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Market wraps 24th November 2023

Morning Bell - Sam Kanaan

Wall St was closed overnight due to the Thanksgiving day holiday.

Over in Europe, markets closed in the green with the STOXX600 ending the day 0.3% higher, led by oil and gas stocks rising 1.4%. Germany’s DAX closed 0.23% higher, the French CAC ended the trading day up 0.24% and over in the UK the FTSE100 closed Thursday’s session 0.19% in the green.

The ASX extended its losing streak into Thursday’s session closing the day down 0.62%, taking no lead from Wall Street’s rally on Wednesday, as the materials and energy sectors weighed on the key index due to the sliding price of oil and iron ore. Oil’s decline was on the back of OPEC+ delaying its upcoming meeting where it was set to discuss further output cuts to stabilise the price of oil, which naturally caused a sell-off in oil producing stocks yesterday including Woodside and Santos.

Origin Energy emerged from a trading halt yesterday to rally 1.2% after the company said it would extend its shareholders vote on the takeover offer to next month instead of today, following the investment group led by Brookfield announcing a revised takeover offer. The revised offer follows Australian Super which is a majority shareholder in Origin at 17.5%, saying it would vote no to the Brookfield led original offer on the grounds of value. The new offer is for a plan B option if majority of Origin’s shareholders do not vote in favour of the original offer of $9.43/share.

The plan B offer is effectively a lower offer that the investment group will ‘come in and control the company’ for a lower price under an Alternative Transaction offer where shareholders will receive a cash consideration of up to $9.08 per share including dividends. It is a very interesting time for Origin Energy shareholders and the company’s takeover fate will be revealed on December 4th when the Scheme Meeting has been postponed to.

Looking at economic data, Australia’s manufacturing PMI index decreased in November to 47.7 points from 48.2 points in October in a sign of the economic slowdown and confirming that the Australian economy is experiencing a soft landing as a result of interest rate rises to date.

What to watch locally today:

  • The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.2% at the open this morning.
  • On the commodity front this morning,
    • Oil is trading down 1.09% to US$76.26/barrel after signs of strong supply from non-OPEC countries, which has been weighing down oil prices.
    • Gold is trading 0.15% higher to US$1992.62/ounce and iron ore is down 1.09% to US$136/tonne.

Trading Ideas:

  • Bell Potter maintains a buy rating on Propel Funeral Partners (ASX:PFP) with a 12-month price target of $5.70. The buy rating is maintained as it is expected that organic volume growth will return in the 2nd quarter of 2024 and mid-long term growth to be further supported by ageing baby boomers as the older cohorts reach average life expectancy.
  • And Trading Central has identified a bearish signal on Pengana Private Equity (ASX:PCG) , indicating that the stock price may fall from the close of $1.58 to the range of $1.23-$1.25 on a pattern formed over 8 days, according to the standard principles of technical analysis.