Evening Wrap: ASX 200 bounces, iron ore hits US$110, markets in wait-and-see mode

The S&P/ASX 200 closed 36 points higher, up 0.50%. 

The local sharemarket finishes the week down -1.2% but managed to snap a three-day losing streak, iron ore prices break through US$110, China's inflation eases and brace yourself for a big week next week: US inflation and the Fed's interest rate decision.

Let's dive in.

Markets

The ASX 200 was looking pretty grim around noon, trading just 0.1% higher from a 0.45% open. Luckily, we managed to finish Friday on a positive note, with a strong rally off the low to close 0.53% higher.

• Materials led to the upside as iron ore prices topped US$110 a tonne and copper V-shaped its way back up to US$3.9. Heavyweights BHP, Rio Tinto and Fortescue all rallied at least 2.0%

• Technology rallied 1.04% as risk appetite improved

• Energy struggled as oil prices struggle to muster up a meaningful bounce. Woodside shares closed -0.8% lower, down from session highs of 0.9%

• 108 of the top 200 advanced (54%)

Economy

China’s inflation rate eased to 1.6% year-on-year in November from 2.1% in October.

• In-line with analyst expectations

• Prices fell for a second consecutive month as tough covid-related restrictions weighed on consumer activity and demand

Commodities 

“A weaker USD and optimism over a China reopening supported sentiment across commodity markets. However, falls in gas and coal markets dragged the broader complex into the red,” said ANZ senior commodity analyst, Daniel Hynes. 

• Iron ore futures +1.0% to US$110.4/t

• Copper +0.8% to US$3.9/lb

• Gold +0.45% to US$1,798/oz

Latest news

Post market brief

Pretty choppy session but we closed at session highs. We take those.

XJO intraday chart (Source: TradingView)

On the daily, we snapped a three-day losing streak and closed above the 20-day average. As noted in the Morning Wrap, are these bounces just selling exhaustion or for good reason?

XJO chart (Source: TradingView)

Next week is stacked in terms of direction setting news, including US CPI, Fed's interest rate decision and the FOMC meeting.

In the worlds of JPMorgan, "We're in a wait-and-see mode at the moment. Next week is a huge week for all markets and that is really going to set the tone between now and year-end."

"There is a little bit too much excitement in the market at the moment as to how quickly the central banks are going to be able to slow the pace of tightening because inflation is still too high. That's very very clear in both the Eurozone and the UK."

That'll be next week's problem. Have a good weekend and I'll see you guys on Monday.

Major announcements

Large caps (>$1bn)

• Beach Energy (BPT) +0.9%: Declines to match the revised Hancock Energy takeover offer for Warrego of 28 cents per share, up from 23 cents

• Pinnacle Investment Management (PNI) -3.7%:  Advises its net share of performance fee of less than $1m in the first-half, down from $6.4m a year ago

Mid-to-small caps

• Nitro Software (NTO) +3.4%: Received a revised takeover offer from Potentia, up 20 cents to $2.00 per share 

• Alkane Resources (ALK) +2.4%: Final assay results were received for drilling at the Kaiser Prospect in NSW

Capital raisings

• Mincor (MCR): Plans to raise $60m at a 12.3% discount to accelerate the development of its Golden Mine and expedite drilling activities at the Cassini prospects 

Trading halts

• Star Entertainment Group (SGR): Shares will be halted until Tuesday ,13 December, pending a response to disciplinary action given by the Queensland Attorney-General and the Office of Liquor & Gaming Regulation 

Broker updates 

Scans