Daily Market Reports | Dec 12 2017
This story features RETAIL FOOD GROUP LIMITED. For more info SHARE ANALYSIS: RFG
By Greg Peel
The Dow closed up 56 points or 0.2% while the S&P gained 0.3% to 2659 and the Nasdaq rose 0.5%.
Failure
No, yesterday was not the day. Indeed yesterday was as a repeat performance of Friday’s trade on the local market. The ASX200 shot up through 6000 from the open to just over 6010, and an hour later was back where it started. Thereafter, nothing happened.
A close of 5998 suggests the index wants to break out, but the sellers are lined up on the other side and they are proving impenetrable right now.
There was one difference between yesterday and Friday – Friday closed flat but there were still some decent sector moves in either direction that netted themselves out. Yesterday, all sectors had moved very little by the close. Seems like the summer break is here already.
Train crash of the day was Retail Food Group ((RFG)), owner of a range of food franchises such as Donut King, Gloria Jeans and Crust Pizza, which fell -25% following a damning article in the Fairfax press on Saturday regarding the treatment of its franchisees. RFG has “rejected the assertion”.
There will have been some angry investors yesterday but also smiles on the other side. As of last week, RFG was the sixth most shorted stock on the ASX at 12%. Only one FNArena database broker covers the stock and as at the August result season, had a Sell on RFG with a target of $4.55. Yesterday the stock closed at $3.25.
The consumer discretionary sector fell -0.2% yesterday as a result, balanced on the other side by ever more telco gains, this time 0.4%.
It may well be that investors are happy to position themselves at the 6000 line in the sand ahead of any developments on US tax reform (and whatever the Wall Street response may be), this week’s Fed meeting, and ECB meeting, and BoE meeting, China’s data dump, and local numbers for business confidence, consumer confidence and jobs.
Get through all that, and it really will be time for a summer break.
Don’t Mention Bitcoin
Bitcoin futures began trading on the CBOE yesterday and immediately ceased at limit up. The CME contracts opened last night and rose 12%. “Physical” bitcoin, which seems a contradictory term for a crypto-thing, is trading just under US$17,000 and the futures are suggesting ~US$18,000 in January (net of carry).
All anyone could talk about on Wall Street last night was bitcoin. Bubble or buying opportunity? Fad or the future?
The usual adage about bubbles, which typically relates to stock markets or maybe gold, is that if your cab driver starts talking about his portfolio it’s time to sell. One commentator on CNBC last night related that his Uber driver that morning had not talked about how much he could make out of bitcoin, but how he can retire.
Make up your own mind.
The introduction of futures on crypto-currencies has two ramifications. One, you can trade in US dollars and never actually have to be in the digital currency itself and two, you can short bitcoin. Shorters have the capacity to keep a lid on prices. A third might be that a futures contract now “legitimises” bitcoin.
If you’re interested, note that the futures contract is over one bitcoin, presently near US$17,000 (A$22,700) and the deposit is a substantial 40% or US$6,800 (A$9,100). Have fun.
Other than bitcoin, Wall Street is focused on this week’s Fed meeting. The indices all traded marginally higher last night but realistically there was not much going on.
Wall Street’s quiet relentlessness is astounding many commentators. Last night a suicide bomber set off his device at a New York City bus terminal, managing to do no more than burn himself and singe a few passers-by. In the city of 9/11, Wall Street shrugged.
Wall Street is also shrugging at the latest round of devastating wild fires in California, just as it ignored two major hurricanes. And a threat of nuclear strike.
At this stage it looks like Wall Street may well be quiet up to Wednesday night, assuming nothing from left field.
Commodities
Gold is down -US$6.30 at US$1241.50/oz with the US dollar index steady at 93.87. No guesses as to where that money went.
After doing very little on Friday night, base metals all jumped last night. Aluminium rose 0.5%, copper and zinc 1.5%, lead 2% and nickel 3%. The incentive was data released in China regarding vehicle sales and bank loans, including mortgages, which were positive. Chinese vehicles and houses are significant consumers of raw materials.
Iron ore rose US60c to US$69.00/t.
Oil traders are expecting positive US inventory data this week thus West Texas crude is up US59c at US$57.93/bbl. Brent has jumped US$1.25 to US$64.60/bbl to further widen the spread to WTI. The pipeline that carries North Sea oil to a refinery in Scotland has sprung a leak.
The Aussie is 0.4% higher at US$0.7533.
Today
The SPI Overnight closed up 14 points or 0.2%. The futures traders are not giving up.
NAB business confidence and conditions survey for November is out today.
Tatts ((TTS)) holds its AGM.
Rudi will hold his final 2017 online seminar today, organised by FP Markets. To register: https://tinyurl.com/Rudi-Webinar
****
| World | |||
| DJIA | 24386.03 | + 56.87 | 0.23% |
| S&P500 | 2659.99 | + 8.49 | 0.32% |
| Nasdaq Comp | 6875.08 | + 35.00 | 0.51% |
| S&P500 VIX | 9.35 | – 0.23 | – 2.40% |
| US 10-year yield | 2.39 | + 0.00 | 0.08% |
| USD Index | 93.87 | – 0.04 | – 0.04% |
| FTSE100 | 7453.48 | + 59.52 | 0.80% |
| DAX30 | 13123.65 | – 30.05 | – 0.23% |
| Spot Metals,Minerals & Energy Future | |||
| Gold (oz) | 1241.50 | – 6.30 | – 0.50% |
| Silver (oz) | 15.68 | – 0.13 | – 0.82% |
| Copper (lb) | 3.01 | + 0.04 | 1.49% |
| Aluminium (lb) | 0.91 | + 0.00 | 0.44% |
| Lead (lb) | 1.13 | + 0.02 | 2.03% |
| Nickel (lb) | 5.08 | + 0.14 | 2.79% |
| Zinc (lb) | 1.42 | + 0.02 | 1.34% |
| West Texas Crude (Dec) | 57.93 | + 0.59 | 1.03% |
The Australian share market over the past thirty days…
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: RFG - RETAIL FOOD GROUP LIMITED
