Wall St had a blinder last night and that should filter through to the ASX today.
Investors seem to have concluded (based on recent reports out of South Africa) that Omicron is less severe than previously expected.
“Today is a very calm day; it’s the relief over Omicron apparently not being as bad as we feared,” chief market strategist at LPL Financial Ryan Detrick said.
“What remains impressive is how strong the consumer remains. It’s a positive sign as we head into 2022. The economic backdrop is on very strong footing.”
ASX futures were up 53 points or 0.7% to 7,345 in the early morning.
The ASX will close at 2.10pm today, so people can go home for Christmas and the New York Stock Exchange is closed for Friday trading.
Most global financial markets will be closed on either Friday, December 31, or Monday, January 3, 2022, in observation of the New Year’s holiday.
The ASX will be closed on the Monday, although US markets will be open both days.
Here’s what we saw:
- The Aussie dollar lifted from lows near US72.08 cents to highs near US72.51 cents and was near US72.45 cents at the US close.
- Global oil prices were higher on reduced fears of an Omicron virus-induced demand slump.
- US crude inventories fell by 4.72 million barrels last week, according to US government data, almost twice the median estimate of analysts.
- The Brent crude price rose by US$1.56 or 2.1% to US$76.85 a barrel.
- The US Nymex crude price added US$1.03 or 1.4% to US$73.79 a barrel.
- Base metal prices were mixed.
- Aluminium rose by 0.9% as production cuts at Aluminium Dunkerque Industries France, Europe's largest smelter, curbed output by 3% in the past two weeks due to surging power prices.
- Copper was flat with lead down by 1.8%.
- The gold futures price rose by US$9.50 or 0.5% to US$1,811.70 an ounce.
- Spot gold was trading near US$1,809 an ounce at the US close.
- Iron ore lifted by US$1.15 or 0.9% to US$123.75 a tonne
Australian market
The benchmark ASX200 index closed up 0.3% at 7,387.60 after hitting an eight-day high of 7404.2 in early trading.
It should be noted, share trading was about half average levels.
Magellan was 5.2% higher.
Ansell regained 4% after diving 4.2% on Wednesday.
WiseTech dropped 2.6% after the CEO sold 4.3 million shares via an equity swap.
Syrah Resources surged 23% on its Tesla agreement, but trading was halted by the ASX which is seeking more information about the agreement.
The word on Syrah
In 2022, the ASX cracked down on big announcements with little substance. And that is exactly what has happened with Syrah Resources Ltd (ASX:SYR)’s announcement that it has agreed to an offtake agreement with Tesla.
Syrah had its best day of trading in 18 months on the back of the announcement that it would supply graphite to the EV giant, however, was brought to halt by the ASX.
The company’s shares jumped up 47 cents to an intraday high of $1.795 – a jump of about 35.5% – before the ASX halted trading pending a response to a query on the details of the announcement.
Syrah operates a small plant at its Vidalia facilities but has not made a final investment decision for the full-scale commercial plant, which is expected to produce about 10,000 tonnes of active anode material a year.
The investment decision is expected in early 2022.
Despite this, Syrah announced that it had reached agreement with Tesla to sell “the majority” of the material produced at the facility and that output would be sold “at a fixed price for an initial term of four years”.
No further advice was given.
The ASX, rightly so, wants more detail.
Rio pauses Serbian lithium project
Protest by environmental groups has forced Rio Tinto to pause plans for its lithium project in western Serbia.
A municipality in the west of Serbia has scrapped a plan to allocate land for the mine.
Rio has expressed an interest in developing its mine near Lozinca in the western Jadar river valley to extract lithium, however, the municipal assembly scrapped a plan to allocate the land.
Rio’s Jadar GM Vesna Prodanovic said Rio planned a pause to conduct public dialogue.
“We want to call for a public dialogue, to acquaint residents with all aspects of our project,” Beta quoted Prodanovic.
US markets
The market is closed for the day but saw a Christmas rally yesterday that helped the S&P/500 Index of blue-chip stocks to a record high of 4,725.79 points.
The Nasdaq Index gained 0.85% and the Dow Jones was up 0.55%.
All three major indices gained for a third straight session with banks, retailers and tech businesses climbing.
The market was boosted by better-than-expected US economic data.
The US Food and Drug Administration granted authorisation for both Pfizer which rose 1.4% and Merck (0.6% higher) COVID-19 anti-viral pills.
Tesla shares were 5.8% higher after CEO Elon Musk said he was "almost done" with his stock sales.
Shares of electric-vehicle startup Nikola surged 18% amid optimism about deliveries.
European markets
European equities were also higher. In fact, they rose to their highest level in a month.
The Stoxx Europe 600 rose 1%, posting the biggest three-day gain since November 2020. Travel and leisure and bank stocks led that market higher.
In London, the FTSE 100 gained 0.2% led by financial stocks as banks gained 0.8% as UK gilt yields picked up.
“The risk sentiment is still there but investors want to see the glass half full,” Swissquote Bank senior analyst Ipek Ozkardeskaya said.
“Though, the sentiment is still fragile and vulnerable to any piece of negative news that could just come and change the direction of the wind very rapidly.”
NB: This will be the last report for the year. Proactive Australia would like to wish everyone a happy holiday. Enjoy your holiday break and/or time with the family. The morning report will be back in early January.