Market Highlights the Turkey Edition: Istanbul cash rates at 40pc, oil stock uncertainty, and 5 ASX small caps to watch today

Wall Street closed for Thanksgiving, European stocks higher
Novo Nordisk to boost production of Wegovy
Crude prices down as OPEC+ production cuts are put in doubt

Aussie shares are poised to open higher on Friday, while Wall Street’s shuttered for Thanksgiving. At 8am AEDT, the ASX 200 index futures was pointing up by +0.2%.

In Europe, shares mainly rose led by gains in energy stocks as traders await the postponed OPEC+ meeting next week (November 30th).

Investors digested the minutes of ECB’s November meeting, which confirmed the more cautious tone ECB President Christine Lagarde had already shown during the press conference in October. The main message of the minutes was that ECB policy makers deemed it was too early for the central bank to close the door to further rate hikes entirely.

Turkey’s central bank meanwhile has increased its key interest rate to 40%, a rise of 5% from the previous 35%, in a bid to battle inflation, which hit 61.36% in October and is forecast to rise further and peak in May next year at around 70 to 75%.

To stocks, market darling Novo Nordisk gained 1% after announcing that it will invests US$2.3 billion in France to expand its weight-loss drug production, aiming to to meet the escalating demand for its blockbuster drug, Wegovy.

Crude prices were down 1% on speculation that discord within OPEC+ has put doubts on whether the carter would deepen its output cuts through to next year.

“Uncertainty is never good for financial markets, which now have to wait longer to get clarity what OPEC+ will do next year,” said UBS analyst, Giovanni Staunovo.

Stock picks for uncertain times

Equities investment manager, DNR Capital, believes uncertainties present new opportunities to buy stocks at attractive valuations.

“The outlook at the moment is quite challenging. There are a range of uncertainties impacting the market and these uncertainties can undermine equities in the short term,” said Jamie Nicol, chief investment officer DNR Capital.

But this sort of market creates new opportunities to buy quality companies when they are out of favour for various reasons, says Nicol.

“We see two sets of opportunities in this environment. Firstly, some great businesses are starting to derate, especially companies with defensive outlook.”

Nicol says CSL (ASX:CSL) is a great example. Even though the company is grappling with issues especially with the launch of Wegovy, its outlook looks very strong because the company is not dependant on the economic climate to deliver a great outcome.

The other opportunity is related to stocks that are going to do well when interest rates peak.

“An example of this is James Hardie (ASX: JHX), a company exposed to the US housing cycle.

“Higher interest rates are typically negative for US housing. But the difference with this cycle is that a lot of American mortgage owners are locked into 30 year mortgages at very low interest rates.

“They are unlikely to move and will need to repair and remodel their homes, which will be a boon to James Hardie over the next year and a half,” said Nicol.

In other markets …

Gold price rose +0.15% to US$1,992.62 an ounce.

Oil prices fell -1%, with Brent now trading at US$80.15 a barrel after OPEC+ delayed its meeting.

Iron ore futures rose +0.22% to US$129.84 tonne.

The Aussie dollar gained +0.2% to US65.57c.

Meanwhile, Bitcoin was down -1.4% in the last 24 hours to US$37,293.

5 ASX small caps to watch today

Aurumin (ASX:AUN)
Aurumin has exectuted a binding term sheet with Polaris Metals, a subsidiary of Mineral Resources Limited (ASX:MIN), for the sale of the Iron Ore rights on four of Aurumin’s Mt Dimer exploration tenements. The Mt Dimer exploration tenements are proximal to MinRes’ Carina iron ore mine. Key terms of the sale include: Cash consideration of $250k is payable to Aurumin, progress payment of $250k on granting of first programme of works (PoW), and other progress payments up to a total of $1m on decision to mine. Aurumin will also receive a $1.00/t royalty on iron ore exported.

Pact Group (ASX:PGH)
The board has reiterated that shareholders should reject the 68c takeover offer made by Bennamon Industries. The company said it will be dispatching a letter today to shareholders explaining why this decision should be made.

EV Resources (ASX:EVR)
EVR presented at the ‘Hidden Gems’ webinar, explaining why copper deficits are looming, and why the lack of new projects is pushing market into a supply deficit. The company also explained why Peru is a Tier 1 copper jurisdiction, and that EVR’s projects in the country (Don Enrique and Parag) will have drill results in the coming months.

Spirit Technology (ASX:ST1)
Spirit has secured a new agreement with Cisco for its Webex Wholesale offering. The new agreement extends the market growth achieved with the Cisco cloud communication platform. Spirit will also launch a new Dealer Program with Cisco to resell advanced cloud communication solutions for smaller managed service providers.

Kingsgate (ASX:KCN)
Kingsgate says that its wholly owned subsidiary, Akara, has found more significant gold intercepts in an area approximately 20km south of the Chatree Gold Mine in Thailand. RC drilling returned intercepts, including: [email protected] g/t Au from 61m to 70m, and [email protected] g/t Au from 180m to 198m.