Daily Market Reports | Mar 26 2021
This story features PREMIER INVESTMENTS LIMITED, and other companies. For more info SHARE ANALYSIS: PMV
The company is included in ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 6774.00 | + 20.00 | 0.30% |
| S&P ASX 200 | 6790.60 | + 11.80 | 0.17% |
| S&P500 | 3909.52 | + 20.38 | 0.52% |
| Nasdaq Comp | 12977.68 | + 15.79 | 0.12% |
| DJIA | 32619.48 | + 199.42 | 0.62% |
| S&P500 VIX | 19.81 | – 1.39 | – 6.56% |
| US 10-year yield | 1.61 | 0.00 | 0.00% |
| USD Index | 92.88 | + 0.29 | 0.31% |
| FTSE100 | 6674.83 | – 38.06 | – 0.57% |
| DAX30 | 14621.36 | + 10.97 | 0.08% |
By Greg Peel
Barrier to Entry
The ASX200 took a while to get going yesterday, flipping around the flatline for a few points here and there, before a cup of coffee around eleven woke the market up. The result was a sharp jump to be up 28 points and just over 6800.
And then it came back down again. On Wednesday, the index had a mid-session spike up to 6796 before falling back. Yesterday, if it wasn’t for a minute-to-midnight spurt on the closing settlement, it would have been a slightly weak close.
Yet again 6800 is proving a line the index is unable to meaningfully cross.
On Tuesday night the S&P500 was down -0.6% and the ASX200 rose 30-odd points on the Wednesday, and on Wednesday night the S&P lost -0.7% while yesterday the ASX200 closed up 11. Clearly we are not, for the moment at least, much interested in what’s happening across the water.
Although the technology sector did post a -1.1% fall yesterday to the Nasdaq’s -2%, which is more like what we’re used to.
Otherwise it was all down to healthcare once more (+1.0%) on another big fall in the Aussie. The Aussie is steady this morning.
Financials and staples were the only other sectors to close in the red yesterday, but only just, while among all the green sectors, consumer discretionary posted the only move of any note (+0.7%).
Premier Investments ((PMV)) was up again (4.6%) following its result on Wednesday. But the currency also had Aristocrat Leisure ((ALL)) up again (1.2%), which has the clout in the sector.
Energy was interesting, rising only 0.3% when oil prices rose 6%, but then it didn’t much panic when oil prices fell -6% the night before.
Prices were down -4% last night, but it appears investors are not interested in getting giddy on this recent volatility.
Despite mostly modest moves in sectors, there were some sizeable moves in individual stocks.
To the upside, a strong earnings result from Brickworks ((BKW)) had it up 4.7%, its cross-shareholder WH Soul Pattinson ((SOL)), which reports today, up 4.3%, and its competitor, Adbri ((ABC)), up a chart-topping 5.3%.
There was some carnage on the downside.
Highlighting the risks of dealing with governments in deepest darkest Africa, Resolute Mining’s ((RSG)) Bibiani gold mine in Ghana, of which the government owns 10%, suddenly had its lease terminated without explanation. The stock fell -26.2%.
And speaking of terminations, ANZ Bank ((ANZ)) will terminate its deposit arrangement with financial platform operator Netwealth ((NWL)) in 12 months. What to do about deposits in a zero-rate world has been the big challenge for the disruptor wealth platforms for a year now, thus while Netwealth fell -13.7%, rival Hub24 ((HUB)) fell -14.0% in sympathy.
Wall Street staged a big turnaround from the depths last night, leading to a net 0.5% gain for the S&P. Our futures are up 20 points, or 0.3%, this morning.
But it didn’t happen
US weekly new jobless claims fell to 684,000 last week from 770,000 the week before, and well below 730,000 forecasts. It was the first number below 700,000 in a year, and indeed the lowest number since covid kicked in.
This has been a closely watched series for the past twelve months, and has often moved the market notably up or down on good or bad numbers. But last night the Dow was down -350 points early in the session.
Why did it go the wrong way? Most likely, stock market investors feared the response to such a good number would be another spike in bond yields, given the connection between employment and inflation. But it didn’t happen.
The US ten-year yield closed unchanged at 1.61%.
Hence around mid-morning the major indices turned, and turned hard. The Dow closed up 200. The S&P largely matched, while the Nasdaq again underperformed, but still finished in the green.
For once there was no late selling to spoil the party.
The end of the March quarter is approaching, and a difficult quarter for investors it has been. Over the previous three quarters, the only way has been up. In this quarter, the only way has been in different directions. Value/cyclicals have won over growth, but on any given day that rotation has flipped and flopped.
Bond yields have spiked up, only to add another complication for fund managers now beginning to square up for quarter-end and reposition their portfolios for the next quarter. The rotation trade has occasionally had the wobbles of late, and had appeared perhaps to have gone too far, but then the out-of-box 2020 covid winners are still being put back in the box.
The US ten-year yield began the quarter at 0.9% and has rallied 70 basis points to now. This implies lower bond prices, which makes allocation decisions harder still for fund managers, particularly those managing standard 60/40 equity/fixed income funds. Where are things headed in the June quarter?
Wall Street has four more sessions until quarter-end so things could get messy before Easter.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1727.40 | – 6.70 | – 0.39% |
| Silver (oz) | 25.06 | – 0.01 | – 0.04% |
| Copper (lb) | 3.99 | – 0.09 | – 2.16% |
| Aluminium (lb) | 1.00 | + 0.00 | 0.46% |
| Lead (lb) | 0.87 | – 0.00 | – 0.16% |
| Nickel (lb) | 7.31 | – 0.05 | – 0.63% |
| Zinc (lb) | 1.26 | – 0.02 | – 1.56% |
| West Texas Crude | 58.42 | – 2.39 | – 3.93% |
| Brent Crude | 61.78 | – 2.27 | – 3.54% |
| Iron Ore (t) | 160.20 | + 0.65 | 0.41% |
Oil prices dropped -6% on Tuesday night when Germany extended its lockdown through Easter, but jumped back 6% on Wednesday night when a ship became wedged in the Suez Canal.
Amid howls of protest, Angular Merkin has now reversed her Easter decision and meanwhile the attempt to use tugs to shift the stuck boat have failed. Talk now is of choppering off the containers one by one.
But oil prices fell -4% last night. The suggestion is that while yes, the boat is stuck, it won’t be stuck forever, and while Germany will be open for Easter, a lot of the rest of Europe will not. Thus demand remains constrained, even if supply is temporarily disrupted.
On a night in which aluminium has breached the US$1/lb mark, copper has fallen below the US$4/lb mark. General weakness in base metal prices is being blamed on the ongoing US dollar rally.
After a couple of big falls, the Aussie is having a rest at US$0.7581.
Today
The SPI Overnight closed up 20 points or 0.3%.
The US will see February personal income & spending data tonight, which include PCE inflation. A strong number here will be interesting.
WH Soul Pattinson reports earnings.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BEN | Bendigo And Adelaide Bank | Upgrade to Outperform from Neutral | Macquarie |
| CBA | Commbank | Upgrade to Neutral from Underperform | Macquarie |
| CSL | CSL | Upgrade to Outperform from Neutral | Credit Suisse |
| DHG | Domain Holdings | Downgrade to Neutral from Outperform | Macquarie |
| GNC | Graincorp | Upgrade to Outperform from Neutral | Credit Suisse |
| PMV | Premier Investments | Upgrade to Accumulate from Hold | Ord Minnett |
| PNV | Polynovo | Upgrade to Outperform from Neutral | Macquarie |
| REA | REA Group | Upgrade to Outperform from Neutral | Macquarie |
| RSG | Resolute Mining | Downgrade to Neutral from Buy | Citi |
| Downgrade to Underperform from Outperform | Macquarie | ||
| SIG | Sigma Healthcare | Downgrade to Neutral from Buy | Citi |
| URW | Unibail-Rodamco-Westfield | Downgrade to Sell from Hold | Ord Minnett |
| WBC | Westpac Banking | Downgrade to Neutral from Outperform | Macquarie |
| WTC | Wisetech Global | Upgrade to Outperform from Neutral | Macquarie |
| XRO | Xero | Upgrade to Outperform from Neutral | Credit Suisse |
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.)
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CHARTS
For more info SHARE ANALYSIS: ABC - ADBRI LIMITED
For more info SHARE ANALYSIS: ALL - ARISTOCRAT LEISURE LIMITED
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: BKW - BRICKWORKS LIMITED
For more info SHARE ANALYSIS: HUB - HUB24 LIMITED
For more info SHARE ANALYSIS: NWL - NETWEALTH GROUP LIMITED
For more info SHARE ANALYSIS: PMV - PREMIER INVESTMENTS LIMITED
For more info SHARE ANALYSIS: RSG - RESOLUTE MINING LIMITED
For more info SHARE ANALYSIS: SOL - WASHINGTON H. SOUL PATTINSON AND COMPANY LIMITED