The Monday Report – 27 April 2020

This story features RAMSAY HEALTH CARE LIMITED, and other companies. For more info SHARE ANALYSIS: RHC

By Greg Peel

Adrift

It was indeed a Friday kind of Friday on the local market as the ASX200 chopped around in a tight range to the close on low volume. There was not a lot of remarkable movement among sectors.

Energy (+2.0%) and materials (+1.2%) continued their comebacks as oil and metal prices stabilise.

Healthcare (+1.7%) returned to normal service following institutional re-weightings to accommodate Ramsay Health Care’s ((RHC)) capital raising.

All other sectors closed mildly in the green, but for staples, banks and industrials, which closed mildly in the red.

Among individual stocks, Southern Cross Media ((SXL)) currently holds the title of most volatile in the index, bouncing back 13.0% on Friday. The stock seems to go up and down with will they, won’t they news on an NRL restart.

Webjet ((WEB)) finally completed its capital raising, which was oversubscribed, and rose 9.6%. Corporate Travel Management ((CTD)) rose 6.8% in sympathy.

Star of the day, outside the index, was stem cell company Mesoblast ((MSB)), which leapt 39% on news its remestemcel treatment had produced very good results in patients on ventilators due to acute virus symptoms.

Nearmap ((NEA)) topped the index losers’ board with a -6.0% fall after competitor Aerometrex ((AMX)) acquired another, unlisted competitor Spookfish Australia at a price that appears to have spooked Nearmap investors.

The second most shorted stock on the ASX, satellite company Speedcast International ((SDA)), filed for bankruptcy.

After a dull end to a down-week for the ASX200, which kicked off with the collapse in the oil price, the futures closed up a more promising 82 points on Saturday morning after Wall Street posted its third straight day of gains.

On My Mind

Georgia intends to begin reopening its economy from tonight, despite being one of the more affected states. Other Republican held states are soon to follow suit.

Japan has now joined Singapore in suffering a second wave, which in Singapore’s case is now worse than the first.

The US is about to launch tracking & tracing apps which, it is suggested, will require 60% participation to be of any use and which — stop me if you’ve heard this one before — have prompted concerns over data privacy.

US new durable goods orders fell -14.4% in March.

The University of Michigan’s consumer sentiment index showed a fall to 71.8 from 89.1 a month ago.

President Trump signed the second round US$484bn fiscal relief package into law, which includes support for the healthcare sector as well as another US$320bn in small business aid on top of the initial US$350bn.

US companies making disinfectants such as Reckitt Benckiser's (UK) Dettol scrambled on Friday night to issue warnings not to inject or swallow such products, in the wake of Trump’s “sarcastic” (read: utterly moronic) remarks.

Put it all together, and it was a positive session on Wall Street, once again led by Big Tech and supported by an ongoing recovery for the oil sector.

One can rest assured that if small tech comes up with something that proves highly popular, Big Tech will quickly be there to stamp on it. Facebook rose 2.7% on Friday night after announcing it will launch a new video chat service. Zoom Video fell -6%.

This week is a big one for Big Tech earnings releases, with Facebook, Amazon and Apple amongst the reporters. There will need to be some justification for yet again elevated prices.

Meanwhile Wall Street appears to be hanging on to the reopening theme with great hope, as the US death toll passes 50,000.

And virus cases at a pork packing factory have led to its closure, joining numbers of US abattoirs that have been forced to shut down their highly worker-intensive operations. While the shutdown of restaurants has led to a drop in demand, the fear is a food shortage in supermarkets may soon be looming.

Commodities

Nothing to see here.

The Aussie is up 0.2% at US$0.6390.

The SPI Overnight closed up 82 points or 1.6% on Saturday morning.

The Week Ahead

The economic highlight locally this week will be the March CPI numbers, except that with the RBA in “whatever it takes” mode, for once they’ll be irrelevant.

A first estimate of US March quarter GDP will be out on Wednesday night, along with a Fed policy statement.

The US will also see numbers for consumer confidence tomorrow and PCE inflation on Thursday.

China will release its April PMIs on Thursday while all others will begin with manufacturing PMIs on Friday.

The Bank of Japan meets today, and the ECB on Thursday.

New Zealand is closed today.

The local quarterly reporting season steps up a gear this week, including several more production reports from miners, and sales numbers from Coles ((COL)) on Wednesday and Woolworths ((WOW)) on Thursday, which will be in sharp contrast to an update on Thursday from Qantas ((QAN)), among many more.

Woodside Petroleum ((WPL)) holds its AGM on Thursday, followed by Oil Search ((OSH)) on Friday, along with Janus Henderson ((JHG)).

ANZ Bank ((ANZ)) kicks off big bank reporting season on Thursday with its interim result and dividend decision.

ResMed ((RMD)) reports quarterly earnings on Friday.

The Australian share market over the past thirty days…

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