Evening Wrap: ASX 200 hits two month high as miners rally, US futures flat

The S&P/ASX 200 closed 40 points higher, up 0.58%.

The local sharemarket closes just shy of 7,000 points, a weaker US dollar pushes commodity markets higher, China's inflation comes in cooler-than-expected and the Republicans take back the House of Reps.

Let's dive in.

Markets

The ASX 200 closes near a two month high, up 2.1% in the last four sessions.

• Materials pulled the market higher as a weaker US dollar and tight supplies pulled iron ore and base metal prices higher

• Real Estate rallied amid a pullback in bond yields

• Financials are trying to bounce back after NAB posted 2H22 results that were mostly in-line with expectations. NAB shares fell as much as -3% and finished the day -0.9%

• A mix of growth and defensive sectors underperformed the broader market

• 107 of the top 200 advanced

Economy

Australian building permits fell -5.8% month-on-month in September following a 23.1% jump in August.

Business turnover in seven of thirteen selected industries fell month-on-month in September, according to the ABS.

• "All industries recorded year-on-year increases in business turnover, led by Accommodation and food services (65.6 per cent) and Arts and recreation (52.9 per cent)." - Kate Lamb, Head of Business Indicators at the ABS

• "Following strong growth in May and June 2022, the Electricity, gas, water and waste industry saw the largest percentage fall in business turnover. The 18.9 per cent decrease in September partly reflected moderation in wholesale electricity prices."

• "Arts and recreation had the largest percentage rise in turnover (9.4 per cent), boosted by large crowds attending the AFL and NRL Finals Series, the FIBA Women’s Basketball World Cup and the start of the Spring Racing Carnival."

China's inflation rate eased to 2.1% in October from 2.8% in September.

• Well below consensus expectations of a fall to 2.4%

• Tight covid-related controls has managed to subdue domestic growth

• China's producer price index was -1.3% in October as the price of raw materials and other input costs declined

Commodities 

"Rising COVID-19 cases in China weighed on sentiment across commodity markets. This was offset in industrial commodity sectors by further falls in inventories. A weaker USD also helped support investor appetite," notes ANZ senior commodity strategist, Daniel Hynes.

• Iron ore futures +0.9% to US$88.9 a tonne, up 6 out of the last 7 sessions

• Copper -0.9% to US$3.65/lb after rallying 2.2% on Tuesday

Latest news

Post market brief

US votes are trickling in. The Republicans have taken back control of the House of Representatives. "That traps Washington into two years of legislative gridlock and greases the wheels for the dollar's coming decline," according to Reuters.

Resource heavyweights like BHP, Rio Tinto and Fortescue are staging powerful V-shaped rallies thanks to the weaker US dollar, which appears to be offsetting the lockdown headlines from China.

Copper miners like Oz Minerals, Sandfire and 29 Metals are also rallying strongly in response to higher spot prices.

Its also surprising to see Woodside close the session 0.5% higher, reversing intraday losses. Even after crude oil fell -3.5% overnight.

Index

S&P/ASX 200: Closes towards intraday highs, above the 200-day moving average, which is starting to flatten. We're running up to the 7,000 mark, do we see some resistance at these levels?

XJO chart (Source: TradingView)

S&P/ASX 200 Tech: Struggling to hold around the 20-day and 50-day. Risk sectors like the Nasdaq and cryptocurrencies are struggling while value and defensive outperform.

XIJ chart (Source: TradingView)

S&P/ASX 200 Materials: Rallies to a two and a half month high. Is this a change of character for the Material sector? A close at intraday highs and above the 200-day.

XMJ chart (Source: TradingView)

Major announcements

Large caps (>$1bn)

• Orica (ORI) +7% reported 49% earnings per share growth to 74.4 cents. The company said it expects to post YoY earnings growth but no expect guidance was provided

• NRW Holdings (NWH) +2.9% AGM reaffirmed its FY23 guidance of $2.6-2.7bn revenue and earnings between $162-172m 

• Monadelphous (MND) +2.0% secured contracts and contract extensions in the resources and energy sectors totalling approximately $150m  

• Coronado Global (CRN) 0% reported 53% YoY revenue growth in the September quarter to $864m and profits rose 51.2% to $108.6m 

• Pushpay (PPH) 0% reported 10% revenue growth to $103m but profits slumped -54% to $8.7m due to higher investments into talent and tech capability

• National Australia Bank (NAB) -0.9% posted revenue of $18.29bn in FY22, slightly below Bloomberg estimates of $18.33bn. Cash earnings rose 8.3% YoY to $7.1bn 

• REA Group (REA) -4.3% reported 1Q23 revenue growth of 16% to $305m and 7% earnings growth to $169m. Management flagged that national residential buy listings were down 18% YoY in October, led by Sydney and Melbourne

• Whitehaven Coal (WHC) -8.5% downgraded its FY23 coal production by -6.2% (midpoint) and revised its production costs up by 6.5% due to La Nina impacts

• News Corp (-9.3%) -11.2% posted 1Q23 revenues of $2.48bn, down -1% YoY but net income declined -75% to $66m    

Mid-to-small caps

• Aussie Broadband (ABB) +5.3% AGM reaffirmed its FY23 guidance of $800-840m revenue at EBITDA margins of 10-10.5%  

• Atlantic Lithium (A11) -6.95% completed a resource and exploration drilling programme for its Ewoyaa Lithium Project in Ghana. The company believe the results pave the way for a resource upgrade and project sale

• Genex Power (GNX) -5.3% said its Kidston Hydro Project encountered unexpected water inflows in its Main Access Tunnel. The project is not delayed but faces $10-15m in additional costs   

Broker updates

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