Daily Market Reports | Apr 13 2018
This story features HT&E LIMITED. For more info SHARE ANALYSIS: HT1
| World Overnight | |||
| SPI Overnight (Jun) | 5815.00 | + 18.00 | 0.31% |
| S&P ASX 200 | 5815.50 | – 13.20 | – 0.23% |
| S&P500 | 2663.99 | + 21.80 | 0.83% |
| Nasdaq Comp | 7140.25 | + 71.22 | 1.01% |
| DJIA | 24483.05 | + 293.60 | 1.21% |
| S&P500 VIX | 18.49 | – 1.75 | – 8.65% |
| US 10-year yield | 2.83 | + 0.04 | 1.58% |
| USD Index | 89.77 | + 0.24 | 0.27% |
| FTSE100 | 7258.34 | + 1.20 | 0.02% |
| DAX30 | 12415.01 | + 121.04 | 0.98% |
By Greg Peel
Directionless
The Australian market wasn’t quite sure what to do yesterday with the news of heightened geopolitical risk in the Middle East, with regard potential US strikes in Syria and thwarted Yemeni strikes against Saudi Arabia, along with a fairly hawkish tone from the latest Fed minutes.
In yet another case of early computer mayhem, the ASX200 plunged around -30 points in the first half hour, only to rally 40 points in the following half hour. Another hour later and we were back near the low of the day once more, before a choppy afternoon resulted in a less imposing -13 point close.
Sector-wise it was again up to the resource sectors to carry the can, with materials (+0.4%) rising on the stronger gold price and energy (+0.4%) rising on the stronger oil price. Consumer discretionary (+0.5%) won the day, but that was all about M&A prospects in the burgeoning outdoor advertising industry.
HT&E ((HT1)) jumped close to 12% on news oOh!media (OML)) had made a bid for the company’s Adshel business, only to be rejected on the basis of a too-low price. The implication is if OML is keen on Adshel it will have to try harder.
Even if OML does stump up sufficiently, what will be the ACCC’s response? Last year the regulator rejected a merger proposal between OML and APN Outdoor ((APO)) on the basis a merged entity being too dominant a player.
Industrials (-1.0%) posted the weakest session while the brief moment in the sun for the banks this week has clearly proven fleeting, as financials fell another -0.4%.
The index traded down to the 5800 level three times yesterday and held each time, but failed to convincingly reach escape velocity.
Overnight developments see the futures up 18 points this morning.
Tweet Now, Think Later
Trump might bomb Syria soon, or maybe not at all. On Wednesday night the president bragged about America’s capacity to take out strategic targets no matter what the Russians responded with, and last night he hinted he might just keep his powder dry instead.
Confused? So is the rest of the world. But the suggestion that missiles won’t be flying into Syria, thus averting an escalation of confrontation with Putin, was enough to provide Wall Street with an opening pop last night.
The Dow jumped up around 300 points from the open and that’s where it ultimately closed, having been up 400 at the peak.
Later in the day, news came though that Trump had asked his senior trade representative and chief economic advisor to investigate the possibility of re-entering the Trans-Pacific Partnership: the free trade agreement that was supposed to involve 12 Pacific nations until Trump called it “terrible” in his election campaign and opted out as soon as he was elected. The other 11 nations, including Australia, went ahead without the US and still managed to form a significant collective capable of facing up to China.
Maybe there’s a clue there as to why Trump has suddenly changed his mind.
Nonetheless, any newly negotiated TPP has to satisfy Trump, which likely means every other nation has to give up sufficient ground to the Great One, and as to whether this is tenable is unknown at this stage. Indeed, no one knows what Trump’s line of thinking is.
The TPP news also proved a positive on Wall Street last night, but did not move the market any further than the easing of Syria fears already had. That relief also led to gold losing all the ground it gained on Wednesday night, and the US ten-year yield rising 4 basis points to 2.84%.
Rising yields are good for US banks, and tonight sees earnings results from Citi, JP Morgan and Wells Fargo. Fund manager Blackrock reported last night, and blew forecasts away. There is much anticipation the banks will post strong numbers this season, enhanced by much improved trading profits in what was a volatile first quarter, compared to the dearth of volatility experienced in 2017.
Traders were buying into US banks last night ahead of results, so they won’t want to be disappointed.
With the S&P500 now back to square again for the year, and market PE multiples down at more realistic level post year to date corrections, the scene is set for a very interesting earnings season indeed.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1334.30 | – 18.50 | – 1.37% |
| Silver (oz) | 16.43 | – 0.22 | – 1.32% |
| Copper (lb) | 3.07 | – 0.06 | – 1.83% |
| Aluminium (lb) | 1.05 | + 0.03 | 3.36% |
| Lead (lb) | 1.06 | – 0.03 | – 3.12% |
| Nickel (lb) | 6.19 | – 0.07 | – 1.16% |
| Zinc (lb) | 1.40 | – 0.07 | – 4.46% |
| West Texas Crude (May) | 67.15 | + 0.41 | 0.61% |
| Brent Crude (Jun) | 72.13 | + 0.25 | 0.35% |
| Iron Ore (t) | 64.75 | + 0.55 | 0.86% |
Rumours spread last night that the Chinese government was selling excess zinc stocks. Traders noted that such sales had previously been flagged, and volumes were nothing significant, but it did not stop the zinc price trading down to its 200-day moving average and setting off a selling spree.
As zinc prices fell, traders rushed into the sell the other metals in sympathy (commodity funds need to maintain their weightings), such that all metals had a bad night on the LME, except aluminium. That metal continues to rise as sanctions are officially imposed on Russia’s globally significant aluminium producer.
Risk off, risk on: gold has fallen back to where it was prior to any Syria talk.
Syria does not impact on oil markets, but Saudi Arabia certainty does. Oil prices remain elevated after missiles flew over the kingdom on Wednesday night.
Today
The SPI Overnight closed up 18 points or 0.3%.
China will release March trade numbers today.
The RBA will publish a Financial Stability Review.
The three big US banks report before the opening bell on Wall Street tonight.
Cimic ((CIM)) holds its AGM today.
Oh, and um, it’s Friday the Thirteenth.
Rudi will connect with Sky News Business via Skype at around 11am today to talk whiplash and global equities, and probably some broker calls too.
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: HT1 - HT&E LIMITED
