Daily Market Reports | Aug 04 2022
This story features PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: PNI
| World Overnight | |||
| SPI Overnight | 6910.00 | + 32.00 | 0.47% |
| S&P ASX 200 | 6975.90 | – 22.20 | – 0.32% |
| S&P500 | 4155.17 | + 63.98 | 1.56% |
| Nasdaq Comp | 12668.16 | + 319.40 | 2.59% |
| DJIA | 32812.50 | + 416.33 | 1.29% |
| S&P500 VIX | 21.95 | – 1.98 | – 8.27% |
| US 10-year yield | 2.75 | + 0.01 | 0.26% |
| USD Index | 106.38 | + 0.05 | 0.05% |
| FTSE100 | 7445.68 | + 36.57 | 0.49% |
| DAX30 | 13587.56 | + 138.36 | 1.03% |
By Greg Peel
Uncertain Times
Despite the S&P500 falling -0.7% on Tuesday night our futures suggested only an -11 point drop yesterday, yet the ASX200 plunged -80 points or -1.1% in the first 40 minutes. By midday it was only down around -20 points and that’s where we closed.
The Nasdaq fell -0.2% on Tuesday night and yesterday our tech sector rose 2.2%, to be one of only two sectors to close in the green. The Aussie ten-year yield jumped 10 points to 3.07%, following US rates.
Materials was the only other sector to close in the green (+0.4%) despite iron ore prices falling. Market-wide selling elsewhere reflected an apparent change in tone on Wall Street, on fears the Fed hadn’t actually become a little more dovish after all.
Consumer discretionary was the best performing sector on Tuesday (+1.5%) and the worst yesterday (-1.2%). Staples rose 1.2% on Tuesday and fell -0.9% yesterday.
Banks rose 0.8% on Tuesday and fell -0.9% yesterday.
Get the picture? No, clearly no one does.
But fear not, Wall Street has bounced back again last night and our futures are up 32 points this morning.
Pinnacle Investment Management ((PNI)) was the best performing index stock yesterday (+12.2%) after reporting that while lower, its funds flows were actually positive, in stark contrast to most every other listed funds manager.
Otherwise the usual suspects filled out the top five. Tyro Payments ((TYR)), Zip Co ((ZIP)), Novonix ((NVX)) and Polynovo ((PNV)).
Polynovo is on one or other side of the ledger almost every day while being largely flat year to date.
On the losers’ board, Centuria Industrial REIT ((CIP)) reported earnings and fell -4.0% to be the worst performer. The chart-topping -4% move underscores the fact it was just a bit of mild selling overall yesterday.
So presumably we go back up today. One drag will be energy, with oil prices down -4% last night. But when the oils fell -5% a couple of days ago, energy only fell -0.9%.
Who doesn’t love a lower oil price?
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The story so far…
Post the Fed rate hike and press conference last week Wall Street detected a less hawkish tone from Jerome Powell, and rallied hard. On Tuesday night a number of Fedheads came out to say don’t be ridiculous, and Wall Street retreated.
Last night St Louis Fed president James Bullard – the most hawkish among Fedheads last year with regard inflation, and thus right – warned rates will have to remain high for a long time to get inflation down. Wall Street rallied.
Aside from some more earnings beats, and the fact Pelosi got in and out of Taiwan in one piece, the change of heart is attributed to last night’s US services PMI for July. It showed an increase (expansion) to 56.7 from 55.3 in July when economists had forecast a fall to 54.0.
While that in itself is positive, what really caught Wall Street’s eye were some of the constituent numbers. New orders rose to 59.9. Production rose to 59.9. And prices paid – a measure of inflation – fell to 73.9 from 81.7 in June to the lowest level since February 2021.
Earnings-wise, Moderna reported a beat and jumped 16%. You may have heard of them.
Starbucks lost a massive amount of business during China’s lockdowns, but still beat and rose 4.3%.
The men in tights, Robinhood, rose 12%, but this included an announcement it was cutting -23% of its workforce.
PayPal had reported in Tuesday night’s aftermarket, and it rose 9%.
A couple of takeaways from the above is that all-services-related companies are enjoying a post-lockdown honeymoon, including travel and accommodation, entertainment, and anything exhibiting pent-up demand. Last night MGM Resorts reported record profits in Las Vegas.
Honeymoons do end.
Online broker Robinhood is just the most recent in a string of tech companies, large or small, either firing, not hiring or slowing the hiring of new staff.
The expectation is that US unemployment will begin to creep back up, which is actually what the Fed wants.
July non-farm payrolls tomorrow tonight.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1765.60 | + 5.40 | 0.31% |
| Silver (oz) | 20.04 | + 0.08 | 0.40% |
| Copper (lb) | 3.54 | + 0.04 | 1.28% |
| Aluminium (lb) | 1.18 | – 0.02 | – 1.90% |
| Lead (lb) | 0.92 | – 0.01 | – 0.84% |
| Nickel (lb) | 10.15 | + 0.09 | 0.87% |
| Zinc (lb) | 1.53 | – 0.01 | – 0.72% |
| West Texas Crude | 90.66 | – 3.76 | – 3.98% |
| Brent Crude | 96.91 | – 3.05 | – 3.05% |
| Iron Ore (t) | 110.38 | – 4.36 | – 3.80% |
Iron ore had been clawing its way back but has slipped again.
Last night’s oil price fall was attributed to the usual higher than expected US weekly inventories.
Forex cowboys must have again become too short the Aussie, as it has bounced 0.5% to US$0.6954 with the US dollar flat.
Today
The SPI Overnight closed up 32 points or 0.5%.
We’ll see June trade numbers today, as will the US tonight.
The Bank of England meets tonight.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| APX | Appen | Downgrade to Underperform from Neutral | Macquarie |
| FMG | Fortescue Metals | Downgrade to Sell from Neutral | UBS |
| PNI | Pinnacle Investment Management | Downgrade to Hold from Accumulate | Ord Minnett |
| PX1 | Plexure Group | Upgrade to Buy from Speculative Buy | Ord Minnett |
| SDR | SiteMinder | Upgrade to Buy from Neutral | Citi |
| SWP | Swoop Holdings | Downgrade to Hold from Speculative Buy | Morgans |
| TCL | Transurban Group | Downgrade to Hold from Add | Morgans |
| VUK | Virgin Money UK | Upgrade to Outperform from Neutral | Macquarie |
| ZIP | Zip Co | Downgrade to Sell from Neutral | Citi |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: CIP - CENTURIA INDUSTRIAL REIT
For more info SHARE ANALYSIS: NVX - NOVONIX LIMITED
For more info SHARE ANALYSIS: PNI - PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED
For more info SHARE ANALYSIS: PNV - POLYNOVO LIMITED
For more info SHARE ANALYSIS: TYR - TYRO PAYMENTS LIMITED
For more info SHARE ANALYSIS: ZIP - ZIP CO LIMITED