Daily Market Reports | Jul 05 2019
|SPI Overnight (Sep)||6660.00||– 2.00||– 0.03%|
|S&P ASX 200||6718.00||+ 32.50||0.49%|
|Nasdaq Comp||8170.23||+ 61.14||0.75%|
|S&P500 VIX||12.57||– 0.36||– 2.78%|
|US 10-year yield||1.95||– 0.02||– 1.16%|
|USD Index||96.74||– 0.04||– 0.04%|
|FTSE100||7603.58||– 5.74||– 0.08%|
By Greg Peel
Out of Breadth
Another day, another 30-odd point rally for the ASX200 to another post-GFC high. However, this time the bulk of the market sat it out and watched the banks and healthcare do all the work.
Financials rallied 1.0%, flipping to outperformers in the recent rally having been a little sluggish up to this point. Healthcare kept on keeping on, rising 1.1%.
Recent gains in healthcare are largely down to sector heavyweight CSL ((CSL)), as this year’s flu outbreak proves to be a particularly nasty one, and not just in Australia.
As for the banks, well I suppose we can make a connection between tax cuts and mortgage affordability.
As to whether we can soon make a connection between tax cuts and consumer spending is yet to be seen. Yesterday’s retail sales data were again weak, showing a mere 0.1% gain in May after April’s -0.1% drop. Economists had forecast +0.2%.
There is a possibility consumers put off buying anything pricey ahead of the mid-month election, but the reality is year on year growth declined in May for a third straight month, to 2.4%.
Once upon a time a healthy sales growth rate was considered to be something above 3%, and back before 2007 Australian sales were growing for a time at 6%.
Utilities (+0.9%) had another good session on the yield play while on the flipside, it appeared bank purchases were funded by taking profits in materials (-0.4%), as the iron ore price trended down during the day.
At the individual stock level, SpeedCast International ((SDA)) finally hit the earth and bounced, up 9.9%.
A debate is ranging among bank analysts as to whether the independent investment platforms will be forced to lower margins in the face of RBA rate cuts, as returns on cash allocations on platforms threaten to fall into the negative net of fees. Both Netwealth ((NWL)) and Hub24 ((HUB)) have been weak in recent times on fee competition and net funds outflows across the industry.
Yesterday Hub24 shares jumped 8.7% as the company's response to the ASX effectively rubbished the analysis published by Macquarie and the likes, suggesting do your homework, boys, you're not seeing the wood for the trees.
On the other side of the ledger, increasingly weak lithium price forecasts have Pilbara Minerals ((PLS)) on the slide, down another -5.8% yesterday.
Yesterday gave us a sign the local market is beginning to lose breadth as the air gets thinner at new post-GFC highs, with the 2007 high looming just over a hundred points away (or over 150 if you take the intraday high of November 1).
Next week we’ll see the first of the resource sector quarterly production reports, which will provide a clue as to whether miners in particular are deserved of today’s lofty valuations.
Those reports will roll out over July, and then we’re into earnings season proper, in which all will be revealed.
In the meantime, it’s Friday, there’s no Wall Street to follow, and the futures are down -2.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1414.90||– 3.30||– 0.23%|
|Silver (oz)||15.24||– 0.04||– 0.26%|
|Copper (lb)||2.68||+ 0.02||0.58%|
|Aluminium (lb)||0.80||+ 0.00||0.40%|
|Lead (lb)||0.85||+ 0.00||0.34%|
|Nickel (lb)||5.56||+ 0.02||0.30%|
|Zinc (lb)||1.11||– 0.02||– 1.85%|
|West Texas Crude||56.79||– 0.61||– 1.06%|
|Brent Crude||63.30||– 0.55||– 0.86%|
|Iron Ore (t) futures||122.30||– 4.05||– 3.21%|
Evidence of increased Chinese production had the zinc price tumbling on the LME.
Iron ore had to have been due a pullback.
The oils are posting a lot of ups and downs without going anywhere much.
The Aussie has stabilised, down slightly at US$0.7024.
The SPI Overnight closed down -2 points. It’s bound to be a quiet one today, ahead of tonight’s critical US jobs numbers.
Locally we’ll see the construction PMI.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|AGL||AGL ENERGY||Upgrade to Neutral from Underperform||Credit Suisse|
|IAG||INSURANCE AUSTRALIA||Downgrade to Equal-weight from Overweight||Morgan Stanley|
|IGO||INDEPENDENCE GROUP||Downgrade to Hold from Accumulate||Ord Minnett|
|ILU||ILUKA RESOURCES||Downgrade to Hold from Accumulate||Ord Minnett|
|MND||MONADELPHOUS GROUP||Downgrade to Neutral from Buy||UBS|
|NHC||NEW HOPE CORP||Upgrade to Add from Hold||Morgans|
|NWL||NETWEALTH GROUP||Downgrade to Underperform from Neutral||Macquarie|
|ORG||ORIGIN ENERGY||Upgrade to Outperform from Neutral||Credit Suisse|
|PLS||PILBARA MINERALS||Upgrade to Hold from Lighten||Ord Minnett|
|RHC||RAMSAY HEALTH CARE||Downgrade to Hold from Accumulate||Ord Minnett|
|SDA||SPEEDCAST INTERN||Upgrade to Neutral from Underperform||Macquarie|
|SUN||SUNCORP||Downgrade to Underweight from Equal-weight||Morgan Stanley|
|TLS||TELSTRA CORP||Downgrade to Neutral from Buy||UBS|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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
FNArena is proud about its track record and past achievements: Ten Years On