxpayer can get stock into the buyback at the minimum discount factor of 8% it hardly seems worthwhile.
“Based on yesterday’s close for Westpac of $21.68, the after tax consideration would be $23.63 and with nearly 16% of one’s consideration sitting in the ATO’s coffers until the annual tax return is dealt with, the effort seems marginal at best.”
IPO extension
Trading and wealth management infrastructure fintech OMG has extended its pre-IPO raise to $17.8 million to support continued record growth.
The majority of funds were derived from sophisticated investor clients of OMG's B2B arm, Openmarkets and its retail trading product, Opentrader, and the remainder from existing investors.
OMG has also entered into a sale agreement for the acquisition of equities markets-specialist tech & API developer, Cannon Trading, which is pivotal to the achievement of OMG’s vision of integration and open architecture. The transaction valued Cannon at $12.5 million.
The acquisition will take OMG from a 40% to 100% ownership stake in Cannon, in a move that will significantly shore up OMG’s technology stack through Cannon’s market-leading APIs. It also secures OMG’s relationships with Cannon customers such as SelfWealth and Sixpark, consolidating OMG’s market leadership in the open API and trading infrastructure sector.
In addition to the new best-of-breed APIs acquired via Cannon, OMG also recently upgraded its back-office system for both domestic and international markets via global fintech GBST, delivered as a managed cloud solution. Its clients include top tier global investment banks and major Australian retail banks. More than 60% of all ASX trading activity is processed through GBST’s systems.
As a result, OMG’s tech stack now extends from KYC and onboarding, to CRM, managed accounts, and order and risk management and execution, with global capabilities.
In the past month OMG also made a number of senior appointments, including former UBS managing director Michael Fagan (OMG’s new derivatives specialist) and Klass Raajmakers who is currently head of product at Stan, was previously chief product officer at B2B scaleup Deputy, and will shortly be joining as OMG’s chief product officer.
The capital injection combined with the acquisition, back-office technology upgrade, and senior management hires will all support OMG’s ability to service record growth experienced throughout 2021, which it expects to continue into 2022.
OMG CEO Ivan Tchourilov said: “We decided to extend our pre-IPO due to continued record growth in trading volume, customers, and revenue throughout 2021.
“This additional growth capital is a clear demonstration of the continued support we are receiving from the capital markets, and the belief in our ability to build massive value for our shareholders and clients.
“Our provision of robust and globally-scalable trading and wealth management infrastructure tech allows us to more cost-effectively connect fintechs to markets, and intermediaries not just to markets but a range of integrated data and technology solutions to optimise their businesses.
“This will ultimately allow us to connect global consumers to affordable and specialist investing solutions by linking them into our marketplace, OMG’s wealth ecosystem.”
Australian indices (at time of writing)
- ASX 200 rose 0.24% to 7,370.30.
- ASX24 futures fell 0.2% to 7,341.
- S&P/ASX Small Ordinaries fell 0.34% to 3,542.80.
- All Ordinaries rose 0.25% to 7,707.80.
US markets
The S&P500 and the Nasdaq had hit new intraday highs, before Federal Reserve chair Jerome Powell was nominated by President Biden for another four-year term.
Biden also nominated Lael Brainard, a current Fed governor, as vice-chairman. The nominations appear to have been well accepted by equity and currency markets.
The President said Powell was the “right person to see us through" the pandemic recovery and the fight against inflation.
Powell said, "we know high inflation takes a toll on families.
"We will use our tools both to support the economy and strong labor market and to prevent higher inflation from becoming entrenched."
Meanwhile, the S&P 500 Information Technology Sector index fell 1.1% yesterday, however, is still up approximately 14% off an early October low. According to JC O’Hara, chief market technician at MKM Partners, this reflects investors rotating into sector.
“If managers are attempting to chase the market into year-end, they are doing it through technology stocks,” O’Hara wrote in a note dated November 21.
Looking at Apple Inc (NASDAQ:AAPL)., O’Hara wrote that “while the relative line is still sideways, we believe there is potential for this chart to continue to make new highs in the weeks ahead”.
In the news
JP Morgan has intimated that Apple is poised to see its supply issues ease within months. This has led to Apple resetting its record high after its market cap briefly topped $US2.7 trillion.
The iPhone-maker’s shares are set for a seventh straight session of gains, bolstered by JPMorgan’s optimistic outlook.
Elon Musk tweeted that the Model S Plaid will “probably” go to China in March. China is the electric-car maker’s second-largest market.
The new Model S Plaid is a 520-mile range sedan that can reach top speeds of up to 320 kilometres per hour.
Canadian Uber customers can now have cannabis delivered via the Uber Eats app, marking the ride-hailing giant’s foray into the booming business.
US indices
- Dow Jones was up 0.1% to 35,619.25.
- S&P 500 fell 0.3% to 4,682.94.
- Nasdaq fell 1.3% to 15,854.76.
European markets
Were mixed on Monday.
According to Commsec, investors digested Germany's warning of tighter lockdown restrictions and also responded to news that Telecom Italia had received a $12-billion proposal from US fund KKR to take Italy's largest phone group private.
In London trade, shares in Rio Tinto rose 1.9% and BHP rose 3.1%.
European indices
- STOXX 600 fell 0.13% to 485.46.
- German Dax fell 0.3% to 16,115.59.
- UK FTSE rose 0.4% to 7,255.46.