Daily Market Reports | Feb 26 2021
This story features SANDFIRE RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: SFR
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Mar) | 6696.00 | – 97.00 | – 1.43% |
| S&P ASX 200 | 6834.00 | + 56.20 | 0.83% |
| S&P500 | 3829.34 | – 96.09 | – 2.45% |
| Nasdaq Comp | 13119.43 | – 478.54 | – 3.52% |
| DJIA | 31402.01 | – 559.85 | – 1.75% |
| S&P500 VIX | 28.89 | + 7.55 | 35.38% |
| US 10-year yield | 1.52 | + 0.13 | 9.29% |
| USD Index | 90.22 | + 0.09 | 0.10% |
| FTSE100 | 6651.96 | – 7.01 | – 0.11% |
| DAX30 | 13879.33 | – 96.67 | – 0.69% |
By Greg Peel
Oh God It’s Friday
Here we go again. The madness continues. Strap in.
It was last Friday the local market went into a tailspin when a sudden spike in an already strong Aussie dollar sparked a swift bout of profit-taking in stocks. The week before, we’d seen a sudden sell-off one day when the Australian ten-year yield jumped a handful of basis points to over 1.30%.
Yesterday the Australian ten-year jumped 16 basis points to 1.72%. Did we blink? No. The ASX200 rose 56 points. Last night the Aussie collapsed a full cent, having hit US80c yesterday. So today we buy? No, the futures are down a hundred points this morning.
Adding to the irony is the fact the futures are down because Wall Street is down, and Wall Street is down because the US ten-year yield jumped 13 basis points to 1.52% last night. The Aussie is down sharply overnight, but the interest yield spread from them to us has widened (Aussie 10-year now at 1.89%).
The drop in the Aussie probably reflects a sudden bout of profit-taking after a solid run-up over the past couple of weeks, triggered by hitting the 80 mark, despite another solid night for commodity prices. By rights that should temper inevitable falls on our stock market today, but it won’t.
Not only is today Friday, it’s also the last trading day of the month. Chances are that by the close today, we will have wiped out just about all of the month’s gains.
Not much point in dwelling on yesterday’s sector moves. We recall however that there is a results season underway, which mercifully ends today. Some highlights from yesterday:
Reporting good numbers and being rewarded were Sandfire Resources ((SFR)), up 11.1%, Clinuvel Pharma ((CUV)), up 9.2%, Bravura Solutions ((BVS)), up 8.1% and Ramsay Health Care ((RHC)), up 7.7%. Flight Centre ((FLT)) reported a shocker, of course, but an upbeat outlook and a big short position had that stock up 8.9%.
Nanosonics ((NAN)) was trashed on Wednesday on its result, but an “overdone” call from brokers and two upgrades in the FNArena database had the stock up 9.5% yesterday. Nanosonics also has a big short position.
Service Stream ((SSM)) was the day’s biggest loser, down -21.4% on report, followed by a2 Milk ((A2M)), down -16.2%. Also reporting on the day were Regis Resources ((RRL)), down -7.9% and Zip Co ((Z1P)), down -7.7%.
So just how far will we fall today? The futures say a hundred. Metals prices are up again (except gold) and the Aussie is down a cent. The perfect scenario for the materials sector (ex-gold) and pretty good for energy, with oil prices steady.
Rising bond yields are great news for banks. But, it will be a case of sell first and ask questions later. And computers don’t ask questions.
Hello? Anyone?
Suppose you held a bond auction and nobody came.
That’s what happened to the US Treasury last night when it tried to auction off a tranche of seven-year bonds. Demand was a weak as anyone could remember for a very long time. No one, it seems, is too keen to lend money to the US government. Not ahead of another massive stimulus package being funded.
US bond yields immediately spiked all along the curve. The ten-year, which had found some stability this week just below 1.40%, hit 1.63%, before settling back at 1.52%.
Simmering fears of a solid rebound in the US economy and subsequent inflation pressures re-ignited and it was Goodnight Irene, led by the Nasdaq.
There was a late attempt to recover, then another wave hit, and only a final burst prevented the indices from closing on their lows for the day.
On Tuesday night Wall Street had staved off what looked like an attempt by hedge funds to trigger the Nasdaq correction many were fearing. The Nasdaq fell -4% but it didn’t work. The Dow had dropped early as well but rallied back to close higher, and then on relief the correction did not transpire, Wall Street ran up solidly on Wednesday night.
From Tuesday’s low to Wednesday’s close, the Dow put on some 780 points.
And then proceeded to lose a good chunk of those last night. At this stage the Dow is roughly square for the week. But tonight is also the last trading day of the month on Wall Street.
US durable goods orders rose 1.4% in January to mark the biggest rise in six months. New jobless claims fell back to 730,000 last week, down -111,000 from the week before. Earlier in the year, this would have been great news for Wall Street.
But not now that bonds are responding in kind…
Another problem for investors is the vast bulk of retirement savings are held in passive, so-called balanced funds, which carry a 60/40 equity/fixed income allocation. The point being, normally, if stocks go down bonds go up (in price), and vice-versa. Hence the “balance”.
Last night both were heavily sold.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1771.20 | – 28.50 | – 1.58% |
| Silver (oz) | 27.43 | – 0.41 | – 1.47% |
| Copper (lb) | 4.28 | + 0.08 | 1.90% |
| Aluminium (lb) | 1.00 | + 0.02 | 2.01% |
| Lead (lb) | 0.97 | + 0.01 | 1.10% |
| Nickel (lb) | 8.71 | – 0.17 | – 1.88% |
| Zinc (lb) | 1.31 | + 0.02 | 1.89% |
| West Texas Crude | 63.49 | + 0.36 | 0.57% |
| Brent Crude | 66.99 | + 0.04 | 0.06% |
| Iron Ore (t) | 174.30 | + 1.80 | 1.04% |
A familiar sight in metals, other than nickel pulling back a tad.
The big fall in gold is all about bonds.
The oils are holding their own on ongoing limited US supply.
The US dollar is little moved, and the Aussie is down -1.2% at US$0.7859.
Today
The SPI Overnight closed down -97 points or -1.4%.
Australian private sector credit numbers for January are due today.
China releases February PMIs.
The US will see January’s read on PCE inflation. Be afraid.
There will be a couple of stragglers early next week but otherwise today is the last day of the February result season. The list is a little smaller today than the past two peak days, but not by much.
If I had to pick a highlight today it would be Harvey Norman ((HVN)).
Note Coles ((COL)) goes ex today.
FNArena's Corporate Results Monitor is updated daily throughout the month: https://www.fnarena.com/index.php/reporting_season/
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ABY | ADORE BEAUTY GROUP | Upgrade to Buy from Neutral | UBS |
| APA | APA | Upgrade to Buy from Hold | Ord Minnett |
| APE | EAGERS AUTOMOTIVE | Upgrade to Outperform from Neutral | Macquarie |
| Upgrade to Accumulate from Hold | Ord Minnett | ||
| ASB | Austal | Upgrade to Hold from Lighten | Ord Minnett |
| ATL | Apollo Tourism & Leisure | Downgrade to Lighten from Hold | Ord Minnett |
| BIN | Bingo Industries | Downgrade to Neutral from Outperform | Credit Suisse |
| BOQ | Bank Of Queensland | Upgrade to Add from Hold | Morgans |
| CCX | City Chic | Downgrade to Neutral from Buy | Citi |
| CGC | Costa Group | Downgrade to Neutral from Outperform | Credit Suisse |
| Downgrade to Neutral from Buy | UBS | ||
| FCL | Fineos Corp | Downgrade to Hold from Accumulate | Ord Minnett |
| HLO | HELLOWORLD TRAVEL | Upgrade to Hold from Lighten | Ord Minnett |
| HVN | Harvey Norman Holdings | Downgrade to Neutral from Outperform | Credit Suisse |
| IDX | Integral Diagnostics | Downgrade to Neutral from Outperform | Credit Suisse |
| JHC | Japara Healthcare | Downgrade to Accumulate from Buy | Ord Minnett |
| LLC | Lendlease | Upgrade to Outperform from Neutral | Credit Suisse |
| MGX | Mount Gibson Iron | Downgrade to Neutral from Outperform | Macquarie |
| MPL | Medibank Private | Upgrade to Neutral from Underperform | Macquarie |
| Upgrade to Add from Hold | Morgans | ||
| MWY | Midway | Upgrade to Buy from Hold | Ord Minnett |
| NAN | Nanosonics | Upgrade to Add from Hold | Morgans |
| Upgrade to Hold from Lighten | Ord Minnett | ||
| NHC | New Hope Corp | Upgrade to Neutral from Underperform | Macquarie |
| NTD | National Tyre & Wheel | Hold | Morgans |
| NXT | Nextdc | Upgrade to Buy from Accumulate | Ord Minnett |
| SCG | Scentre Group | Downgrade to Neutral from Outperform | Credit Suisse |
| SEK | Seek Ltd | Upgrade to Buy from Neutral | UBS |
| Downgrade to Underperform from Neutral | Macquarie | ||
| TYR | Tyro Payments | Upgrade to Buy from Accumulate | Ord Minnett |
| WSA | Western Areas | Upgrade to Outperform from Neutral | Macquarie |
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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CHARTS
For more info SHARE ANALYSIS: A2M - A2 MILK COMPANY LIMITED
For more info SHARE ANALYSIS: BVS - BRAVURA SOLUTIONS LIMITED
For more info SHARE ANALYSIS: COL - COLES GROUP LIMITED
For more info SHARE ANALYSIS: CUV - CLINUVEL PHARMACEUTICALS LIMITED
For more info SHARE ANALYSIS: FLT - FLIGHT CENTRE TRAVEL GROUP LIMITED
For more info SHARE ANALYSIS: HVN - HARVEY NORMAN HOLDINGS LIMITED
For more info SHARE ANALYSIS: NAN - NANOSONICS LIMITED
For more info SHARE ANALYSIS: RHC - RAMSAY HEALTH CARE LIMITED
For more info SHARE ANALYSIS: RRL - REGIS RESOURCES LIMITED
For more info SHARE ANALYSIS: SFR - SANDFIRE RESOURCES LIMITED
For more info SHARE ANALYSIS: SSM - SERVICE STREAM LIMITED