Global markets were higher overnight with the big news being the US central bank announcement that confirmed that interest rate cuts are done for now, and policymakers see rates steady through next year. The US Federal Reserve remains firmly in wait and see mode. The economic outlook has brightened somewhat over the past several months, in no small part due to the three rate cuts the Fed has provided, which has given a lift to consumer spending and housing.
Trade developments are the backdrop for markets and some speculation has emerged that Washington could delay the nearly $160 billion worth of Chinese consumer goods tariffs it is set to introduce on December 15.
Stock in Focus: Lynas (LYC:ASX)
As we touched on earlier this week, Lynas has moved higher as the rare earths producer rose after announcing it would build a new processing plant at Kalgoorlie in Western Australia.
The need for a new cracking and leaching plant follows the order to remove that part of its operations from Malaysia, which had been the subject of controversy in the south-east Asian nation. Regulatory risks remain a key risk for the company, although the move does de-risk the business partially in that respect.
In our view, Lynas provides an attractive investment for those wanting to gain indirect exposure to electric vehicle theme.
We currently have a BUY (High-Risk) rating on LYC.
Members should look out for a full update on LYC to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market rallied on Wednesday (ASX 200 index +0.68%). Leading the advance was online travel company Webjet. Shares in the firm shot up 9.6 per cent to $12.78 after the firm rebuffed reports of a takeover offer. CSL continued its run toward $300 a share, after Goldman Sachs lifted its price target on the blood products firm. Retailers were under pressure, however, with department store retailer Harris Scarfe on Wednesday going into receivership.
The New Zealand market was marginally higher yesterday (NZX 50 index +0.07%) as Port of Tauranga led the market higher ahead of today's release of the upper North Island supply chain study recommending Northport take over as the principal import port for Auckland. Outside the benchmark index, Evolve Education entered a trading halt pending a capital raising.
Finance Minister Grant Robertson outlined high-level plans for an extra $12 billion of capital spending on infrastructure, primarily on roads and rail over five years.
3 Things Markets Will be Watching this Week
- Tariff news, as planned tariffs by the US on Chinese imports kick in on Dec 15.
- The US Federal Reserve makes its last interest rate decision for the year Thursday morning (AU/NZ time).
- The UK election will be held on the 12th of December.
Have a Great Day,