Daily Market Reports | Feb 13 2020
|SPI Overnight (Mar)||7061.00||+ 42.00||0.60%|
|S&P ASX 200||7088.20||+ 32.90||0.47%|
|Nasdaq Comp||9725.96||+ 87.02||0.90%|
|S&P500 VIX||13.74||– 1.44||– 9.49%|
|US 10-year yield||1.63||+ 0.04||2.52%|
|USD Index||99.03||+ 0.30||0.30%|
By Greg Peel
Still Number One
A supposed slowing in the rate of daily new virus cases provided a positive platform on the local market yesterday from which investors could assess the day’s earnings results at face value, without a macro overlay. One result in particular stood out.
Commonwealth Bank ((CBA)) reported a beat on profit, an increase in net interest margin, despite RBA rate cuts, and, most importantly, did not cut its dividend. That was worth a 4.1% share price gain and an individual 19 points of the ASX200’s 32 point rise on the day.
There was a little sympathy for the other three, albeit all less than 1%, and the financials sector won the day with an 1.8% gain with daylight second, third and fourth.
What of the pretender? Well, CSL ((CSL)) will now have to wait a bit longer if it is to take the crown from CBA as Australia’s biggest index constituant. It, too, posted a positive result, but after a long and little-interrupted run into the heavens this year managed only a 0.8% gain.
The concentration of market cap in the ASX200 was clearly evident yesterday given all of energy, industrials, materials, telcos, utilities and IT fell between -0.2% and -0.7%.
The counters were CBA, CSL, consumer discretionary and a just a tad from staples.
A 0.5% gain for discretionary was aided by a 28.4% pop for foreign student placement company IDP Education ((IEL)), which had been sold down since late January on virus impact fears. “No impact,” said management. The share price recovered all of its loss and some.
The opposite was true for Blackmores ((BKL)). In short, “big impact”. Add in cost issues and the stock fell -12.9%.
Salmon farmer Tassal Group ((TGR)) has tracked a similar path to IDP this year but it, too, blew away the doubters and jumped 11.9%.
In economic news, Westpac’s monthly consumer confidence index has ticked up slightly but at 95.5 remains on the pessimistic side of neutral. Westpac put the tick-up down to easing bushfire fears and noted little impact from the coronavirus, which was also the case back in 2002-03 with SARS.
Easing virus fears have Wall Street up solidly again last night and our futures are up 42 points this morning, ahead of the biggest day so far in this earnings reporting season.
WHO can you trust?
For the second day running, China reported a lower number of new cases of coronavirus yesterday. The pace of virus growth is slowing.
Or is it?
Beijing has also announced a change in its counting methodology, which may explain the lower numbers, while at the same time many outside of China question whether any numbers can be trusted at all and wonder just how many cases have actually been unaccounted for. WHO is not sure the pace of new cases might even be rising.
So who does Wall Street trust? China!
Or more likely, Wall Street is continuing to “look through” the virus impact and concentrate on other matters, such as earnings results, the upcoming election and oil production cuts.
Bernie Sanders won the New Hampshire primary. US healthcare stocks took off last night. Yet Sanders, along with Elizabeth Warren, is a major threat to US healthcare, touting un-American ideas of a universal health system. Heaven forbid. So why is Sanders’ victory a positive?
He is considered least likely to be able to beat Trump.
OPEC has not yet decided upon the extent of any production cuts. However, last night the cartel dramatically lowered its forecast 2020 oil demand growth in the fallout from the virus. The market thus believes OPEC, and Russia, will have no choice but to act to hold up oil prices and thus their economies.
Oil prices surged 3-4%, and perennial laggard energy topped the S&P500 sector board on the day.
In the Dow, the biggest winner was United Healthcare. See above.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1565.90||– 2.00||– 0.13%|
|Silver (oz)||17.45||– 0.18||– 1.02%|
|Copper (lb)||2.61||+ 0.01||0.38%|
|Aluminium (lb)||0.79||+ 0.02||2.54%|
|Lead (lb)||0.84||+ 0.01||1.54%|
|Nickel (lb)||5.92||– 0.01||– 0.19%|
|Zinc (lb)||0.97||– 0.00||– 0.32%|
|West Texas Crude||51.46||+ 1.67||3.35%|
|Brent Crude||56.04||+ 2.11||3.91%|
|Iron Ore (t) futures||88.00||+ 2.45||2.86%|
Please note that aluminium move represents two sessions, with the data having gone missing yesterday.
Iron ore is coming back fast.
Virus confusion is affecting gold uncertainty.
The commodity comeback continues to support an Aussie comeback. It’s up another 0.3% at US$0.6736.
The SPI Overnight closed up 42 points or 0.6%.
The RBA governor will take part in a panel discussion today.
US inflation numbers are out tonight.
For a full list of earnings results due today please refer to the FNArena Corporate Results Monitor (https://www.fnarena.com/index.php/reporting_season/).
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|BLD||BORAL||Upgrade to Hold from Lighten||Ord Minnett|
|Downgrade to Underperform from Neutral||Credit Suisse|
|CGF||CHALLENGER||Downgrade to Neutral from Outperform||Macquarie|
|Downgrade to Sell from Lighten||Ord Minnett|
|FLT||FLIGHT CENTRE||Downgrade to Hold from Buy||Ord Minnett|
|JBH||JB HI-FI||Upgrade to Outperform from Neutral||Macquarie|
|Downgrade to Sell from Neutral||Citi|
|KMD||KATHMANDU||Downgrade to Neutral from Outperform||Credit Suisse|
|NST||NORTHERN STAR||Downgrade to Neutral from Buy||UBS|
|OSH||OIL SEARCH||Upgrade to Hold from Lighten||Ord Minnett|
|REA||REA GROUP||Downgrade to Underperform from Neutral||Macquarie|
|SM1||SYNLAIT MILK||Upgrade to Neutral from Underperform||Credit Suisse|
|Upgrade to Neutral from Underperform||Macquarie|
|SUN||SUNCORP||Downgrade to Hold from Add||Morgans|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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