Daily Market Reports | Sep 14 2021
This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP
|SPI Overnight (Jun)||7421.00||– 14.00||– 0.19%|
|S&P ASX 200||7425.20||+ 18.60||0.25%|
|Nasdaq Comp||15105.58||– 9.91||– 0.07%|
|S&P500 VIX||19.37||– 1.58||– 7.54%|
|US 10-year yield||1.32||– 0.02||– 1.27%|
|USD Index||92.62||+ 0.04||0.04%|
By Greg Peel
It was another up and down day for the ASX200 yesterday, swinging in a range of -17 points to plus 30 before settling at plus 18. By the end of the show, it was once again the resources sectors that drove the market.
Despite the iron ore price continuing to slip away, BHP Group ((BHP)) was up 0.6% yesterday. Base metal prices continued their run upwards, but among mining stocks, non-base metals led the charge, with some help from gold.
Analysts are warning the rally in lithium has run too far, but Pilbara Minerals ((PLS)) topped the index leaders’ board yesterday with a 7.3% gain. Rare earths are in fashion too, with Lynas Rare Earths ((LYC)) up 5.4%. Two gold miners were on the leaders’ board as well, alongside Sydney Airport ((SYD)), which rose 4.6% on an increased takeover offer.
The most material moves were nevertheless posted by uranium miners, none of which are in the index. On another weekly surge in the spot uranium price, Energy Resources of Australia ((ERA)) rose 27.3%, Paladin Energy ((PDN)) 14.6% and Boss Energy ((BOE)) 13.2%.
The materials sector rose 1.0% on the day, while energy rose 1.3% on higher oil prices. No other sector came close.
Losing sectors on the day were the banks (-0.1%), property (-0.4%) and technology (-0.3%), the latter due to a fall in the Square share price.
There was no theme among the worst performing index stocks on the day. Litigation specialist Omni Bridgeway ((OBL)) fell -5.1%, UR Westfield ((URW)) -3.1%, and Redbubble ((RBL)), which is in either top five every day, fell -2.7%.
So outside of resources, there’s very little going on in the post result season doldrums. Next month we will see a flood of September quarter reports, and of AGMs, which will reinform the market at the micro level.
At the macro level, we’ll see the US CPI tonight and our own jobs numbers on Thursday, and the Fed meets next week to announce its tapering plan.
Focus in the meantime is clearly on vaccination rates, and not so much on case-counts, although yesterday’s drop in NSW back to the 1200s from the weekend’s near 1600 result may provide a little ray of hope.
That said, the futures are down -14 points this morning with the S&P500 up 0.2%.
The resources sectors today will face some give-back in base metal prices and another solid drop in the iron ore price, offset by WTI crude jumping back above US$70/bbl.
And We’re Back
After a week-long fall that saw the S&P500 down -1-7% and the Dow down -2.2%, Wall Street swung back around last night, sending the S&P500 up 0.2% and the Dow up 0.8%.
While many on Wall Street believe the major indices simply must be due a decent pullback from lofty valuations, and September-October would be a suitable time, the minor pullbacks seen throughout this year are becoming gradually smaller in magnitude.
News is that the US case-count saw a seven-day average of 136,000 per day last week, down from 157,000 per day at the end of August. This provided some impetus.
But in reality the only driving force last night was the energy sector, which jumped 2.9%. Next best was property on 0.5%.
OPEC posted its monthly oil market assessment last night, which suggested delta will delay an expected recovery in oil demand into next year. But next year, demand is expected to surge back above pre-pandemic levels.
OPEC has increased its 2022 demand forecast to an average 4.2m barrels per day, which is an increase of 900,000bpd on its forecast only one month ago. To that end, the WTI crude price last night jumped 1% to be back above US$70/bbl.
US oil & gas companies and their service contractors have been wallowing despite higher oil prices because major institutional investors will no longer touch them due to ESG considerations. All very laudable, but not an actual impact on oil demand/supply.
Global demand for EVs may be surging, and ambitious emissions reduction targets may be the new deal, but energy markets can still look to certain realities in the decade ahead.
The citizens of less wealthy countries cannot afford expensive EVs. The infrastructure build-out to support EVs is an enormous proposition, particularly in large geographies. And we are yet to hear of a prototype electric airliner (the biggest consumer of oil) or cargo ship.
Despite rumours to the contrary, oil is not yet dead.
In other news, Nike (Dow) fell -2.5% on a broker downgrade. The broker pointed to supply chain disruption as the reason why the leading shoemaker will not have enough stock to meet the usual Christmas demand.
Nike shoes are made in Vietnam. Like Australia, last year Vietnam was a poster child for containing covid but like Australia, this year’s delta variant has not been contained. Cases in Vietnam are continuing to rise, and the country’s vaccination rate is 4-5%. The government has forced closures of manufacturing facilities.
Nike cannot just up sticks and shift production elsewhere in a couple of months.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1793.50||+ 6.70||0.37%|
|Silver (oz)||23.71||+ 0.03||0.13%|
|Copper (lb)||4.29||– 0.02||– 0.39%|
|Aluminium (lb)||1.32||+ 0.00||0.02%|
|Lead (lb)||1.06||– 0.02||– 1.55%|
|Nickel (lb)||9.01||– 0.25||– 2.75%|
|Zinc (lb)||1.39||– 0.01||– 0.59%|
|West Texas Crude||70.45||+ 0.73||1.05%|
|Brent Crude||73.63||+ 0.71||0.97%|
|Iron Ore (t)||122.60||– 6.15||– 4.78%|
A bit of give-back last night for raging base metal prices.
Another solid drop for iron ore, to be down -US$100/t, or -45%, from its peak.
Oils as noted.
The Aussie is steady at US$0.7369.
The SPI Overnight closed down -14 points.
We’ll see the NAB business confidence survey for August today.
The August US CPI results are out tonight.
Zip Co ((Z1P)) hosts an investor day today.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|AZJ||Aurizon Holdings||Upgrade to Add from Hold||Morgans|
|FMG||Fortescue Metals||Upgrade to Buy from Neutral||Citi|
|IMD||Imdex||Upgrade to Outperform from Neutral||Macquarie|
|JMS||Jupiter Mines||Downgrade to Underperform from Neutral||Macquarie|
|MFG||Magellan Financial||Downgrade to Sell from Neutral||UBS|
|MIN||Mineral Resources||Downgrade to Hold from Buy||Ord Minnett|
|MQG||Macquarie Group||Downgrade to Hold from Add||Morgans|
|NAB||National Australia Bank||Downgrade to Neutral from Outperform||Credit Suisse|
|NVX||Novonix||Downgrade to Hold from Add||Morgans|
|QUB||Qube Holdings||Downgrade to Neutral from Outperform||Credit Suisse|
|TNE||TechnologyOne||Downgrade to Neutral from Buy||UBS|
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