ASX storms home with gains of 1.9 per cent

ASX delivers best day in six months, buying the dip, iron ore rallies
 
The S&P/ASX200 (ASX: XJO) finished what has been a difficult month on an extremely strong note, finishing 1.9% higher. This was the largest single day gain since November 2020, right after the vaccine was approved.

A number of factors likely coincided today, with 30 September closing out the quarter in which many professional investors must report, whilst the recent run in the bond yield slowed.
 
Six of the 11 market sectors moved over 2% higher led by consumer staples (2.7%) and materials (2.4%) with the latter rallying on the back of a 10% jump in the iron ore price in Singapore.
 
Despite the rally the market finished down 2.7%, ending an eleven-month winning streak the longest in 78 years according to CommSec.
 
Orica (ASX: ORI) was a standout, with shares rallying 14.5% following yesterday’s write-down with brokers upgrading the stock on the back of an expected surge in mining exploration.
 
Fortescue (ASX: FMG) added 1% despite confirming a death on one of their Australia mining sites. Pinnacle (ASX: PNI) had another difficult day with the fund manager falling 3.5%.
 
Zip inks Microsoft deal, Chinese economy slows, Bunnings Beaumont deal approved
 
Shares in Zip Co (ASX: Z1P) added 1.3% after announcing they had inked a deal with Microsoft (NYSE: MSFT). Under the deal the group will be integrated into Microsoft’s Edge store for businesses and consumers and could be launched as early as November this year.
 
The group also signed a deal with Adyen, expanding its merchant base into the Chemist Warehouse Chain with growing rumours that the underbidder for Afterpay (ASX: APT) may be lurking.
 
Proof of China’s slowdown was delivered today with the manufacturing PMI falling to 49.6 and into contraction as lockdowns and output curbs hit the economy.
 
Wesfarmer’s (ASX: WES) plans to acquire Beaumont Tiles through their Bunnings business have been waved though by the regulator, noting that Bunnings of itself is not a major player and hence it will not reduce competition in the sector; shares were 0.8% higher.
 
News Corp’s (ASX: NWS) hidden gem in Foxtel highlighted their incredible turnaround in a strategy day as the group gears up for an IPO in 2022.
 
After struggling for growth in recent years, the group’s decision to pivot to streaming via the likes of Kayo and Binge have paid off with management targeted 5 million subscribers and $3 billion in revenue within three years.
 
Debt ceiling extended, risk averted, markets fall
 
US markets continue to struggle, unable to climb the ‘wall of worry’ with the Dow Jones down 1.6%, the S&P 500 1.2 and the Nasdaq outperforming falling just 0.4% as the quarter came to an end.
 
The end of the quarter usually sees rebalancing back into bonds, but this wasn’t the case in September following the weakest quarterly returns since March 2020.
 
The concern appears to be focused on a global energy set to pressure most economies into the Northern winter.
 
China for instance has ordered the state-owned energy companies to secure supplies for winter at all costs.
 
This is pressuring everything from coal to oil and gas. On the positive side the US Government passed a nine-week extension on their debt ceiling, averting another shutdown but kicking the can down the road with the Republican’s demanding spending cuts.
 
The Dow was down 4.5% in September, with the S&P and Nasdaq both falling over 5% as the ASX outperformed in a rare win.
 
Both NVIDIA (NYSE: NVDA) and Electronic Arts (NYSE: EA) moved higher with the former approving a number of new games for its cloud gaming platform.
 
Netflix (NASDAQ: NFLX) remains at all-time highs as investors return to the consistent cash flow pandemic winner.

The Inside Adviser