Daily Market Reports | Jun 05 2020
|SPI Overnight (Jun)||5986.00||– 14.00||– 0.23%|
|S&P ASX 200||5991.80||+ 50.20||0.84%|
|S&P500||3112.35||– 10.52||– 0.34%|
|Nasdaq Comp||9615.81||– 67.10||– 0.69%|
|S&P500 VIX||25.81||+ 0.15||0.58%|
|US 10-year yield||0.82||+ 0.06||7.75%|
|USD Index||96.76||– 0.55||– 0.57%|
|FTSE100||6341.44||– 40.97||– 0.64%|
|DAX30||12430.56||– 56.80||– 0.45%|
By Greg Peel
Reaching a Barrier?
The ASX200 charged through the 6000 level in the first half hour yesterday morning, rising 100 points, where it ran into selling. That selling begat more selling, accelerating late in the morning.
The timing suggests acceleration was due to the release of April retail sales numbers, showing a -17.7% record “lockdown” fall compared to March’s record 8.5% “hoarding” gain. However, the ABS had previously released preliminary numbers and the final result was little different. Nor should anyone have been surprised.
Whatever the case, the index was back to square by lunchtime.
Also in the not surprising category were April’s trade data. Australia’s trade surplus dropped in the month from a record $10.4bn in March to a second highest $8.8bn. Iron ore exports fell back in April from March highs (in terms of volume, with prices still elevated), suggesting the peak of China’s re-opening scramble had passed. This fall was offset by a plunge in travel imports.
Travel imports (outbound) fell to zero, basically, while travel exports (inbound) only fell by -15%. Presumably this reflects the rush of ex-pats escaping to home shores. ANZ Bank economists expect this figure to fall in May, and for trade surpluses to continue to drift lower.
Take it while you can.
Travel stocks had a solid session on the market yesterday, not due to the data, but as a result of Qantas ((QAN)) announcing it will lift its domestic flight capacity to 15% of pre-virus by the end of June from a virus low of 5%. More flights will be added in July, depending on demand.
These moves helped to lift the consumer discretionary sector 1.7%, which also helped the ASX200 to bounce at lunchtime and recover 50 points to the close.
For most of this recent FOMO rally, healthcare has been the source of funds, having been the best performer both during and after the crash. But yesterday the sector jumped 2.7% to win the day, as dip-buyers returned to CSL ((CSL)). Staples rose 1.4%.
Banks followed their US counterparts higher (+1.3%) while the losers on the day were energy (-1.0%), probably profit-taking, and materials (-0.6%) because of a big drop in the AUD gold price.
All in all a messy session without any theme, except perhaps that 6000 may need some consolidation after a strong rally before it could be breached. As of yesterday, the index has recovered 36% from the March low, having fallen -38% from the February high. Even-Stevens might be a good place to stop and recalibrate, although on top-down/bottom-up we’re still -16% shy of the February high.
On Wednesday night the Dow recovered to its 200-day moving average. The ASX200 is still around -300 points short.
The individual index stock winner on the day was FOMO flag-bearer UR Westfield ((URW)), again, up another 12.0%.
On the downside, Nufarm ((NUF)) copped two downgrades to Sell from FNArena database brokers after a disappointing update, which revealed the virus impact in Europe was worse than feared. It fell -11.5%.
Wall Street also tracked a meandering path last night suggesting it, too, might be looking a bit exhausted. Our futures are down -14 points this morning.
Ring the Bell
The Nasdaq 100 hit a new all-time intraday high last night, then fell. For those having successfully ridden the FAANMG wave through the crisis, while other sectors were floundering in the white water, it was perhaps time to cash in. And maybe look to punt the gains on some beaten-down names.
Airlines perhaps? American Airlines surged 40% last night on news that it, too, was increasing capacity and that it, too, will increase further if demand dictates. AA was the hardest hit of the US major airlines due to carrying the highest level of debt.
Wall Street had opened higher following the ECB’s decision to go all-in on the QE, raising its bond-buying program by another E600bn on top of the E750bn announced in March, which at the time was seen as a bit light on. The duration of the program will be extended to June 2021 from a prior end-2020, or sooner if the need subsides.
Echoes of Mario Draghi here, who was never able to end GFC-driven QE.
Earlier this week the German government announced a massive fiscal package, which has sent the DAX soaring. While the DAX came off a bit last night, likely a sell-the-fact, the ECB’s move spurred Wall Street on to a solid start. Until the Nasdaq 100 hit its high.
It was all rock ‘n’ roll from there, with the Dow down -170 points in the last hour, before rallying back to ensure a six-day winning streak (just).
Another 1.9 million Americans filed for unemployment benefits last week, taking the total to around 48 million. The number of continuous, as opposed to new, claims nonetheless has fallen back to 19.3 million from a lockdown peak of 23 million, reflecting some workers returning after re-openings.
The number of new claims has been steadily falling from the early surge, but there was some consternation that last week’s 1.9m was actually a tick above the prior week’s 1.8m.
There is also consternation that some of the earliest reopening cities are beginning to see a tick-up in new virus cases. This is coupled with a fear the large protest crowds, however well supported across the country and the world, may well lead to a burst of new cases.
Another sign of things returning to normal last night was the first IPO of a tech company since the pre-virus era. Zoominfo – an AI company servicing sales & marketing – jumped 62% on debut.
I don’t know the history but don’t confuse Zoominfo with the totally unrelated Zoom Video. If you’re going to list a new company, I’d suggest you call it Zoom Something.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1712.90||+ 12.10||0.71%|
|Silver (oz)||17.73||+ 0.08||0.45%|
|Copper (lb)||2.48||+ 0.01||0.36%|
|Aluminium (lb)||0.69||+ 0.00||0.22%|
|Lead (lb)||0.77||+ 0.01||1.12%|
|Nickel (lb)||5.75||+ 0.01||0.09%|
|Zinc (lb)||0.91||+ 0.01||0.82%|
|West Texas Crude||37.33||+ 0.58||1.58%|
|Brent Crude||39.86||+ 0.41||1.04%|
|Iron Ore (t) futures||99.20||– 2.30||– 2.27%|
After ticking down slightly on Wednesday night, last night the US$100/t mark proved a bridge too far for iron ore.
On the other hand, gold recovered some ground despite another 6 basis point rise in the US ten-year yield to 0.82%, thanks to a -0.6% fall in the US dollar.
One might expect the ECB news would impact on the dollar index but no – the euro is up 1.2% against the greenback. The ECB might be all-in, but the Fed is unlimited.
The Aussie briefly fell back below 69 on the trade numbers yesterday, but thanks to the dollar is up 0.3% in 4 hours to US$0.6942.
The SPI Overnight closed down -14 points or -0.2%.
US May jobs numbers are out tonight. The market is looking for around -20m jobs lost.
oOh!media ((OML)) holds its AGM today.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|ALX||Atlas Arteria||Downgrade to Hold from Add||Morgans|
|AQG||Alacer Gold||Downgrade to Neutral from Buy||UBS|
|ARF||Arena Reit||Upgrade to Overweight from Equal-weight||Morgan Stanley|
|AWC||Alumina||Upgrade to Buy from Neutral||UBS|
|EVN||Evolution Mining||Downgrade to Neutral from Buy||UBS|
|GWA||GWA Group||Upgrade to Neutral from Underperform||Credit Suisse|
|IRE||Iress||Downgrade to Accumulate from Buy||Ord Minnett|
|JBH||JB Hi-Fi||Upgrade to Outperform from Neutral||Macquarie|
|NCM||Newcrest Mining||Upgrade to Buy from Neutral||UBS|
|NST||Northern Star||Downgrade to Sell from Neutral||UBS|
|NUF||Nufarm||Downgrade to Underperform from Neutral||Macquarie|
|Downgrade to Reduce from Hold||Morgans|
|PME||PRO Medicus||Downgrade to Neutral from Buy||UBS|
|SGP||Stockland||Upgrade to Overweight from Equal-weight||Morgan Stanley|
|SGR||Star Entertainment||Downgrade to Neutral from Buy||Citi|
|SUL||Super Retail||Downgrade to Neutral from Buy||UBS|
|VCX||Vicinity Centres||Downgrade to Hold from Accumulate||Ord Minnett|
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