Shares to open higher on Monday
US retail stocks were in focus as Black Friday kicked off
Why Black Friday and Cyber Monday are two important day for retailers and investors
Aussie shares are poised to open higher on Monday, as Wall Street closed mixed on a shortened trading day last Friday. At 8am AEDT, the ASX 200 index futures was pointing up by +0.2%.
In New York, the S&P 500 rose by +0.06%, the blue chips Dow Jones index was up by +0.33%, and the tech-heavy Nasdaq fell by -0.11%.
US retail stocks outperformed the broader market as online sales on Black Friday hit almost US$10 billion in the US, and US$71 billion globally. Black Friday is a bellwether for consumer sentiment and the most important day for retailers.
Nvidia fell 2% after news that it will be facing a lawsuit from French automotive company Valeo after a Nvidia employee inadvertently showed Valeo’s source code files on his computer as he was sharing his screen during a meeting with both firms in 2022.
Tesla shares were up 0.5% after news that that Swedish postal workers are refusing to deliver Tesla license plates, as they join in sympathy with striking mechanics who have stopped servicing Tesla cars in Sweden since late October. “This is insane,” CEO Elon Musk said on X.
Crude prices dropped over -1% after OPEC+ said it will hold its next meeting, which was postponed earlier, online.
“The Saudis will probably argue for more production cuts, while Russia is getting desperate for oil revenue,” said Oanda analyst, Edward Moya. “The bromance between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman is probably over.”
Back home in Australia and looking ahead to this week, Tuesday’s October retail sales and Wednesday’s CPI report will be the focus for investors.
Now read: Traders’ Diary: Everything you need to get ready for the week ahead
Why Black Friday and Cyber Monday are two very crucial days
Black Friday and today’s Cyber Monday sales are extremely important days for a number of reasons.
Firstly, it gives retailers an opportunity to move stock and reduce inventory levels through heavily discounted promotions.
“A key metric investors look for when choosing whether or not to invest in a retailer is the level of inventory the company holds,” said Grady Wulff, Market Analyst at Bell Direct.
According to Wulff, fashion and retail is cyclical in nature, therefore a company that holds a high level of inventory may find it difficult to sell down levels – possibly leading to stock being written off or sold at a loss.
In addition, this period also allows retailers to gauge outlook toward consumer spend in the December holiday period.
“If consumers spend big in the Black Friday and Cyber Monday sales, we may see a dip in spend over the busy holiday and Christmas period as consumers are likely to snap up bargains to reduce the hip pocket damage come Christmas,” Wulff said.
“Investors this sale season will be keeping a close eye on just how heavily some stock is discounted, and what the implications are for the respective retailers in terms of revenue over the traditionally busy holiday period.”
In other markets …
Gold price rose 0.5% to over US$2k at US$2,001.60 an ounce. Bullion has been rising on the back of a weaker US dollar.
Oil prices fell over -1%, with Brent now trading at US$80.23 a barrel after a discord at OPEC+.
Iron ore futures rose 0.25% to US$130.16 a tonne.
The Aussie dollar gained +0.30% to US65.77c.
Meanwhile, Bitcoin was down -0.85% in the past 24 hours to US$37,541
5 ASX small caps to watch today
Astute Metals (ASX:ASE)
Astute advised that a recent rockchip sampling campaign has revealed outstanding rock chip assay results of up to 2,190ppm lithium from sampled claystone at the recently staked 100%-owned Red Mountain Lithium Project in Nevada. A total of 36 samples were taken at Red Mountain, targeting claystone and other outcropping to subcropping rock types to characterise the Project’s potential for lithium mineralisation.
Midway (ASX:MWY)
The carbon management and woodfibre export company announced it has entered a binding Memorandum of Understanding (MOU) with CHS Broadbent. Under the deal, Midway will sell a section of its North Shore site in Geelong, Victoria, to CHS Broadbent who will build and operate an 80,000 metric tonne grain storage and export terminal. Broadbent will initially lease and then acquire freehold title to five hectares (12 acres) of the Midway site. The agreed price for the land sale is $15.5 million, and CHS Broadbent’s grain export volumes will contribute to Midway’s Port volumes.
Power Minerals (ASX:PNN)
Preliminary Economic Assessment (PEA) has confirmed the Rincon salar’s potential to produce high-purity, battery-grade lithium carbonate. The PEA results predict 7,061 tonnes of lithium carbonate equivalent per annum over an initial project life of 14 years. The PEA also forecasts a pre-tax NPV of US$501.85 million, with payback period of 3 years, and pre-tax IRR of 42%.
Hannans (ASX:HNR)
Hannans announced the successful award of a grant to lithium ferrous phosphate (LFP) battery recycling project, ReLiFe. This comes as Hannans’ project consultant, Greenhouse, secured a European grant for lithiumion phosphate battery recycling technology through its participation in the ReLiFe Project, aimed at establishing a pilot plant for LFP battery recycling. Participation in the ReLiFe Project aligns with EU targets for critical raw materials, sustainability, energy transition, and the circular economy.
Adavale Resources (ASX:ADD)
High-resolution satellite imagery has identified significant palaeo-channel system on the northwestern edge of the Flinders Ranges. Gravity data is correlated with the imagery identified where potentially buried channel zones may be located. High priority targets for uranium exploration will be generated by combining all three lines of evidence over the coming weeks.
At Stockhead we tell it like it is. While Power Minerals and Adavale Resources are Stockhead advertisers, they did not sponsor this article.
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