Daily Market Reports | Mar 11 2019
|SPI Overnight (Mar)||6190.00||– 14.00||– 0.23%|
|S&P ASX 200||6203.80||– 60.10||– 0.96%|
|S&P500||2743.07||– 5.86||– 0.21%|
|Nasdaq Comp||7408.14||– 13.32||– 0.18%|
|DJIA||25450.24||– 22.99||– 0.09%|
|S&P500 VIX||16.05||– 0.54||– 3.25%|
|US 10-year yield||2.63||– 0.01||– 0.42%|
|USD Index||97.31||– 0.35||– 0.36%|
|FTSE100||7104.31||– 53.24||– 0.74%|
|DAX30||11457.84||– 59.96||– 0.52%|
By Greg Peel
I suggested on Friday morning that Fridays were good days to take profits and so it came to pass. The local market had a bit of a Paul Keating session.
The ASX200 had run hard up to Friday morning, taking all the ex-divs into account, on a bad-news-is-good-news theme and the expectation of a pending RBA rate cut (or two). Too hard. We cannot look at our own economy in isolation, and no doubt there was a lot of inanimate activity chasing the momentum.
The futures pointed down on Friday morning after the ECB pulled back its 2019 growth forecast to 1.1% from 1.7% and Wall Street responded to the downside. The local index had ignored Wall Street all week. But suddenly the global growth story, or lack thereof, loomed over the exciting prospect of a weak Australian economy.
On Friday, Beijing reported a -20.7% year on year drop in exports, compared to a -5% forecast and a 9.1% rise in January. Don’t mention the tariffs. Imports fell -5.2%. Chinese stockbroker Citic Securities issued a rare Sell recommendation on the Chinese stock market, calling stocks overvalued and warning of a possible -50% drop.
Seems Beijing had become worried about a bubble. The Shanghai index fell -4.4%.
No one was spared in the local market’s -60 point drop and it was the one day in the week ex-divs had little impact. All sectors closed in the red.
Leading the charge were the banks, down -1.6%, along with materials, down -1.1%. Both had enjoyed a nice run-up during the week. Energy’s -1.5% drop was more than the oil price suggested.
The Big Bank CEOs are currently being grilled in Canberra, which doesn’t help.
Not faring quite as badly were healthcare (-0.3%) and industrials (-0.3%), while, good heavens, IT fell only -0.2% to be the best performer on the day. Being the best performer is no surprise. Any move of less than 1% in a session is virtually unheard of.
Individual stocks moves on the day were inconsequential. There were no standout losers in the ASX200 and winners all posted small moves. Most of the action involved the indices themselves.
ASX200 constituents are determined not just on market cap but on a desire by S&P for the index to reflect breadth across the Australian economy. There goes the only standalone wind farmer. In comes an online platform for financial advisors.
There was more bad news to come on the global economy front on Friday night. With the futures down -14 this morning, it appears last week’s euphoria bubble has been popped.
And the ex-divs keep on coming.
Buddy can you spare a dime?
The US added 20,000 jobs in February. No, I didn’t leave an “0” out. Economists had forecast 172,000.
Apart from smacked gobs, the number was met with disbelief – genuine disbelief. It came on the back of a December retail sales number no one believes and a December construction spending number that has raised doubts. But they were December. This is a February result.
It seems a bit late to blame the shutdown for the aberration, but that one’s been dragged back out. Snow is also a prime suspect, as is so often the case in the March quarter. Others point to the January number – an eye-popping 311,000 that was equally as unbelievable to the upside – and suggested netting the two out. The three-month trend remains 186,000 additions.
No doubt, come the March release, there’ll be revisions. Revisions are often substantial. The Dow initially fell -220 points on the number but battled back all session. The good news is the US unemployment rate fell to 3.8% from 4.0% and workers saw an average US11c per hour gain in pay – the highest in a decade.
The weak Chinese data wasn’t lost on Wall Street either, but still the buyers continue to make their mark. Wall Street saw a down-day every day last week – the longest losing streak since last June – but so often a very weak opening turned into a more modest loss by the close.
It all hinges on trade. No new news there.
And Wall Street is keen to see more data, particularly more catch-up numbers for January that might debunk weak December numbers. And the February CPI is out this week, which might help determine whether the only economy in the world that’s surging ahead at present actually isn’t.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1297.70||+ 12.80||1.00%|
|Silver (oz)||15.31||+ 0.34||2.27%|
|Copper (lb)||2.91||– 0.02||– 0.72%|
|Aluminium (lb)||0.84||+ 0.00||0.37%|
|Lead (lb)||0.94||– 0.01||– 0.71%|
|Nickel (lb)||5.95||– 0.08||– 1.36%|
|Zinc (lb)||1.23||– 0.02||– 1.68%|
|West Texas Crude||56.05||– 0.54||– 0.95%|
|Brent Crude||65.70||– 0.48||– 0.73%|
|Iron Ore (t) futures||84.85||– 2.20||– 2.53%|
The Chinese data are written all over moves in base metals, iron ore and oil on Friday night.
The weak US jobs number sent the US dollar index down -0.4%, and re-awoke gold.
Just when it looked like the Aussie was heading for the swinging sixties, it’s back up 0.3% at US$0.7030.
The SPI Overnight closed down -14 points on Saturday morning.
The Week Ahead
Usual deal with US data this week. Tonight has January retail sales and trade numbers due. Retail sales we might see but we only just saw December trade last week. I believe the February CPI tomorrow and PPI on Wednesday can be relied upon. Then February retail sales are scheduled for Thursday and industrial production for Friday. Perhaps not.
We do know, nevertheless, that China will release February industrial production, retail sales and fixed asset investment numbers on Thursday.
The Bank of Japan meets on Friday.
Locally we’ll see housing finance numbers tomorrow along with the NAB business confidence survey, and the Westpac consumer confidence survey on Wednesday.
There’s another long list of stocks going ex-dividend this week, although fewer big names than last week’s flood.
Rudi will appear on Your Money today, midday-2pm.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|ANZ||ANZ BANKING GROUP||Downgrade to Neutral from Buy||Citi|
|CHC||CHARTER HALL||Upgrade to Accumulate from Hold||Ord Minnett|
|GDF||GARDA DIV PROP FUND||Downgrade to Hold from Add||Morgans|
|MYR||MYER||Upgrade to Hold from Sell||Deutsche Bank|
|RIO||RIO TINTO||Downgrade to Neutral from Buy||UBS|
|SIL||SMILES INCLUSIVE||Downgrade to Hold from Add||Morgans|
|TPE||TPI ENTERPRISES||Upgrade to Add from Hold||Morgans|
|VRL||VILLAGE ROADSHOW||Upgrade to Outperform from Neutral||Macquarie|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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