Daily Market Reports | Mar 09 2021
This story features TREASURY WINE ESTATES LIMITED. For more info SHARE ANALYSIS: TWE
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Mar) | 6782.00 | + 48.00 | 0.71% |
| S&P ASX 200 | 6739.60 | + 28.80 | 0.43% |
| S&P500 | 3821.35 | – 20.59 | – 0.54% |
| Nasdaq Comp | 12609.16 | – 310.99 | – 2.41% |
| DJIA | 31802.44 | + 306.14 | 0.97% |
| S&P500 VIX | 25.47 | + 0.81 | 3.28% |
| US 10-year yield | 1.60 | + 0.04 | 2.70% |
| USD Index | 92.38 | + 0.40 | 0.43% |
| FTSE100 | 6719.13 | + 88.61 | 1.34% |
| DAX30 | 14380.91 | + 460.22 | 3.31% |
By Greg Peel
Lunchtime Swoon
It is not unusual for a stock market to quietly roll over in the afternoon to a lesser gain on the day if the morning session shows signs of over-exuberance. But that’s not what happened yesterday on the ASX.
On the strength of Wall Street’s big rebound rally on Friday night, driven by solid jobs numbers, and news over the weekend Biden’s stimulus bill had passed, to which Wall Street was yet to respond, the ASX200 opened up 125 points yesterday, having been down -50 on Friday. A bit over-enthusiastic perhaps, but in the context of recent volatility, not a surprise.
The index held onto those gains right through the morning, and then precisely at 1.10pm the bottom fell out. It was not a rollover as such.
There was no data release and no market-moving news, and it had nothing to do with the market’s greatest fear du jour – bond rates. The Aussie ten-year fell -6 basis points on the day. It appears that someone decided over chateaubriand and claret that it was all too much.
Or a big sell order hit the market, possibly from offshore. In such instances, traders tend to just get out of the way. The index fell -110 points in a largely straight line to the close. This morning, with the S&P500 down -0.5% overnight, our futures are up 48 points, suggesting a return to normal programming now whatever it was is out of the way.
In the wash-up, it was again healthcare that copped the brunt in index terms, falling another -0.8%. Technology fell -1.1% led by BNPL, while industrials fell -0.7%.
If ever there was a sector that was set to lag on the day it was materials, given falls overnight in iron ore and copper, but no, a gain of 1.7% won the day by a margin. It was at least a better day for gold miners. It won’t be today.
Further counterbalance was offered by the banks (+0.5%), energy (+0.7%) and staples (+0.7%). Staples were aided by a 6.4% jump for Treasury Wine Estates ((TWE)) on takeover rumours.
The Chinese?
In retrospect the opening 100-plus points on the ASX200 does look a little stretched this morning given Wall Street did not ultimately kick on following the stimulus news, if we take the S&P as the benchmark. It was in no uncertain terms a return to the value-over-growth trade.
It doesn’t bode well once more for our technology sector today, while a -2% flip-over in oil prices will have energy under pressure, and gold’s taken another leg down.
But as noted, the futures are up 48, so the yo-yo spins on.
Value Grows
The excitement the stimulus news might have provoked was not apparent on Wall Street last night, probably a reflection of the strength of the rebound rally on Friday night, and the fact the US ten-year yield rose 4 basis points to 1.60%.
The switch into value from growth played strongly once more under the surface of the S&P’s net -0.5% fall, with the Dow up 1.0% and the Nasdaq down -2.4%. With an hour to go, it was Dow up 500 and Nasdaq down -1.5% with the S&P flat, so once again there was a late sell-off.
Value investors have been waiting for over a decade to have their moment in the sun, and all of a sudden in 2021 they need the factor 30. One wonders what might have been if there never were a covid, given it is the virus that drove everyone into growth stocks and new world stay-at-homes and the vaccine that has driven them all out again, and back into old world industries.
It’s now getting to the point commentators are beginning to question as to whether this long-awaited switch has gone too far, but longstanding value fans point to the duration of their time in the wilderness as to why they’re confident this rotation trade has a lot further to run.
There were several attempts in the second half of 2020 to make this switch, all of which failed. Every time the Big Tech stocks lost some ground the buyers flooded back in. And it worked – the Nasdaq just kept pushing higher.
Right now, the Nasdaq is friendless. Last year, bond yields were the least of anyone’s problem. Tesla is down -37% from its early January high. Maybe there was a clue when the company’s market cap exceeded the market caps of all the major car manufacturers of the US and Europe combined.
Apple is down -20%. Amazon is down -17%. Their only crime was to have become overvalued. Caterpillar is up 20%. American Express is up 28%. These companies were established when Mark Zuckerberg’s grandfather was in nappies.
Exacerbating the switch back into the industries hardest hit by the virus is the fact the vaccine rollout in the US is moving faster than even Joe Biden had hoped. “Herd immunity” is now the big talking point.
The “reopening trade” is gathering momentum, and it doesn’t look like stalling just yet.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1682.20 | – 17.90 | – 1.05% |
| Silver (oz) | 25.15 | – 0.07 | – 0.28% |
| Copper (lb) | 4.05 | + 0.04 | 1.11% |
| Aluminium (lb) | 0.98 | + 0.00 | 0.07% |
| Lead (lb) | 0.91 | – 0.01 | – 0.86% |
| Nickel (lb) | 7.75 | + 0.10 | 1.33% |
| Zinc (lb) | 1.26 | + 0.03 | 2.63% |
| West Texas Crude | 64.65 | – 1.44 | – 2.18% |
| Brent Crude | 67.89 | – 1.47 | – 2.12% |
| Iron Ore (t) | 174.15 | – 0.50 | – 0.29% |
The pullback in the copper price came to a halt last night.
The US$1700/oz mark has failed to hold for gold.
Saudi Arabia has quickly nipped in the bud an attack on its oil facilities by Houthi rebels from Yemen. The Saudis blame the attack on Biden for removing the Houthis from America’s terrorist list. The oils have fallen back after an earlier spike.
Typically if a nation implements massive monetary and fiscal stimulus its currency would pay the cost, but the US dollar had already been well beaten down and is now rebounding on its own reopening trade.
So the good news is the greenback’s up 0.4% and the Aussie’s down -0.4% to US$0.7653.
Today
The SPI Overnight closed up 48 points or 0.7%.
The NAB business confidence survey for February is out today.
There are quite a few ex-divs today.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ARB | ARB Corp | Upgrade to Accumulate from Hold | Ord Minnett |
| MFG | Magellan Financial Group | Downgrade to Neutral from Outperform | Macquarie |
| PAN | Panoramic Resources | Upgrade to Add from Hold | Morgans |
| SM1 | Synlait Milk | Downgrade to Reduce from Hold | Morgans |
| WPL | Woodside Petroleum | Upgrade to Buy from Hold | Ord Minnett |
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For more info SHARE ANALYSIS: TWE - TREASURY WINE ESTATES LIMITED
