Daily Market Reports | Nov 23 2022
This story features WHITEHAVEN COAL LIMITED, and other companies. For more info SHARE ANALYSIS: WHC
|SPI Overnight||7255.00||+ 62.00||0.86%|
|S&P ASX 200||7181.30||+ 42.00||0.59%|
|Nasdaq Comp||11174.41||+ 149.90||1.36%|
|S&P500 VIX||21.29||– 1.07||– 4.79%|
|US 10-year yield||3.76||– 0.07||– 1.75%|
|USD Index||107.23||– 0.61||– 0.57%|
By Greg Peel
On the back of increasing Chinese covid cases and lockdowns, base metal prices were all down -2-3% on Monday night, iron ore was down -1.5%, and gold was also lower. Yesterday the materials sector rose 1.2%.
Meanwhile, oil prices had closed slightly lower on Monday night but energy rose 2.6%. Having spent last week tumbling on lower coal prices, yesterday coal miners shot up again as coal prices recovered. Whitehaven Coal ((WHC)) gained 7.8% and New Hole Corp ((NHC)) 7.3%.
When coal miners move they don’t muck around.
Oil & gas companies were also in demand yesterday, with Woodside Energy ((WDS)) rising 2.9%. All because the Saudi oil minister said rumours of OPEC increasing production were untrue. Oil prices had fallen -6% on the rumour and were back to square on the denial before the market opened yesterday.
Throw in a 0.3% gain for the banks yesterday and the ASX200 is once again knocking on the door of 7200 – last seen in June before global markets tanked.
Virgin Money UK ((VUK)) saw a somewhat delayed response yesterday to its earnings report on Monday, and accompanying buyback announcement, and jumped 10.6% to top the index.
TechnologyOne ((TNE)) reported earnings yesterday and rose 5.1%. The technology sector gained 1.0%.
Threats of regulation of BNPL companies kept Block ((SQ2)) weak again yesterday, down -3.2% to top the losers’ board. Block also dabbles in crypto, and that space is an ever growing graveyard right now.
RBA governor Philip Lowe used his speech last night to warn workers that if they keep pushing for higher wages as compensation for the higher cost of living, they will only fuel inflation, which will drive the cost of living higher still.
That’s what happened in the seventies – the classic wage-price spiral – as half the country’s workforce was on strike for higher wages at any given time. It took a decade, and a recession, to resolve.
The silver lining, Dr Lowe promised, is that if we can "ride through this period" with wages barely rising and the problem of rising prices getting "resolved", then inflation will come down. "It can be painless," he said.
If you need confirmation, just look across The Dutch. After a series of 50 point rate hikes, to take its cash rate to 3.50%, the RBNZ is widely expected to hike by an unprecedented 75 points this morning.
The reason is inflation is at 7.2%, and wage inflation is at a record level.
The other reason is the RBNZ now takes a three-month Chrustmus break. Nice work if you can get it.
What Inventory Problem?
US retailers Best Buy, American Eagle Outfitters and Abercrombie & Fitch all reported quarterly earnings last night and rose 12.8%, 18.2% and 21.4% respectively.
The assumption was this week’s Thanksgiving sales would bring a bonanza of bargains in discounted inventory retailers are all stuck with, due to over-ordering to get ahead of supply-chain blockages. Target had been the poster child for this predicament.
But it looks increasingly like Target, and others, were simply the victims of poor execution. Not all retailers are tarred with the same brush.
The results provided a bit of a fillip for Wall Street last night, helping to overcome the drag of Chinese lockdowns. Or at least a fillip for the handful of people in attendance. Volumes are now holiday-thin, and there’ll be tumbleweeds rolling through the NYSE by tomorrow afternoon in New York.
It is not unusual for Wall Street to get a little bit carried away heading into Thanksgiving. The next Fed meeting is over three weeks away but the market is increasingly more confident in only a 50 point hike, and in inflation having peaked.
The October PCE inflation numbers are due next week and the November CPI is out the day before the Fed decision.
History also suggests Wall Street typically rallies into the new year, and investors are hoping 2022 is no different. It doesn’t always, of course, and when it doesn’t it can be quite spectacularly bad.
Whatever happens tonight, it will be on very low volume.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1738.60||+ 0.80||0.05%|
|Silver (oz)||21.06||+ 0.25||1.20%|
|Copper (lb)||3.62||+ 0.04||1.09%|
|Aluminium (lb)||1.19||+ 0.02||1.53%|
|Lead (lb)||0.95||– 0.01||– 1.01%|
|Nickel (lb)||11.29||+ 0.36||3.30%|
|Zinc (lb)||1.32||+ 0.00||0.35%|
|West Texas Crude||81.03||+ 1.30||1.63%|
|Brent Crude||88.37||+ 1.19||1.36%|
|Iron Ore (t)||91.45||– 0.09||– 0.10%|
Having risen the night before, last night the US ten-year bond yield fell -7 points to 3.76% and the US dollar index fell -0.6% to provide some relief for metal prices, despite there being no change to the situation in China.
There were 27,307 new cases recorded for Monday, just shy of the previous record 28,973 reached in April.
Oil prices also gained some ground after the Saudis shot down any notion of production increases.
The Aussie is once again back from the brink, up 0.7% at US$0.6647.
The SPI Overnight closed up 62 points or 0.9%. That implies the ASX200 should break through 7200 today.
The index first conquered 7200 in May 2021, on the way up, before dropping back through in June this year, on the way down. The peak was 7624, in August 2021.
We await the RBNZ decision.
The minutes of the November Fed meeting are out tonight, along with US new home sales and consumer sentiment.
The world will flash estimates of November PMIs today/night.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|ABY||Adore Beauty||Downgrade to Neutral from Buy||UBS|
|GNC||GrainCorp||Upgrade to Buy from Neutral||UBS|
|HLS||Healius||Downgrade to Lighten from Hold||Ord Minnett|
|LOV||Lovisa Holdings||Upgrade to Buy from Neutral||UBS|
|NAN||Nanosonics||Downgrade to Hold from Add||Morgans|
|NHF||nib Holdings||Upgrade to Accumulate from Lighten||Ord Minnett|
|PME||Pro Medicus||Downgrade to Hold from Add||Morgans|
|PPT||Perpetual||Downgrade to Neutral from Outperform||Credit Suisse|
|RRL||Regis Resources||Upgrade to Neutral from Sell||Citi|
|SFR||Sandfire Resources||Downgrade to Neutral from Buy||Citi|
|Downgrade to Sell from Hold||Ord Minnett|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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