Daily Market Reports | Apr 19 2021
This story features ORIGIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: ORG
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7071.00 | + 37.00 | 0.53% |
| S&P ASX 200 | 7063.50 | + 4.90 | 0.07% |
| S&P500 | 4185.47 | + 15.05 | 0.36% |
| Nasdaq Comp | 14052.34 | + 13.58 | 0.10% |
| DJIA | 34200.67 | + 164.68 | 0.48% |
| S&P500 VIX | 16.25 | – 0.32 | – 1.93% |
| US 10-year yield | 1.57 | + 0.04 | 2.81% |
| USD Index | 91.56 | – 0.11 | – 0.12% |
| FTSE100 | 7019.53 | + 36.03 | 0.52% |
| DAX30 | 15459.75 | + 204.42 | 1.34% |
By Greg Peel
China Syndrome
The local market began in typical Friday profit-taking style after a solid week's rally, chopping its way downward from the open. Then when China's GDP result and other data were released, it chopped down further, to be off -28 points at lunchtime.
China's GDP grew a record 18.3% in the March quarter year on year. Looks remarkable, but the result was cycling last March quarter when China was in lockdown. That quarter saw a record -6.8% contraction; the first ever contraction since data began being measured.
On a quarter on quarter basis, China's economy actually contracted -0.6% in the quarter, missing forecasts.
In the month of March, industrial production grew 14.1% year on year, down from 35.1% in January-February and missing forecasts of 18%. Retail sales grew 34.2%, up from 33.8% in Jan-Feb, and beating a 28% forecast. Fixed asset investment grew 25.6% in the year to March compared with 35.0% in the year to February, missing 26% expectation.
So a little bit disappointing overall, buy it mattered not given the ASX200 bottomed out thereafter and shot straight back up to where it started by the close. The buyers are still out there.
The energy sector was the standout mover on the day, falling -1.5% despite oil prices rising overnight. The problem was an -8.9% drop for Origin Energy ((ORG)) after the company was ordered to pay more for gas from Beach Energy ((BPT)) following a contract review. Beach rose 4.6%.
Origin peer AGL Energy ((AGL)) fell in sympathy to send the utilities sector down -0.6%. The banks (-0.4%) and staples (-0.4%) were the other negative performers.
REITs were the winners on the day (+1.5%), while all other sectors closed modestly higher.
Resource sector contractor Monadelphous ((MND)) topped the index winners on the day with a 5.9% gain after reaching a settlement with Rio Tinto ((RIO)) regarding a fire at the latter's iron ore port way back in the mists of time 2019.
It was another positive session for gold miners, as the bitcoin rival spent all week trying to regain some status on falling US bond yields, including another nice rally on Friday night.
Another night, another rally on Wall Street and on Saturday morning our futures were up 37 points, suggesting a shake-off of Chinese data and onward for the ASX200 beyond the 7000 mark.
More of the Same
The Dow and S&P500 hit new record highs on Friday night yawn while the Nasdaq is just shy of its record. The flip-flop of the rotation trade flopped to see the Dow outpace the Nasdaq as the US ten-year yield bounced back 4 basis points to 1.57%, but the upward trend remains intact.
The fortnightly Michigan Uni consumer sentiment index showed a rise to a one-year high of 86.5, albeit below expectation. US housing starts jumped 19.4% in March to a 15-year high, rebounding from the Big Freeze in February.
So the strong economic data keep rolling in, and all the while the Fed remains unmoved and bond yields mostly behave themselves. The suggestion is that the recent failure of US yields to respond to positive data, as was the case last month, is all about foreign buyers.
While the US economy surges ahead, and 50% of adult Americans have now received at least one dose of vaccine, economies in Europe, Japan and elsewhere are still struggling with the virus, vaccine rollouts, and economic recovery. Hence bond rates in these regions remain low to negative, making US yields look increasingly attractive as a safe place to park funds.
This suggests US inflation can run riot, and it won't matter.
So for now, there's simply nothing on the horizon to kill off the Wall Street rally, unless the deluge of earnings reports due this week and next are not up to expectation. Or if the market becomes simply too exuberant.
Morgan Stanley was the biggie among another night of bank earnings on Friday night, and like its peers posted a solid beat. But the stock fell -3% because that beat would have been even stronger were it not for a near -US$1bn loss from its Archegos positions.
Morgan Stanley, it now has been revealed, had been Archegos' prime broker for a decade and before the proverbial hit the fan, its biggest, and had no idea the fund had been replicating the same trades with several other banks on the street. The loss still pales into insignificance against losses incurred by Credit Suisse and Nomura, and compared to Morgan Stanley's trading revenues overall for the quarter.
So Wall Street is set up to absorb all this week's earnings reports, and so far beats have been met with share price gains other than the odd exception (Morgan Stanley).
But its early days.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1776.50 | + 12.90 | 0.73% |
| Silver (oz) | 25.95 | + 0.13 | 0.50% |
| Copper (lb) | 4.20 | + 0.03 | 0.65% |
| Aluminium (lb) | 1.04 | – 0.01 | – 1.04% |
| Lead (lb) | 0.90 | – 0.00 | – 0.40% |
| Nickel (lb) | 7.27 | – 0.00 | – 0.04% |
| Zinc (lb) | 1.28 | + 0.02 | 1.61% |
| West Texas Crude | 63.13 | – 0.33 | – 0.52% |
| Brent Crude | 66.77 | – 0.08 | – 0.12% |
| Iron Ore (t) | 177.85 | + 0.55 | 0.31% |
Gold appears currently to be trading on its own momentum, given US bond yields rose on Friday night.
Despite a -0.1% fall in the US dollar index, the Aussie is down -0.3% at US$0.7731.
The SPI Overnight closed up 37 points or 0.5% on Saturday morning.
The Week Ahead
The Australian quarterly reporting season is not, as is the case in the US, official, or mandatory, but has become a surrogate in recent times nonetheless. Quarterly reports/updates begin to flow freely from this week.
On the economic front, the minutes of the April RBA meeting are out tomorrow and Wednesday sees a preliminary look at March retail sales.
The US will see numbers for new and existing home sales later in the week and on Friday, flash estimates of April manufacturing PMIs will be provided across the globe.
The ECB holds a policy meeting on Thursday.
Australian Pharmaceutical Industries ((API)) posts an actual earnings report on Friday.
The Australian share market over the past thirty days
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ABP | Abacus Property Group | Upgrade to Accumulate from Hold | Ord Minnett |
| BOQ | Bank Of Queensland | Upgrade to Accumulate from Hold | Ord Minnett |
| NSR | National Storage | Downgrade to Hold from Accumulate | Ord Minnett |
| RRL | Regis Resources | Downgrade to Hold from Buy | Ord Minnett |
| WES | Wesfarmers | Upgrade to Hold from Lighten | Ord Minnett |
| WHC | Whitehaven Coal | Downgrade to Neutral from Outperform | Credit Suisse |
| Z1P | Zip Co | Upgrade to Buy from Neutral | Citi |
For more detail go to FNArena's Australian Broker CallReport, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: AGL - AGL ENERGY LIMITED
For more info SHARE ANALYSIS: BPT - BEACH ENERGY LIMITED
For more info SHARE ANALYSIS: MND - MONADELPHOUS GROUP LIMITED
For more info SHARE ANALYSIS: ORG - ORIGIN ENERGY LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED