The Australian market’s Wednesday, November 4 session unfolded against a backdrop of contracting domestic economic activity and US midterm elections, with brokers maintaining their calls on several major ASX-listed companies while investors awaited the Reserve Bank of Australia’s afternoon decision.
Live coverage of the ASX was expected to conclude around 2:30 pm AEDT following the RBA announcement, with updates on broker calls for major companies. Citi retained its Buy rating on CAR Group with a $33.30 target, dismissing concerns over a 9% year-on-year fall in Brazil’s October used-vehicle sales by noting the data includes commercial vehicles to which the company’s local subsidiary is not exposed. The brokerage also maintained a Buy on Goodman Group with a $40 target, describing the property group’s first-quarter update as a clear step forward in de-risking its data centre pipeline, with Hong Kong’s HKG10, Los Angeles’ LAX02 and Amsterdam’s AMS01 identified as near-term watchpoints.
UBS Sees Upside in Dicker Data and IAG
UBS analysts likewise stuck with their positions, lifting Dicker Data’s target to $15.90 from $15.41 while maintaining a Neutral rating after the company’s acquisition of New Zealand-based Sektor, which could be 9% EPS accretive in its first full year. UBS also kept a Buy rating on Insurance Australia Group with a $9.10 target, arguing that IAG’s acquisition of RAC’s Western Australian insurance business appeared more likely to secure ACCC approval following concessions, adding upside earnings risk.
Manufacturing PMI Drops Sharply as Input Costs Surge
Economic indicators released during the session painted a weakening picture of the domestic economy. The Australian Industry Group reported that the manufacturing PMI fell 13.4 points to -20.1 in October, reversing September’s gains, while the broader Australian Industry Index rose 6.4 points to -19.1, with readings below zero signalling contraction. Input costs emerged as the biggest drag, cited by 29% of businesses, as the input price index hit 69.3, its highest in a year, while the sales price index edged up only to 15.4, leaving a 53.9-point margin gap. Services activity also slipped into contraction for the first time since May, with the services PMI falling to 48.5 from 51.9 in September, dragging the composite PMI down to 48.2 from 51.3.
US Midterms Unfold as Polls Close
International political developments ran concurrently with local trading, as Americans voted in the US midterm elections.
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