Daily Market Reports | Mar 28 2023
This story features ENDEAVOUR GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: EDV
|SPI Overnight||7021.00||+ 29.00||0.41%|
|S&P ASX 200||6962.00||+ 6.80||0.10%|
|Nasdaq Comp||11768.84||– 55.12||– 0.47%|
|S&P500 VIX||20.60||– 1.14||– 5.24%|
|US 10-year yield||3.53||+ 0.15||4.38%|
|USD Index||102.83||– 0.29||– 0.28%|
By Greg Peel
Yesterday the federal government agreed to an absolute cap on emissions to secure the Greens’ backing for its safeguard mechanism climate bill. Greens leader Adam Bandt said the deal puts “significant hurdles” in the way of new coal and gas projects but Energy Minister Chris Bowen insists it will not kill off new investment.
Either way, the energy sector fell a standout -2.3% yesterday, helping to kill off a rally from the open of 34 points for the ASX200 to a close of up 6.
Ironically, trouble in Iraq has oil prices up 4-5% overnight.
The only other sectors to close in the red were banks (-0.2%), after a positive start, and consumer discretionary (-0.3%) despite Endeavour Group ((EDV)) rising 2.8% on Labor’s NSW election win, diluting any cashless gaming card plans.
Speaking of beer, United Malt ((UMG)) is in a trading halt pending news on its potential suitor.
Utilities was the other big mover yesterday (+2.2%) on anticipation of news on long-running Origin Energy ((ORG)) takeover negotiations. Origin shares rose 3.2% and the takeover by a US-Canadian private equity consortium has this morning been confirmed, pending the usual yada yada.
Last man standing AGL Energy ((AGL)) also rose 3.2%.
The other move of note was real estate (+1.1%), with bond yields dipping slightly (slightly does rather have a new meaning in bond markets these days). US bond yields shot back up last night so we could well see real estate and energy swap places today.
Materials closed flat on the session as gold miners managed to hold out slight falls in the big miners and a tedious down-day for lithium miners, despite the gold price falling on Friday night. It fell further last night.
The big miners were upset by the news Chinese industrial profits fell -23% year on year in January-February.
All other sectors posted modest gains.
The index is struggling to find the traction to get it back to the 7000 level – once support now resistance — and so far relief in the global banking sector has not translated downunder.
Today we’ll see February retail sales data. Is the post-covid honeymoon over?
The futures are up 29 points this morning, outperforming a lacklustre Wall Street.
No global banks blew up over the weekend, which allowed Wall Street to post a modest net gain last night. The Deutsche Bank scare seems to have subsided.
North Carolina-based First Citizens BancShares has bought around US$72bn of Silicon Valley Bank’s assets from the FDIC at a discount, leaving a further US$90bn worth in receivership. FCB shares jumped 54%, so it must have been a nice discount. The regional bank has a track record of buying troubled peers.
First Republic Bank, seen recently as next most likely, rose 12%.
The news also had US bond yields surging again. The ten-year jumped 16 points to 3.54% and the two-year 23 points to 4.01%.
This weighed on interest rate-sensitive sectors, hence real estate, technology and communication services saw falls on the day while all else rose. The latter two led to Nasdaq underperformance in a more recognisable fashion.
Financials and energy were the outperformers.
Debate rages over whether the Fed will now pause or go yet another 25 points in May. The market has the odds at around 50/50. But May is a while away.
In between there will be Friday night’s PCE numbers to ponder, both the March and April CPIs, and the March jobs report.
Plus the March quarter US earnings season, which will kick off in a couple of weeks’ time.
The suggestion is that given the volatility of March and the general credit crunch scare, and subsequent recession talk, this will be the quarter managements rein in their expectations and cautiously issue downbeat guidance.
And maybe another bank will blow up in the meantime.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1957.10||– 21.10||– 1.07%|
|Silver (oz)||23.06||– 0.14||– 0.60%|
|Copper (lb)||4.01||– 0.01||– 0.17%|
|Aluminium (lb)||1.17||+ 0.02||1.42%|
|Lead (lb)||0.97||– 0.00||– 0.48%|
|Nickel (lb)||10.49||+ 0.11||1.08%|
|Zinc (lb)||1.32||+ 0.01||0.71%|
|West Texas Crude||73.01||+ 3.75||5.41%|
|Brent Crude||78.21||+ 3.22||4.29%|
|Iron Ore (t)||126.01||0.00||0.00%|
About half a percent of global oil supply, or 450,000 barrels per day of crude exports from Iraq’s autonomous region of Kurdistan stopped on Saturday after a victory in an arbitration case confirmed Baghdad’s consent was needed to ship the oil from Turkey, which could force Kurdistan into production cuts.
Add in the general relief being felt in markets last night and the fact long positions in oil futures had fallen to very low by the time WTI fell below US$70/bbl, and the stage was set for a snapback rally.
Elsewhere, the bounce-back in US yields has stymied gold’s run to beyond 2000.
The Aussie is down slightly at US$0.6650.
The SPI Overnight closed up 29 points or 0.4%.
We’ll see retail sales today and the US will see consumer confidence and house prices tonight.
AUB Group ((AUB)) holds its AGM today, Reliance Worldwide ((RWC)) hosts an investor day and Atlas Arteria ((ALX)) goes ex.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|ALQ||ALS Ltd||Upgrade to Lighten from Sell||Ord Minnett|
|APE||Eagers Automotive||Upgrade to Buy from Hold||Bell Potter|
|APX||Appen||Downgrade to Sell from Hold||Bell Potter|
|CHC||Charter Hall||Upgrade to Buy from Accumulate||Ord Minnett|
|MCR||Mincor Resources||Downgrade to Hold from Buy||Bell Potter|
|MYR||Myer||Upgrade to Hold from Lighten||Ord Minnett|
|PMV||Premier Investments||Upgrade to Lighten from Sell||Ord Minnett|
|Downgrade to Neutral from Buy||UBS|
|UMG||United Malt||Upgrade to Buy from Neutral||UBS|
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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