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The Overnight Report: Big Turnaround

Daily Market Reports | Jan 25 2022

World Overnight
SPI Overnight 6960.00 – 92.00 – 1.30%
S&P ASX 200 7139.50 – 36.30 – 0.51%
S&P500 4410.13 + 12.19 0.28%
Nasdaq Comp 13855.13 + 86.21 0.63%
DJIA 34364.50 + 99.13 0.29%
S&P500 VIX 29.90 + 1.05 3.64%
US 10-year yield 1.74 – 0.01 – 0.69%
USD Index 95.89 + 0.25 0.26%
FTSE100 7297.15 – 196.98 – 2.63%
DAX30 15011.13 – 592.75 – 3.80%

Two more sleeps and Greg Peel will be back in action.

In old Hollywood style, just as the situation seemed dire with no relief in sight, over the hills came the cavalry, John Wayne in front, to turn the siege around and scare away the evil savages.

You wouldn't know if you slept like a baby last night and woke up this morning to see equity indices in the US ended their Monday session with slight gains, but that was thanks to a tsunami in buy-orders in the last hour of trade.

Before that epic last-minute surge, things looked, let's say, a lot different. At its session low, the Dow had been down -1100. Not sure whether it has ever happened, but a turnaround larger than 1000 Dow points in one trading session; it doesn't come along often. The Nasdaq had been flirting with a -5% retreat, on the day, to make it close to -20% from the peak in late October.

The Russell 2000 small cap index did hit the -20% correction mark, and it was the first of the four major indices to turn. This appeared to prompt buying in the larger caps, with the Nasdaq down almost -20% and the Dow and S&P500 at or near -10% corrections at that point.

Various technical indicators are pointing towards a short-term recovery rally. Market corrections never happen in one straight line.

Meanwhile, US president Joe Biden is reportedly organising a call with European leaders to set up a united front against potential Russian aggression (should Boris Johnson still participate?) and -not to be dismissed either- there are reports of an incursion by 39 Chinese military planes into Taiwan airspace.

Bond markets are experiencing funds inflows, which is normal when equities are in the doldrums (apart from last night's finish) but most of last night's flash PMI surveys around the globe revealed rather subdued momentum. Energy and base materials retreated, this time including iron ore.

The Aussie is weaker. SPI futures are indicating heavy selling is set to continue when the local market opens at 10am, but that remains to be seen, given the big turnaround on Wall Street.

Spot Metals,Minerals & Energy Futures
Gold (oz) 1840.40 + 4.80 0.26%
Silver (oz) 23.91 – 0.36 – 1.48%
Copper (lb) 4.40 – 0.08 – 1.88%
Aluminium (lb) 1.38 + 0.00 0.33%
Lead (lb) 1.07 – 0.00 – 0.11%
Nickel (lb) 10.32 – 0.55 – 5.08%
Zinc (lb) 1.65 – 0.02 – 0.94%
West Texas Crude 83.69 – 1.45 – 1.70%
Brent Crude 86.69 – 1.20 – 1.37%
Iron Ore (t) 133.70 – 3.70 – 2.69%

The Australian share market over the past thirty days…

ABP Abacus Property Upgrade to Buy from Neutral Citi
AKE Allkem Upgrade to Add from Hold Morgans
Downgrade to Neutral from Buy UBS
ANZ ANZ Bank Upgrade to Overweight from Equal-weight Morgan Stanley
Upgrade to Accumulate from Hold Ord Minnett
ASX ASX Downgrade to Underweight from Equal-weight Morgan Stanley
AWC Alumina Ltd Downgrade to Hold from Accumulate Ord Minnett
BLD Boral Upgrade to Equal-weight from Underweight Morgan Stanley
COE Cooper Energy Downgrade to Hold from Accumulate Ord Minnett
CVN Carnarvon Energy Upgrade to Buy from Accumulate Ord Minnett
DXI Dexus Industria REIT Upgrade to Outperform from Neutral Macquarie
Upgrade to Add from Hold Morgans
DXS Dexus Upgrade to Neutral from Sell Citi
GNC GrainCorp Downgrade to Neutral from Buy UBS
HUB Hub24 Upgrade to Outperform from Neutral Macquarie
Upgrade to Buy from Accumulate Ord Minnett
LLC Lendlease Group Upgrade to Outperform from Neutral Macquarie
MP1 Megaport Upgrade to Hold from Sell Ord Minnett
PME Pro Medicus Upgrade to Add from Hold Morgans
SFR Sandfire Resources Downgrade to Sell from Hold Ord Minnett
VRT Virtus Health Downgrade to Hold from Add Morgans

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)

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