Daily Market Reports | Apr 07 2021
This story features CLEANAWAY WASTE MANAGEMENT LIMITED, and other companies. For more info SHARE ANALYSIS: CWY
|SPI Overnight (Jun)||6863.00||+ 3.00||0.04%|
|S&P ASX 200||6885.90||+ 57.20||0.84%|
|S&P500||4073.94||– 3.97||– 0.10%|
|Nasdaq Comp||13698.38||– 7.21||– 0.05%|
|DJIA||33430.24||– 96.95||– 0.29%|
|S&P500 VIX||18.12||+ 0.21||1.17%|
|US 10-year yield||1.66||– 0.06||– 3.72%|
|USD Index||92.31||– 0.28||– 0.30%|
By Greg Peel
After two solid sessions on Wall Street, The ASX200 leapt around 80 points in the opening minutes yesterday to breach 6900, before falling back. Another assault in the morning saw the index reach as high as up 87 points before again falling back.
The index then traded just under 6900 for the rest of the day. Looks like 6900 is the new 6800 because hey, it’s a round number.
Excitement on Wall Street on Monday night was driven by a blow-away jobs number that did not reignite inflation fears and send bond yields spiking once more. But on top of the offshore influence, yesterday saw the local market respond to travel news, as well as some company-specific updates.
We can now travel to New Zealand and not have to quarantine. Not sure why you’d want to, but apparently Australia represents 40% of typical NZ inbound tourism. They’ve been coming here for a while now, so it was about time Jac.
The news had the obvious impact on all things travel-related, from airlines to airports and travel agents. None made the top five index winners list on the day, but all had solid sessions.
Those gains helped the industrials sector to a 2.3% rise and consumer discretionary to 1.4%.
But the big move in industrials was a 15.9% leap for Cleanaway Waste Management ((CWY)) after it confirmed a bid for the Australian assets of French company Suez Recycling & Recovery. Brokers see the acquisition as very positive in terms of scale and growth, ACCC scrutiny notwithstanding.
But there could be a problem. Another company, Veolia, has bid for the French parent company Suez, and has seen red with regard Cleanaway’s tactics. Veolia is prepared to sell the Australian assets, but at this point has dubbed the Cleanaway bid illegal.
Also in industrials, hardware and communications equipment company Codan ((CDA)) equally pleased the market with its own acquisition, that of US company Zetron last week. It rose 9.6%.
If 2.3% was a good day for industrials, it was rather left in the dust by a 5.1% jump in the technology sector. Afterpay ((APT)) held a twice-a-year sales event in the US, called AfterpayDay, which saw a 35% increase in new customers. The stock jumped 10.0%, and dragged other US-exposed tech stocks with it.
The materials sector still managed a 0.8% gain thanks to gold and iron ore, but beyond that sector moves pale into insignificance. This would suggest that were it not for these individual stock stories on the day, and the travel bubble, we would not have been all that excited about Wall Street’s new record high after all.
Investors have regrouped with the index just under 6900 but if there is to be another assault, today may not be the day. With Wall Street taking a breather, our futures are up 3 this morning.
Have a Break
In the weird world of US government, someone called the Senate nonpartisan parliamentarian has ruled in favour of Biden’s infrastructure package to be considered as something called “reconciliation” and thus a budget measure. Budget bills only require a simple majority and not a 60-vote majority.
This paves the way for the bill to be passed without Republican obstruction, but that assumes all 50 Democrat senators are onside, and at this point they’re not. The conservative Democrat senator from West Virginia, Joe Manchin, is fast becoming the critical swing-voter on all measures, and he wants the corporate tax hike accompanying the stimulus package to be only to 25% from 21% and not the 28% proposed.
So the game’s not over yet.
One might expect the reconciliation news to be a signal to start selling US bonds again, given infrastructure stimulus will require up-front spending before the taxes roll in, which means more government borrowing via bond issuance. But last night the US ten-year yield fell -6 basis points to 1.64%.
If that wasn’t strange enough, the Nasdaq didn’t budge.
The Nasdaq had nevertheless put in two strong sessions, particularly on Monday night when the shock US jobs number did not move bond yields higher either. That failure to react could explain why investors feel it's safe to buy bonds once more.
Meanwhile, the IMF upgraded its 2021 global GDP growth forecast last night to 6.4% from a prior 5.1% — the highest level since the fund started forecasting back in the eighties. But nah, Wall Street was too weary to respond.
All indices drifted around during the session before closing slightly weaker.
In other news, Credit Suisse has revealed its Archegos exposure will lead the bank to take a charge of -US$4.7bn, translating into a -US$1bn loss. Credit Suisse will subsequently cut its dividend, and the head of investment banking and chief risk manager have been taken out and shot.
That will not be the end of the wider story.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1743.60||+ 15.10||0.87%|
|Silver (oz)||25.15||+ 0.31||1.25%|
|Copper (lb)||4.10||+ 0.12||2.98%|
|Aluminium (lb)||1.02||+ 0.01||1.35%|
|Lead (lb)||0.88||+ 0.01||0.65%|
|Nickel (lb)||7.46||+ 0.10||1.36%|
|Zinc (lb)||1.27||+ 0.01||1.07%|
|West Texas Crude||59.33||+ 0.68||1.16%|
|Brent Crude||62.61||+ 0.36||0.58%|
|Iron Ore (t)||170.85||+ 3.15||1.88%|
As for the rest of the green on screen above, we could put that down to a combination of a weaker US dollar and the boost to Biden’s infrastructure chances.
A fall in US bond yields is positive for gold.
The Aussie is up 0.1% at US$0.7669.
The SPI Overnight closed up 3 points.
The minutes of the last Fed meeting will be released tonight along with US trade data.
Adbri ((ABC)) goes ex today.
The Australian share market over the past thirty days…
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