ASX rallies ahead of Christmas

Lithium miners rose across the board on Monday, led by Pilbara Minerals who rose 6.9 per cent to 62¢. Galaxy Resources advanced 3.4 per cent to $2.14, Orocobre climbed 0.7 per cent to $3.02 and Mineral Resources lifted 0.7 per cent to $14.48.

Vocus announced on Monday it had signed a five-year deal with Optus to use its 5G network. Vocus managing director and CEO Kevin Russel said the deal would allow the company to expand its mobile offering. “We have a high degree of confidence in Optus’ leadership in 5G networks and our own potential to innovate and better cater to our customers in mobile, where we have historically had a sub-scale market share,” he said. Vocus shares closed 2.3 per cent lower at $2.99.

Blue Sky Alternative Investments announced it had hired a new chief financial officer. Elizabeth Walker is the first appointment to a new senior management team after former chief executive officer Rob Shand and chief financial officer Matthew Whyte stood down from their respective positions earlier this year. The company’s shares closed 1.9 per cent lower at 77.5¢.

Stock watch

Caltex Australia

Credit Suisse retained its ‘outperform’ rating on Caltex Australia despite the refiner margin taking a large hit and the company reduced its guidance. Whilst the company’s replacement cost operating product was in line with the broker’s expectations, there was a severe decline in refiner margin in the fourth quarter of the calendar year.

Despite this, the broker believes there is little downside to the company’s price. “Whilst acknowledging the uncertainties with respect to refiner margin, we would argue that the downside is largely in the price, [it] has an increasing exposure to the convenience retail segment, a sound infrastructure position in Australia underpinned by a long term contract for supplying Woolworths’ sites and Caltex retail as well as international distribution into a growing import fuel market,” said analyst Grant Saligari. The broker downgraded its price target from $33.07 to $32.79.

What moved the market

Nasdaq drops

The tech-heavy Nasdaq has become the first of the three major US indices to enter a bear market since 2008, firming fears the historical bull market run in the US is set to come to a close. On Friday, the index closed 21.9 per cent below its August 29 record high, exceeding the 20 per cent threshold for a technical bear market. The poor performance of the major tech stocks has been one of the biggest drivers behind the fall. Apple and Netflix are down more than 30 per cent while Amazon, Facebook, Alphabet (Google) and Adobe are down more than 20 per cent. Microsoft has also weighed falling 10.5 per cent since August 29.

Brent crude

The price of oil has continued to tumble amid economic growth fears, prompting OPEC to consider further cuts to production. Officials from Iraq, Kuwait and the United Arab Emirates have now agreed with Saudi Arabia’s expectation the group will extend its current agreement for another six months and OPEC President Suhail Al Mazrouei hinted there could be further cuts ahead. The cartel had been hoping the cuts proposed in early December would be enough to stop oil’s nose dive, however fears slowing economic growth will curb demand and surging supply in the United States have meant the price has kept falling.

Japanese yen

The Japanese yen has been one of the best performing currencies in the past days, rising amid increased safe haven demand. Investors are concerned about the political instability in the United States and growing fears of a global economic slowdown. While they have turned to the US dollar this year in times of uncertainty, more dovish indications from the Federal Reserve last week have left traders nervous that higher borrowing costs could hurt corporate profits in the country and slow the US economy. The yen rose 2 per cent against the US dollar last week.

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