Daily Market Reports | Mar 30 2021
This story features ANZ GROUP HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: ANZ
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 6804.00 | + 44.00 | 0.65% |
| S&P ASX 200 | 6799.50 | – 24.70 | – 0.36% |
| S&P500 | 3971.09 | – 3.45 | – 0.09% |
| Nasdaq Comp | 13059.65 | – 79.08 | – 0.60% |
| DJIA | 33171.37 | + 98.49 | 0.30% |
| S&P500 VIX | 20.74 | + 1.88 | 9.97% |
| US 10-year yield | 1.72 | + 0.06 | 3.67% |
| USD Index | 92.93 | + 0.16 | 0.17% |
| FTSE100 | 6736.17 | – 4.42 | – 0.07% |
| DAX30 | 14817.72 | + 68.78 | 0.47% |
By Greg Peel
Whatever floats your boat
After a solid session on Wall Street on Friday night, the local market was looking forward to a strong start yesterday, with the futures showing up 49 points. The ASX200 only made it up 36 points in the first fifteen minutes before the index turned tailed and plunged -66 points.
Why? Take your pick.
Brisbane has gone back into lockdown, just ahead of Easter. The cluster has grown to seven so the possibility of the current three-day sentence may yet be extended into weekend. State borders have once more slammed shut, albeit only to Greater Brisbane. But how might this impact holiday makers headed for the north of the state who have to pass through Brisbane airport?
The quarter mile-long container ship wedged in the Suez Canal had by yesterday been partially floated, and last night it sailed away. Oil prices started falling, with supply now flowing. (But is it? More on that below.)
A little known US hedge fund has defaulted on margin calls, impacting five major global banks stuck with the fund’s underwater positions. Small fund but big dollars. Ramifications yet unclear. More on this below.
Having bottomed out down -30 points yesterday, the index recovered slightly to the close. Interestingly, the market bounced when the index hit 6800. Resistance now support?
Also interesting is this morning’s futures trade. With the S&P500 basically flat, our futures are up 44 points, as if none of the above has any relevance.
Technology was the worst hit sector yesterday by a margin (-2.8%). This despite a good session from the Nasdaq on Friday night. Afterpay ((APT)) fell -4.2% for no particular reason other than perhaps end-of-quarter squaring, and the other BNPL-ers followed suit.
Torrid times continue among disruptor wealth platforms after ANZ Bank ((ANZ)) pulled the pin on deposits. Netwealth ((NWL)) fell another -5.2%. Brokers are more circumspect, and indeed Citi upgraded Netwealth to Buy on Friday, but investors are bailing anyway.
Netwealth, Hub24 ((HUB)) and others are financials, and that sector fell -0.6% yesterday but the banks and insurers carry the market cap. Lockdowns are not bank-positive (noting JobSeeker has also now ended) while insurers have their own problems at present.
The biggest fall beyond tech was in consumer discretionary (-1.4%) as investors again rushed out of travel-related names.
Telcos fell -1.2%, having rallied by as much on Friday. All other sectors closed in the red by varying amounts, except for industrials (+0.3%) and saviour of the day, materials (+1.3%). Four of the top five index winners on the day were materials constituents.
Materials rallied because metal prices rallied. Metal prices rallied due to a supply disruption caused by a big boat being stuck in the Suez Canal. That said, the iron ore price has jumped 4% in the meantime.
No point trying to pull it apart any further. If this time the futures are more accurate, yesterday does not much count.
Eerie Similarities
I haven’t heard anyone mention Long Term Capital Management yet – the hedge fund that imploded in the mid-nineties and threatened to bring down the entire global financial system, forcing central banks to dump loads of gold down into the US$200/oz range. I have nonetheless heard mention that while in a different market (property), this is how the GFC began.
That was the sort of fear that dominated the opening on Wall Street last night, as banks were sold in a rush. Goldman Sachs, Morgan Stanley, Deutsche Bank, Nomura and Credit Suisse were all revealed as counterparties to a family hedge fun no one had heard of called Archegos Capital, which couldn’t make its margin calls. The fund was very highly leveraged, and it is unclear whether the banks above knew of the positions held by the others.
When Archegos defaulted, the banks had no choice but to dump out of the leveraged stock positions. That’s why on Friday night two particular names stood out – Viacom-CBS and Discovery – having fallen -50% over two sessions.
But as the morning wore on, it became clear Goldman, Morgan Stanley and Deutsche had been holding sufficient collateral and had managed the risk sensibly enough to get out with only minimal losses. Not so Nomura and Credit Suisse. The share prices of the other banks mostly recovered early losses but the Japanese and Swiss banks closed down double-digits.
Credit Suisse is also stuck with the collapse of Greensills, which has led the “saviour” of the Whyalla steel mill to face bankruptcy.
In the scheme of things, while we’re talking losses of over a billion for the two banks, Archegos is not big. When LTCM went down owing US$6bn we all found that an astonishing number at the time. How times have changed.
There are still questions to be answered but in the end Wall Street picked itself up in the afternoon to post a flattish close for the S&P.
Interestingly, when the US ten-year yield jumped up on Friday night the Nasdaq shrugged, and rallied anyway. Last night the ten-year popped again, up 5 points to 1.71%, and the Nasdaq was back to its old ways.
Hence we saw the familiar pattern of Nasdaq down, Dow up (new record high), but this is distorted by a 2.3% gain for big ticket Boeing, after one airline threw caution to the wind and ordered one hundred 737 Maxes.
There was also relief on the day in various sectors that supply chains would be unlocked again with the Suez back in business.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1710.70 | – 22.60 | – 1.30% |
| Silver (oz) | 24.63 | – 0.40 | – 1.60% |
| Copper (lb) | 4.05 | – 0.03 | – 0.68% |
| Aluminium (lb) | 1.02 | – 0.01 | – 0.71% |
| Lead (lb) | 0.88 | – 0.00 | – 0.11% |
| Nickel (lb) | 7.31 | – 0.07 | – 0.97% |
| Zinc (lb) | 1.27 | – 0.00 | – 0.06% |
| West Texas Crude | 61.65 | + 0.68 | 1.12% |
| Brent Crude | 65.13 | + 0.56 | 0.87% |
| Iron Ore (t) | 167.70 | + 6.25 | 3.87% |
There is a tail-back of some 400 ships. So while oil prices, in particular, did begin to fall on the news, they’re actually up over 24 hours.
Ignoring iron ore, metal prices are down modestly, also due to a stronger greenback.
The point is that while clearing the Canal is a big relief, it’s still going to be a long time before the flow of trade gets back to normal. Those 400 ships have to get through before any new ships can have a turn.
I noted earlier how the LTCM collapse led to massive selling in gold.
The Aussie is steady at US$0.7635.
Today
The SPI Overnight closed up 44 points or 0.7%.
Synlait Milk ((SM1)) reports earnings today but otherwise it’s a big day for ex-dividends – the once-a-season day in which just about all REITs, infra funds and the like hold hands and go ex together.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AWC | Alumina | Upgrade to Neutral from Underperform | Macquarie |
| CMM | Capricorn Metals | Upgrade to Neutral from Underperform | Macquarie |
| COE | Cooper Energy | Downgrade to Hold from Add | Morgans |
| GNC | Graincorp | Upgrade to Outperform from Neutral | Credit Suisse |
| GXY | Galaxy Resources | Upgrade to Buy from Hold | Ord Minnett |
| IAG | Insurance Australia | Upgrade to Add from Hold | Morgans |
| ILU | Iluka Resources | Upgrade to Buy from Hold | Ord Minnett |
| JBH | JB Hi-Fi | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| JMS | JUPITER MINES | Upgrade to Outperform from Neutral | Macquarie |
| MCP | Mcpherson'S | Downgrade to Hold from Buy | Ord Minnett |
| MGX | Mount Gibson Iron | Upgrade to Outperform from Neutral | Macquarie |
| NWL | Netwealth Group | Upgrade to Buy from Neutral | Citi |
| ORE | Orocobre | Upgrade to Buy from Hold | Ord Minnett |
| OSH | Oil Search | Upgrade to Neutral from Underperform | Macquarie |
| PMV | Premier Investments | Upgrade to Accumulate from Hold | Ord Minnett |
| PNV | Polynovo | Upgrade to Outperform from Neutral | Macquarie |
| RSG | Resolute Mining | Downgrade to Neutral from Buy | Citi |
| Downgrade to Underperform from Outperform | Macquarie | ||
| S32 | South32 | 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)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: HUB - HUB24 LIMITED
For more info SHARE ANALYSIS: NWL - NETWEALTH GROUP LIMITED
For more info SHARE ANALYSIS: SM1 - SYNLAIT MILK LIMITED