Daily Market Reports | Feb 07 2019
|SPI Overnight (Mar)||5988.00||+ 18.00||0.30%|
|S&P ASX 200||6026.10||+ 20.20||0.34%|
|S&P500||2731.61||– 6.09||– 0.22%|
|Nasdaq Comp||7375.28||– 26.80||– 0.36%|
|DJIA||25390.30||– 21.22||– 0.08%|
|S&P500 VIX||15.38||– 0.19||– 1.22%|
|US 10-year yield||2.70||0.00||0.00%|
|USD Index||96.38||+ 0.31||0.32%|
|FTSE100||7173.09||– 4.28||– 0.06%|
|DAX30||11324.72||– 43.26||– 0.38%|
By Greg Peel
The Day After
“Looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down. Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced.”
So said RBA governor Philip Lowe at the National Press Club yesterday, thereby announcing a shift in policy from a tightening bias (“the next move will likely be up”) to a neutral stance (“evenly balanced”). On that note, the Aussie is down -1.6%. When the RBA didn’t cut its cash rate on Tuesday, the Aussie jumped to US$0.7260. Now it’s at US$0.7118.
The day after the Hayne report response proved to be yet another positive one overall for the market, with a couple of obvious exceptions. Most notable was the financials sector, which fell -0.6%. Commonwealth Bank ((CBA)) posted a slight miss on earnings yesterday, but after Tuesday’s effort, a bit of profit-taking was pretty much a given for the sector.
CSL ((CSL)) seems to be a bit septic at present, and appears perhaps to be one stock investors are selling out of to return to the banks. There was also a downgrade by Credit Suisse to Neutral. Healthcare fell -0.9%.
Utilities fell -0.5%. That one’s got me stumped. It wasn’t AGL Energy. Utilities are beneficiaries of a lower interest rate scenario so someone in there must have had a bad day.
Sydney Airport ((SYD)) on the other hand, had a good day, rising 4.3% on a regulatory win. Industrials were the best performers yesterday with a 2.1% gain, not counting IT (2.3%).
Vale has declared force majeur, so iron ore producers just keep on rising. Materials were up 1.2%. The big fall in the Aussie is also a plus for exporters.
And I noted yesterday that consumer discretionary had had a good session despite weak retail sales data. Yesterday that sector jumped 1.4%. Nothing like talk of a rate cut to get consumers excited.
As the dust settles on bank-land, the mood is definitely a more positive one on the local market. The ASX200 is back over 6000, up over 500 points from Christmas. The economy is not looking so flash, but then Phil’s got our back. So all is good.
Until the election.
State of Not Much
President Trump’s much anticipated State of the Union address was a bit of a fizzer, offering scant economic detail.
Trump did insist that China would have to commit to real structural reforms before a trade deal can be reached, but that reflects no change in rhetoric. He reiterated an infrastructure plan, but this time put no price on it. He vowed he was still going to build his Wall, but stopped short of suggesting emergency powers would be enacted, hence it appears like another shutdown is forthcoming but it’s not entirely clear.
The Dow futures moved very little post address, and Wall Street overall did much the same last night. The Dow was down -100 points early on and the S&P500 fell back from the sight of its 200-day moving average, as could have been expected, although did recover some of that loss by the close.
The US trade deficit receded in December from its 10-year record high in November. The fall was due to a drop in imports, attributed to a pullback from the rush in November to get in ahead of the latest round of tariffs but also on lower oil imports. The specific deficit with China also receded slightly due to a drop in imports.
The trade deficit for the period January-November 2018 was 10% higher than that same period in 2017, despite tariffs being imposed in 2018.
Earnings were again in the frame, with last night’s winner being Snap Inc, of Snapchat fame, which jumped 22% on record quarterly revenue. Never mind that the stock is down -62% since listing two years ago.
Earnings notwithstanding, Wall Street appears now in a consolidation phase, with that S&P 200-day offering resistance and a trade deal the source of anticipation. The March 1 deadline is looming.
The Brexit deadline is also looming. Stock up on your Spam.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1306.50||– 7.50||– 0.57%|
|Silver (oz)||15.64||– 0.18||– 1.14%|
|Copper (lb)||2.81||+ 0.01||0.36%|
|Aluminium (lb)||0.85||– 0.01||– 1.14%|
|Lead (lb)||0.94||– 0.01||– 0.98%|
|Nickel (lb)||5.84||+ 0.06||1.06%|
|Zinc (lb)||1.23||– 0.01||– 0.94%|
|West Texas Crude (Feb)||53.99||+ 0.24||0.45%|
|Brent Crude (Apr)||62.65||+ 0.63||1.02%|
|Iron Ore (t) futures||86.65||0.00||0.00%|
Despite Vale announcing force majeur, the iron ore price is again unmoved with China absent. Nickel is up another 1% nevertheless, in the face of a 0.3% gain for the US dollar.
The dollar rise has taken a bit of wind out of the gold price rally.
Oil prices rose on the weekly US inventory lottery.
The Aussie is toast.
The SPI Overnight closed up 18 points. Still a feeling of exuberance.
Australia’s construction PMI is out today which is not usually a market-mover, but with the infra build going on around the country, countered by plunging housing construction, it might be interesting.
The Bank of England meets tonight and clearly can’t do a damned thing.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|AFG||AUSTRALIAN FINANCE||Downgrade to Neutral from Outperform||Macquarie|
|AHY||ASALEO CARE||Upgrade to Outperform from Neutral||Credit Suisse|
|CSL||CSL||Downgrade to Neutral from Outperform||Credit Suisse|
|CVW||CLEARVIEW WEALTH||Downgrade to Neutral from Outperform||Macquarie|
|EVN||EVOLUTION MINING||Downgrade to Underweight from Equal-weight||Morgan Stanley|
|FMG||FORTESCUE||Downgrade to Equal-weight from Overweight||Morgan Stanley|
|GUD||G.U.D. HOLDINGS||Upgrade to Accumulate from Hold||Ord Minnett|
|HT1||HT&E LTD||Upgrade to Outperform from Neutral||Credit Suisse|
|IAG||INSURANCE AUSTRALIA||Upgrade to Accumulate from Hold||Ord Minnett|
|NVX||NOVONIX||Upgrade to Add from Hold||Morgans|
|OGC||OCEANAGOLD||Downgrade to Neutral from Outperform||Macquarie|
|RIO||RIO TINTO||Downgrade to Hold from Accumulate||Ord Minnett|
|SIQ||SMARTGROUP||Downgrade to Hold from Add||Morgans|
|SYD||SYDNEY AIRPORT||Downgrade to Underperform from Neutral||Credit Suisse|
|TCL||TRANSURBAN GROUP||Downgrade to Hold from Add||Morgans|
|TNE||TECHNOLOGYONE||Downgrade to Hold from Buy||Ord Minnett|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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