The Overnight Report: Getting The Wobbles

Daily Market Reports | Feb 19 2021

This story features TREASURY WINE ESTATES LIMITED, and other companies. For more info SHARE ANALYSIS: TWE

World Overnight
SPI Overnight (Mar) 6809.00 – 28.00 – 0.41%
S&P ASX 200 6885.90 + 0.70 0.01%
S&P500 3913.97 – 17.36 – 0.44%
Nasdaq Comp 13865.36 – 100.14 – 0.72%
DJIA 31493.34 – 119.68 – 0.38%
S&P500 VIX 22.49 + 0.99 4.60%
US 10-year yield 1.29 – 0.01 – 1.08%
USD Index 90.57 – 0.34 – 0.37%
FTSE100 6617.15 – 93.75 – 1.40%
DAX30 13886.93 – 22.34 – 0.16%

By Greg Peel

Under the Surface

At the index level it looks like nothing happened in the local market yesterday but in fact the ASX200 swung through a 40 points range in a choppy session, before returning to the start. With still no lead from Wall Street, it was all about the list of earnings results on the day.

And about investors responding to assessments made by brokers of results posted the day before. To wit, Treasury Wine Estate ((TWE)) leapt 17.5% yesterday after brokers were moderately upbeat over the company’s progress in reallocating wine sales away from China, and success in selling off labels in the US.

It was daylight to the next best index mover, being IPH ((IPH)). The intellectual property protection admin company gained 9.8% on result.

Tabcorp ((TAH)) and Domino’s Pizza ((DMP)) had each reported the day before. Tabcorp received two upgrades among FNArena brokers, while Domino’s was seen by most as doing everything right. They rose 5.7% and 5.6% respectively.

Fifth on the top five table was packaging company Orora ((ORA)), which reported on the day and gained 5.5%.

Matching Treasury Wine in the opposite direction was mining contractor NRW Holdings ((NWH)), falling -17.1% on its result. Funds manager Perpetual ((PPT)) was another reporter on the day that was taken to the cleaners, down -6.2%.

Bendigo & Adelaide Bank ((BEN)) had seen two sessions of solid gains post report but yesterday cooled off to the tune of -6.2%, while Coles' ((COL)) guidance was poorly received the day before and yesterday the selling accelerated, down -5.6%.

Perhaps the star report of the day was that of CSL ((CSL)). The stock rose only 2.8% but almost singularly provided the balance to weakness across other sectors on the day. Healthcare rose 2.1%, countering energy (-1.5%), industrials (-1.2%), utilities (-1.2%) and telcos (-0.7%).

Outside of result season movers, United Malt Group ((UMG)) lost -6.6% on a downbeat AGM warning of ongoing covid issues.

In other news, Australia added 29,000 jobs in January following the 50,000 in December, on a balance of 59,000 full-time jobs gained to -30,000 part-time lost. The unemployment rate fell to 6.4% from 6.6%.

Economists expect a couple more strong monthly prints until the music stops after March, when JobKeeper expires.

Earnings reports will remain the focus on the local market today and all through next week. After days of doing nothing, Wall Street was demonstrably lower overnight, albeit only to the tune of -0.4% for the S&P500.

Our futures are down -32 this morning.

Fighting Back

US weekly new jobless claims hit 861,000 last week, to mark the worst week in a month. This came as a bit of a shock to Wall Street when other indicators seemed all to be going the right way.

The vaccine rollout has significantly picked up pace now the adults are in charge, the weekly new case-count is trending down by some -40% and January’s retail sales figures knocked it out of the park. Jobless claims had also finally slipped into the 700,000s per week.

If the shock does anything, it would be to steel the resolve of the Democrats to get the stimulus package through post haste.

The Dow was down over -350 points from the open and it looked for all the world like Wall Street was finally bottling after failing to push any higher. But the major indices stabilised through the morning before recovering ground in the afternoon.

Not helping the Dow was Walmart, which fell -6.4% on its earnings result. Walmart had, nonetheless, been a major covid winner, and highly praised for its capacity to take on Amazon at its own game, so a bit of selling on result is not surprising.

Otherwise, fears of rising inflation linger, despite the US ten-year yield slipping back a tad last night. Selling has been modest but steady this week in the Big Tech names, for which higher yields undermine valuations. The Nasdaq again underperformed the broader market.

The storms in Texas and beyond are also causing some angst, given millions are without power at a time they are being instructed to boil their water. Much of America is at a standstill, which weighs on economic activity. And unlike a hurricane, the snow is not causing the sort of damage that would drive a subsequent rebuilding phase.

Investors continue to focus on the vaccine rollout and the stimulus package – the finer details of which are still being negotiated – as reasons for Wall Street will not correct from lofty heights.

It’s looking a bit wobbly though.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz) 1774.60 + 1.10 0.06%
Silver (oz) 26.98 – 0.31 – 1.14%
Copper (lb) 3.91 + 0.09 2.44%
Aluminium (lb) 0.96 + 0.01 1.16%
Lead (lb) 0.96 + 0.01 1.03%
Nickel (lb) 8.47 + 0.00 0.05%
Zinc (lb) 1.27 + 0.01 0.48%
West Texas Crude 60.09 – 1.16 – 1.89%
Brent Crude 63.52 – 0.97 – 1.50%
Iron Ore (t) 174.45 + 5.50 3.26%

The Chinese are back in style and ploughing back into iron ore.

And copper.

It had to happen. News is Saudi Arabia is considering a reversal of oil production curtailments when OPEC-Plus meets in April.

The Aussie is up 0.2% at US$0.7772.

Today

The SPI Overnight closed down -37 points or -0.5%.

Today’s list of reporting companies is a little shorter than the prior two days but there’s plenty of fun to be had nonetheless.

Eclipx Group ((ECX)) holds its AGM.

The ABS will report preliminary numbers for January retail sales today.

Flash estimates of February manufacturing PMIs will be posted across the globe.

FNArena's Corporate Results Monitor is updated daily throughout the month: https://www.fnarena.com/index.php/reporting_season/

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AHY Asaleo Care Downgrade to Neutral from Outperform Credit Suisse
ALU Altium Upgrade to Buy from Neutral Citi
Upgrade to Buy from Neutral UBS
ANN Ansell Upgrade to Add from Hold Morgans
APX Appen Downgrade to Underperform from Outperform Macquarie
ARB ARB Corp Upgrade to Hold from Lighten Ord Minnett
AZJ Aurizon Holdings Downgrade to Neutral from Buy Citi
BAP Bapcor Limited Downgrade to Hold from Add Morgans
CAR Carsales.Com Upgrade to Buy from Neutral UBS
COL Coles Group Downgrade to Neutral from Buy Citi
Downgrade to Neutral from Outperform Credit Suisse
DHG Domain Holdings Downgrade to Neutral from Outperform Credit Suisse
GPT GPT Group Upgrade to Outperform from Neutral Credit Suisse
ING Inghams Group Upgrade to Outperform from Neutral Macquarie
NWL Netwealth Group Upgrade to Hold from Sell Ord Minnett
ORE Orocobre Upgrade to Buy from Neutral Citi
PGH Pact Group Upgrade to Buy from Hold Ord Minnett
PLS Pilbara Minerals Upgrade to Neutral from Sell Citi
PME PRO Medicus Downgrade to Hold from Add Morgans
SIQ Smartgroup Downgrade to Neutral from Outperform Macquarie
SWM Seven West Media Downgrade to Accumulate from Buy Ord Minnett
TAH Tabcorp Holdings Upgrade to Buy from Neutral Citi
Upgrade to Hold from Lighten Ord Minnett
TWE Treasury Wine Estates Upgrade to Accumulate from Lighten Ord Minnett
VCX Vicinity Centres Downgrade to Neutral from Outperform Credit Suisse

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

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms

CHARTS

BEN COL CSL DMP ECX IPH NWH ORA PPT TAH TWE UMG

For more info SHARE ANALYSIS: BEN - BENDIGO AND ADELAIDE BANK LIMITED

For more info SHARE ANALYSIS: COL - COLES GROUP LIMITED

For more info SHARE ANALYSIS: CSL - CSL LIMITED

For more info SHARE ANALYSIS: DMP - DOMINO'S PIZZA ENTERPRISES LIMITED

For more info SHARE ANALYSIS: ECX - ECLIPX GROUP LIMITED

For more info SHARE ANALYSIS: IPH - IPH LIMITED

For more info SHARE ANALYSIS: NWH - NRW HOLDINGS LIMITED

For more info SHARE ANALYSIS: ORA - ORORA LIMITED

For more info SHARE ANALYSIS: PPT - PERPETUAL LIMITED

For more info SHARE ANALYSIS: TAH - TABCORP HOLDINGS LIMITED

For more info SHARE ANALYSIS: TWE - TREASURY WINE ESTATES LIMITED

For more info SHARE ANALYSIS: UMG - UNITED MALT GROUP LIMITED