Evening Wrap: ASX 200 rallies, New Zealand hikes rates by another 75 bps, US futures flat

The S&P/ASX 200 closed 51 points higher, up 0.70%.

The local sharemarket rallied to another fresh seven month high led by value and resource sectors, New Zealand hiked interest rates by another 75 bps, US markets slow down for Thanksgiving and Fed minutes due on Thursday morning.

Let's dive in.

Markets

The ASX 200 rallied for a second consecutive session, now down just -3% year-to-date from -14% in mid September.

• Defensive sectors led to the upside, notably Utilities and Industrials

• Energy also outperformed despite volatile oil prices, with traders weighing China's covid outbreak against Saudi Arabia rejecting the idea of an OPEC output hike

• Materials rose almost 1.0% thanks to gains from BHP, South 32 and Gold Miners. Of note, Mineral Resources closed at a fresh all-time high

• Technology was a clear outlier, weighed by an almost -7% dip from WiseTech Global, the largest tech stock

• 125 of the top 200 rallied (63%)

Economy

New Zealand raised interest rates by 75 bps to 4.25%

• In line with consensus expectations

• "The office cash rate needs to reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium term." - Reserve Bank of New Zealand

Australia's manufacturing PMI fell to 51.5 in November from 52.7 in October.

• Below analyst expectations of 52.2

• "... the private sector economy further contracted midway into the fourth quarter, faced with deteriorating demand conditions." - S&P Global

• "That said, with price inflation further climbing in November, the pressure remains on the central bank to keep tightening monetary policy to rein in prices. This is also amid indications of solid employment growth from the PMI data."

Australia's services PMI slumped to 47.2 in November from 49.3 in October.

• Below analyst expectations of 48.6

• "In particular, the service sector continued to be affected by higher interest rates and capacity constraints, leading to a sharper fall in business activity." - S&P Global

• “The mix of deteriorating demand and worsening price pressures does not bode well for the near-term outlook, and this has also been reinforced by the decline in private sector confidence in November.”

Commodities 

"A risk on tone across markets boosted sentiment across the commodity complex. This was further supported by ongoing supply side issues," said ANZ senior commodity strategist, Daniel Hynes.

• Iron ore futures fell -0.4% to US$91.9/t

Latest news

Post market brief

Large cap names from Financials, Staples and Materials are pulling the market higher. But beneath the surface, things remain rather choppy.

Thanksgiving kicks off in the US on Thursday, which means we can expect rather subdued volumes. Here's an interesting but likely useless stat: Since 1950, the S&P 500 is up 80% of the time from the Tuesday before Thanksgiving to the 2nd trading day of the year the following year, with an average gain of 2.7%, according to AlmanacTrader.

S&P 500 chart (Source: TradingView)

The ASX 200 is running rather hard, without much consolidation after the recent rally. The good thing is that the VIX is currently 13.3, which indicates low volatility. At least from a technical perspective, set ups can work a little better.

XJO chart (Source: TradingView)

We have FOMC minutes due tomorrow morning, before the markets open. To-date, the Fed has stuck to its hawkish script. Does another hawkish blast by the Fed send markets lower? Or do we wake up to something on the slightly more dovish side?

Major announcements

Large caps (>$1bn)

• Chalice Mining (CHN) +6.5% intersected ‘several outstanding broad zones of sulphide mineralisation’ of up to 650m beyond its current resource 

• Qantas (QAN) +5.3% raised its half-year FY23 guidance to up to $1.45bn, up $150m from its trading update a month ago  

• Shopping Centres Australasia (SCP) -0.7% AGM guided to FY23 funds from operations of 17 cents per share compared to 17.4 cents in FY22

• Polynov (PNV) -8.9% successfully raised $30m at $1.90 per share, a 9.1% discount to its last close. Proceeds will be used to accelerate growth in the US and the rest of the world 

Mid-to-small caps

• Talga Group (TLG) +8.8% said its Vittangi Anode Project has passed the European Investment Bank’s preliminary screening for debt financing, for up to 300m euros

• PeopleIN (PPE) +8.4% responded to media speculation about a takeover and said a strategic review of the business is currently being undertaken

• Macmahon Holdings (MAH) +7.1% received a notice of award for the load and haul services from Talison Lithium for the Greenbushes Lithium Project.  The seven-year contract is estimated to generate revenues of more than $1.1bn 

• Dreadnought Resources (DRE) +0% delivered multiple zones of rare earth, niobium, titanium and phosphorus at its first pass RC drilling at the Mangaroon project

• SmartGroup (SIQ) -2.9% earnings update guided to CY22 NPAT between $60-61m compared to $58m a year ago

• Westgold Resources (WGX) -3.2% said its flagship Big Bell mine in WA is outperforming feasibility tonnages of 1m tonnes per annum since commercial production was declared in 3Q22. The company will nw kick off expansion studies to optimise cost and productivity    

Broker updates 

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