Daily Market Reports | Mar 16 2018
This story features PREMIER INVESTMENTS LIMITED. For more info SHARE ANALYSIS: PMV
| World Overnight | |||
| SPI Overnight (Jun) | 5923.00 | + 12.00 | 0.20% |
| S&P ASX 200 | 5920.80 | – 14.50 | – 0.24% |
| S&P500 | 2747.33 | – 2.15 | – 0.08% |
| Nasdaq Comp | 7481.74 | – 15.07 | – 0.20% |
| DJIA | 24873.66 | + 115.54 | 0.47% |
| S&P500 VIX | 16.59 | – 0.64 | – 3.71% |
| US 10-year yield | 2.83 | + 0.01 | 0.32% |
| USD Index | 90.16 | + 0.39 | 0.43% |
| FTSE100 | 7139.76 | + 7.07 | 0.10% |
| DAX30 | 12345.56 | + 107.82 | 0.88% |
By Greg Peel
Royal Flush
On Tuesday night the S&P500 fell -0.6% and the ASX200 followed suit on Wednesday by falling around -30 points. On Wednesday night the S&P again fell -0.6% and the ASX200 again followed suit to midday yesterday, falling around another -30 points.
That fall took the index close to the 5900 mark, which could have set off greater volatility given it was index option expiry day, but the buyers moved in to avert any trouble and we recovered to a less imposing close.
I suggested earlier in the week that given the bank Royal Commission is set to run for a year, it would most likely be background noise rather than a day to day market mover unless anything we didn’t already know was unearthed. Well the Commission’s only being running for three days from its official commencement and every day has seen banks stocks sold off.
At this rate the banks will be worthless in twelve months’ time.
Presumably once the opening sessions are completed things will die down to a daily grind, and there will also have been an element of selling the banks in line with Wall Street as US inflation fear eases and thus rate rise expectations retreat.
And there’s Bill Shorten’s hotly debated dividend policy pledge, which continues to undermine the value of high-yield large caps on the assumption Bill will be our next PM. So take your pick as to why the banks have been falling all week.
Yesterday the bank sector was the worst performer in the index with a -0.9% drop. Another -0.7% fall for the telcos supports the ongoing Shorten story.
Energy fell -0.8% despite the oil price being slightly stronger, and materials countered with a 0.6% gain on further strength in the iron ore price along with speculation of corporate activity among smaller miners.
Other sectors had quiet sessions.
One Step Closer
After some heavy selling among the Dow names this week on tariff fears, some buying emerged last night to have the Dow up almost 300 points late morning. The big mover of the week – Boeing – found some early buying, but was destined to close lower once more.
Boeing has become somewhat of a bellwether for tariff fears given China is its biggest customer and Boeing is nominally the highest priced stock in the Dow. The aircraft manufacturer’s shares have now fallen close to -10% from their recent high, but remain up 11% year to date.
The mood changed on Wall Street early in the afternoon when it was announced the Trump Organisation was to be subpoenaed in relation to the ongoing Russia probe. The Dow fell a hundred points in a hurry on the news. When queried, the White House press secretary suggested the subpoena was not a matter for the president but for the Trump Organisation.
Somehow it seems only a matter of time. Clearly Wall Street is getting a bit nervous.
Meanwhile, trade confusion lingers. The president suggested this week he wants to impose US$60bn worth of tariffs on Chinese goods – which goods is not yet known – and he also said Canada runs a trade surplus with the US, which it doesn’t.
It has been said before by commentators that the president’s measure of a bad free trade deal is one in which the US is in deficit, and good if in surplus. Thus all trade deals must result in the US being in surplus, which is a bit much of a one way street when talking “free trade”.
And next week we have the Fed meeting. Last last year it was assumed the March meeting would simply be a rubber stamp for the first rate rise of the year, but recently we’ve had an inflation scare followed by a low inflation scare, so Wall Street is now eagerly anticipating what the FOMC has to say on the matter.
The S&P has now fallen four sessions in a row, which is actually the longest losing streak in 2018.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1315.60 | – 8.90 | – 0.67% |
| Silver (oz) | 16.36 | – 0.15 | – 0.91% |
| Copper (lb) | 3.12 | – 0.03 | – 0.88% |
| Aluminium (lb) | 0.94 | – 0.00 | – 0.38% |
| Lead (lb) | 1.10 | – 0.00 | – 0.02% |
| Nickel (lb) | 6.17 | – 0.09 | – 1.37% |
| Zinc (lb) | 1.47 | + 0.00 | 0.23% |
| West Texas Crude (Apr) | 61.22 | + 0.32 | 0.53% |
| Brent Crude (May) | 65.08 | + 0.25 | 0.39% |
| Iron Ore (t) | 71.50 | – 0.25 | – 0.35% |
The US dollar index jumped 0.4% on a combination of dovish comments from the Bank of Canada and no rate hike from the Swiss National Bank, as well as technical factors, traders suggested. Technical factors were also cited for a sudden -1.0% plunge in the Aussie to US$0.7797 in response.
Gold awoke from this week’s slumber to fall in concert with the greenback’s rise, while elsewhere commodity price moves were minimal, making that Aussie move stand out.
Today
The S&P500 is weaker again today but only mildly so, and the SPI Overnight is up 12 points or 0.2%.
The local market saw expiry day yesterday and tonight the US follows suit with its quarterly “quadruple witching”.
The quarterly adjustments to the S&P/ASX index components become effective today. The changes mean index-tracking funds must buy and sell those stocks going in and out but given they are previously flagged, most funds would have made their moves by now.
Premier Investments ((PMV)) reports earnings today. No doubt the name Myer will arise.
Rudi will connect with Sky News Business via Skype around 11am to discuss Premier Investments, and potentially broker calls too.
The Australian share market over the past thirty days…
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