Daily Market Reports | Mar 21 2022
This story features LIONTOWN LIMITED, and other companies. For more info SHARE ANALYSIS: LTR
The company is included in ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight | 7339.00 | + 45.00 | 0.62% |
| S&P ASX 200 | 7294.40 | + 43.60 | 0.60% |
| S&P500 | 4463.12 | + 51.45 | 1.17% |
| Nasdaq Comp | 13893.84 | + 279.06 | 2.05% |
| DJIA | 34754.93 | + 274.17 | 0.80% |
| S&P500 VIX | 23.87 | – 1.80 | – 7.01% |
| US 10-year yield | 2.15 | – 0.04 | – 2.01% |
| USD Index | 98.23 | + 0.21 | 0.21% |
| FTSE100 | 7404.73 | + 19.39 | 0.26% |
| DAX30 | 14413.09 | + 25.03 | 0.17% |
By Greg Peel
Misleading
I suggested on Friday morning that despite the futures showing up 37 points following another Wall Street rally, the local market may still see a late sell-off on a Friday in the middle of a war. Anything could happen on the weekend.
And I was right. At 3pm the ASX200 was up 34 points and at the closing bell up 16. But the market match-up on close adjusted that to a 43 gain, impacted apparently by the ASX index rebalance becoming effective.
That notwithstanding, energy was the best performing sector on the day (+2.2%) on the rebound in oil prices, while materials (+1.3%) played its part on general metal/mineral price increases offset by a fall in gold.
Liontown Resources ((LTR)) topped the index (7.8%) after signing a lithium supply deal with Tesla. Paladin Energy ((PDN)) rose 7.0% despite the spot uranium price pulling back for the week, for the first time since February.
Industrials had a good session (+1.6%), with Transurban ((TCL)) one stock to kick up on the close, to be up 2.7% on the day.
Technology gained another 1.6% on the Nasdaq comeback.
It was the consumer sectors that provided the offset. Communication services (which includes telcos) down -0.2%, consumer discretionary down -0.8% and staples down -0.4%. Looks like inflation is biting.
Megaport ((MP1) topped the index losers’ board with an -8.1% fall, but only after an executive sold shares.
Woes continue for the travel agents and Qantas ((QAN)) as aspiring international travellers eye off the rise of omicron BA2 across the globe and fuel cost surcharges on ticket prices. Add in that many a major route connecting Europe, Asia and the US normally fly over the massive landmass that is Russia, but planes now have to take the long way around.
The Bank of Japan met on Friday and despite rising inflation, decided to leave rates on hold at zero and QE in place. After decades of no inflation, the BoJ just wants to see what it feels like.
Meanwhile, the Aussie ten-year yield pushes ever higher, up another 5 points on Friday to 2.56%.
Biden met with Xi by video on Friday night and laid out just what China would cop, sanction-wise, were it found to be helping Russia.
Otherwise there was nothing much new in the war over the weekend other than observers noting the heroic efforts of the Ukrainians to slow the Russian advance (yay!) are only making Putin ever more frustrated (boo!), leading to growing anxiety that even more deadly force may be deployed.
Still More of the Same
Yet the Wall Street rebound presses on, with Friday night marking the forth session of solid gains.
The Dow closed up 5.5% for the week, the S&P500 6.2% and the Nasdaq 8.2%, to mark the best week since November 2020 (vaccines announced).
Having initially fallen in January on the Fed-scare, the S&P500 made it about half way back before the invasion in late February. It is now about half way back again, from its early January high.
That puts the S&P back above its pre-invasion level.
There is little doubt Wall Street has seen a bottom for now, having rebounded from an oversold position, hence debate now moves to how far this rebound can run before valuations are more in line and the rally runs out of puff.
Wall Street may have been oversold but there is still a war on, covid refuses to go away, and sanctions on Russia are set to drag on the whole global economy.
Most notable is the VIX volatility index on the S&P. It traded up into the 30s when Russia invaded and hung there until this week’s rebound. It’s now back at 23, when 20 is considered the line between complacency and anxiety.
When Wall Street becomes too complacent, bad things happen.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1921.90 | – 19.70 | – 1.01% |
| Silver (oz) | 24.98 | – 0.39 | – 1.54% |
| Copper (lb) | 4.65 | + 0.06 | 1.20% |
| Aluminium (lb) | 1.63 | + 0.00 | 0.23% |
| Lead (lb) | 1.01 | + 0.00 | 0.49% |
| Nickel (lb) | 16.69 | ||
| Zinc (lb) | 1.75 | + 0.01 | 0.73% |
| West Texas Crude | 104.70 | + 1.09 | 1.05% |
| Brent Crude | 107.93 | + 1.03 | 0.96% |
| Iron Ore (t) | 151.35 | + 4.45 | 3.03% |
Ignore the actual nickel prices noted above. When nickel trading opened on the LME on Friday night immediately the price went “limit-down”, indeed beyond the limit at -5% all the way to -12%, trading was immediately halted and trades below -5% cancelled.
Thus actual price discovery is impossible at this point.
Meanwhile, Beijing has reiterated its intention to support the troubled Chinese property market (haven’t heard much from Evergrande lately) as part of its economic rescue package, supporting the likes of copper and iron ore which are primary inputs to construction.
The US ten-year yield actually fell on Friday night by -4 points to 2.15%, but gold seems determined to return home to US$1900/oz after a brief holiday up at US$2000/oz.
There is now little day-to-day correlation between movements in the Aussie and the US dollar, with commodity prices front and centre. The greenback’s up 0.2% and the Aussie’s up 0.4% at US$0.7409.
The SPI Overnight closed up 45 points or 0.6% on Saturday morning.
More of the same.
The Week Ahead
It’s a comparatively quiet week economically this week, and on the local corporate front.
The US will see numbers for durable goods orders, new home sales and consumer sentiment.
Thursday brings flash estimates of global manufacturing PMIs for March.
Japan is closed today.
Nothing major in Australia this week.
The ex-dividend season is now rapidly winding down.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| CLV | Clover | Downgrade to Neutral from Buy | UBS |
| PRU | Perseus Mining | Downgrade to Neutral from Buy | Citi |
| UWL | Uniti Group | Downgrade to Hold from Buy | Ord Minnett |
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: LTR - LIONTOWN LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED
For more info SHARE ANALYSIS: QAN - QANTAS AIRWAYS LIMITED
For more info SHARE ANALYSIS: TCL - TRANSURBAN GROUP LIMITED