Morning Wrap: ASX 200 to inch higher, France falls into political chaos, Rio Tinto issues FY25 guidance

The geopolitical news has continued to attract most of the overnight attention. Michel Barnier's administration became the first French government to fall via a no-confidence vote since 1962. And South Korea's President is now staring down the barrel of impeachment following the martial law fiasco of 48 hours ago. In corporate news, Atlassian shares soared after the company signed a strategic collaboration agreement with AWS and Rio Tinto has issued its FY25 production and revenues guidance.

Let's dive in.

S&P 500 SESSION CHART

The market stages quite the dip-buying rally to post a respectable gain. (Source: TradingView)

OVERNIGHT MARKETS

• US equities were higher in Wednesday trading as stocks ended near best levels. S&P 500 posted 11th gain in past 12 sessions.

  • The S&P 500, Dow, and Nasdaq all set fresh record closes.

  • December is usually a great time for stocks: Goldman Sachs pointed out that since 1928, the S&P 500 median monthly return for December is +2.04%. BofA also looked back to 1928 and noted that the S&P has traded higher 74% of the time for an average return of +1.32%. It put the median return at +1.50%.

• Treasuries firmer across the curve, reversing earlier weakness and near best levels.

• US Dollar index flat though Japanese Yen and Australian Dollar weakness was the bigger focus.

• Gold finished up 0.3%. Bitcoin futures up 3.7%, crossing $100,000 before pulling back. WTI crude settled down 2.0% after a notable gain yesterday.

STOCKS

• General Motors takes $5 billion charge, citing material loss in value of China joint value investments (FT)

• Eli Lilly says study shows Zepbound leads to more weight loss than Novo Nordisk's Wegovy (CNBC)

• CEO of UnitedHealth Group insurance unit shot and killed in targeted attack (CNBC)

POLITICS & GEOPOLITICS

• French Government Falls After National Assembly Approves No-Confidence Vote (WSJ)

• Trump names Peter Navarro as senior counselor for trade and manufacturing (Bloomberg)

• Trump picks Paul Atkins to head SEC, where he was once commissioner (Bloomberg)

ECONOMY

• US: November ADP private payrolls missed, coming in at 146K, below 158K estimate. October revised down from 233K to 184K.

• US: November ISM Services came in at 52.1, down 3.9 points m/m and missing consensus for 55.5. PMIs like these ones are reliable leading indicators for where the economy - and eventually, corporate earnings - will track.

POINTS OF INTEREST

• Rio Tinto reaffirmed its FY24 production guidance overnight and issued new numbers for FY25:

  • FY25 production guidance:

    • Pilbara Iron ore shipments (100% basis) 323-338Mt -- same as FY24

    • Mined copper (consolidated basis) 780-850Kt -- +18% on FY24

    • Bauxite 57-59Mt -- Slightly higher than FY24

    • Alumina 7.4-7.8Mt -- +6% on FY24

    • Aluminium 3.25-3.45Mt -- Slightly higher than FY24

    • CAPEX of around $11.0B -- +$1.5 billion on FY24

• The Australian reports a few REIT's are believed to be weighing a bid for Aveo (ASX: AOG), including Charter Hall (ASX: CHC). The reporting also suggests private equity firms may be interested.

• HMC Capital has entered into agreements to acquire French renewable energy developer Neoen’s Victorian assets for $950 million.

• Shares in Atlassian (NASDAQ: TEAM) soared more than 6% after the company said it signed a multi-year strategic collaboration agreement with Amazon’s web services unit.

BROKER MOVES

• Integral Diagnostics initiated buy at Bell Potter, price target of $3.87 (implying 27% upside)

• Ramelius Resources upgraded to outperform from neutral at Macquarie, price target of $2.60 (implying 23% upside)

• Collins Foods upgraded to buy from neutral at Citi, price target of $9.38 (implying 14% upside)

Stocks trading ex-dividend: 

• Thu 5 Dec: 1.20%, Fisher & Paykel Healthcare (FPH) – 0.49%, Hancock & Gore (HNG) – 3.47%

• Fri 6 Dec: Indiana Resources (IDA) – 45.45%

• Tue 10 Dec: Premier Investments (PMV) - 1.98%

• Wed 11 Dec: WCM Global Growth Limited (WCG) - 1.09%

• Fri 13 Dec: Metcash (MTS) - 2.54%

Economic calendar (AEDT):

• Today: OPEC+ Meetings

• Overnight: US jobless claims