Daily Market Reports | Apr 13 2021
This story features COCHLEAR LIMITED, and other companies. For more info SHARE ANALYSIS: COH
| World Overnight | |||
| SPI Overnight (Jun) | 6964.00 | + 15.00 | 0.22% |
| S&P ASX 200 | 6974.00 | – 21.20 | – 0.30% |
| S&P500 | 4127.99 | – 0.81 | – 0.02% |
| Nasdaq Comp | 13850.00 | – 50.19 | – 0.36% |
| DJIA | 33745.40 | – 55.20 | – 0.16% |
| S&P500 VIX | 16.91 | + 0.22 | 1.32% |
| US 10-year yield | 1.68 | + 0.01 | 0.54% |
| USD Index | 92.09 | – 0.07 | – 0.08% |
| FTSE100 | 6889.12 | – 26.63 | – 0.39% |
| DAX30 | 15215.00 | – 19.16 | – 0.13% |
By Greg Peel
Sense of Abandonment
News over the weekend the federal government was abandoning its vaccine rollout target did not win a vote of confidence in the local market yesterday. It wasn’t devastating, given there is some appreciation of the fact supply is somewhat out of the government’s control and the fact we are not currently in any covid crisis.
But travel stocks again took the brunt yesterday, leading the consumer discretionary sector down -0.5%, while REITs, which are reliant on traffic back in shops, fell -1.2%.
The biggest impact on the market was nevertheless materials (-1.2%). Aside from a fall in the gold price on Friday night the big iron ore miners were sold off without any real move in the iron ore price.
Indeed the iron ore price has remained relatively stable in the US$160-180/t range since the disruption that is Chinese New Year, and analysts believe such prices will hold in the near term and the cash will continue to roll in. But there is general agreement prices will revert in the second half, which is why analyst forecasts remain well below current spot prices.
The banks had a lie-in yesterday so it was up to telcos (+0.7%) and healthcare (+0.7%) to provide the counter, in what seems like simple rotation. There has been no new news out of Cochlear ((COH)) but it rose 2.4% to top a benign index winners’ board.
There was greater movement on the downside, with Nickel Mines ((NIC)) topping the losers’ board with a -7.7% fall. Yesterday the Chinese government warned “all eyes are on commodity prices”, seemingly in response to a wholesale inflation blow-out in March. This had the nickel price down -3% and zinc down -2.5% in London overnight.
Otherwise, the local market has largely stalled since its strong rally out of March quarter-end, coinciding with a bit of a corporate news vacuum as is typically the case this time of year. This will change from late this week and into next week as we enter an unofficial quarterly reporting season, in which more and more companies these days are providing updates.
Funny – the push in the US is to revert to half-year reporting.
Bring it on
Commentators are expecting Wall Street’s quarterly earnings season just kicking off to average a 10% beat of forecasts. There we go again – expectations of a beat of expectations. As to how the market will respond is more nuanced.
US stock indices rallied into the prior December quarter earnings season only to see earnings beats mostly met with a sell-the-fact response. US stock indices have again rallied to new all-time highs ahead of this season, so the same may apply.
The difference is nevertheless that 2021 to date has been the year of rotation, hence while the S&P500 might be at a new high there is a clear divide between those stocks running ahead recently and those that have fallen back.
It has also been particularly noted that market breadth has been poor in reaching the latest new highs, with NYSE volumes to the downside on any day either close to or even exceeding volumes to the upside, suggesting the recent rally is more about a handful of big-caps than widespread gains. On that basis, earnings result responses could go either way.
All three major indices slipped back slightly last night but only to counter Friday night’s late surge.
It has also been noted that many of the very big US pension funds, akin to our big super funds, don’t play around in volatile markets. Hence they have not participated in the recent rally. But now that the VIX volatility index has fallen below 20, indeed now under 17, they’re in, despite having missed out to date.
Yet it is also largely agreed Wall Street is now “fully priced” in relation to the rapid vaccine rollout and government stimulus. So, anything could happen and probably will.
The first of the big banks report tomorrow night.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1732.70 | – 11.50 | – 0.66% |
| Silver (oz) | 24.78 | – 0.47 | – 1.86% |
| Copper (lb) | 4.04 | – 0.03 | – 0.63% |
| Aluminium (lb) | 1.02 | – 0.00 | – 0.21% |
| Lead (lb) | 0.88 | – 0.00 | – 0.21% |
| Nickel (lb) | 7.32 | – 0.23 | – 3.07% |
| Zinc (lb) | 1.24 | – 0.03 | – 2.47% |
| West Texas Crude | 59.70 | + 0.38 | 0.64% |
| Brent Crude | 63.20 | + 0.25 | 0.40% |
| Iron Ore (t) | 173.00 | + 0.65 | 0.38% |
All base metal prices fell last night but nickel and zinc copped the brunt.
Gold continues to slide back – no new news on the Archegos front but there remains a concern we haven’t yet learned the full story.
Oil prices have gone into limbo.
The Aussie is flat at US$0.7625.
Today
The SPI Overnight closed up 15 points or 0.2%.
The NAB business confidence survey for March is out today.
China reports March trade numbers.
The US will see March CPI – might be some consternation there.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BSL | Bluescope Steel | Upgrade to Buy from Accumulate | Ord Minnett |
| NCM | Newcrest Mining | Upgrade to Buy from Accumulate | Ord Minnett |
| ORE | Orocobre | Downgrade to Hold from Buy | Ord Minnett |
| PPH | Pushpay Holdings | Upgrade to Hold from Lighten | Ord Minnett |
| RSG | Resolute Mining | Upgrade to Neutral from Underperform | Macquarie |
| SBM | St Barbara | Upgrade to Buy from Accumulate | Ord Minnett |
| TAH | Tabcorp Holdings | Upgrade to Outperform from Neutral | Credit Suisse |
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CHARTS
For more info SHARE ANALYSIS: COH - COCHLEAR LIMITED
For more info SHARE ANALYSIS: NIC - NICKEL INDUSTRIES LIMITED