Daily Market Reports | Apr 26 2021
This story features KOGAN.COM LIMITED, and other companies. For more info SHARE ANALYSIS: KGN
The company is included in ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7010.00 | – 15.00 | – 0.21% |
| S&P ASX 200 | 7060.70 | + 5.30 | 0.08% |
| S&P500 | 4180.17 | + 45.19 | 1.09% |
| Nasdaq Comp | 14016.81 | + 198.39 | 1.44% |
| DJIA | 34043.49 | + 227.59 | 0.67% |
| S&P500 VIX | 17.33 | – 1.38 | – 7.38% |
| US 10-year yield | 1.57 | + 0.01 | 0.84% |
| USD Index | 91.28 | + 0.15 | 0.16% |
| FTSE100 | 6938.56 | + 0.32 | 0.00% |
| DAX30 | 15279.62 | – 40.90 | – 0.27% |
By Greg Peel
Flatline Friday
The local market began Friday unperturbed over Wall Street’s capital gains tax scare, as it should be, and spent the morning deciding what to do. A bit of Friday selling then emerged to send the ASX200 down -19 points by lunchtime but a late flourish had the index back where it started by the close.
It wasn’t quite a nothing-day, with a bit going on under the surface.
Australia’s Little Amazon and prior covid winner Kogan ((KGN)) reported disappointing March quarter earnings due to slowing sales and higher inventory costs and promptly fell -14.3% to be the day’s standout index loser. Investors then ran scared of sector heavyweights JB Hi-Fi ((JBH)), down -5.0% and Harvey Norman ((HVN)), down -3.5% and consumer discretionary lost -1.0%.
Footwear retailer Accent Group ((AX1)) did its best, rallying 11.2% on announced acquisitions, but is not in the index.
Things weren’t much better in consumer staples, where investors fear another round of Chinese retaliation now the Victorian Belt&Road deal has been scrapped. Blackmores ((BKL)) fell -6.3% and a2 Milk ((A2M)) -3.4%, sending that sector down -0.6%.
Utilities fell -0.7% on another bad day for AGL Energy ((AGL)), which fell -1.0%. AGL is suffering from its decision to spin off its coal-fired business which no one wants to buy, so management must have been peeved to see AMP ((AMP)) rally 0.9% after a decision to spin off its AMP Capital business that no one wants to buy.
Squaring up the index on the day required a 0.4% rally in the banks, 0.3% for materials and 0.2% for healthcare.
Technology fell -0.3% because it’s dominated by Afterpay ((APT)) which offset a 7.5% gain for Nuix ((NXL)) after its earlier big tumble and a 5.2% gain for Megaport ((MP1)), which is fast becoming a bit of a star.
Also a recent comeback kid is Nufarm ((NUF)), in this case coming back more from the drought rather than covid. It rose 4.9% and all agri-stocks have been winners recently as a bumper season plays out.
Having ignored Wall Street’s negative reaction to Biden’s capital gains plans on Thursday night it appears we will also thus ignore Friday night’s swift rebound, as our futures were up all of 4 points on Saturday morning.
Not going to happen
Wall Street’s sharp response to Biden’s 39.4% capital gains tax plan has been labelled a knee-jerk reaction to a policy well articulated throughout Biden’s election campaign. Investors knew it was coming, it was just a matter of when and how much.
Few believe that when the wrangling ends and an agreement is reached – within the Democrats that is, as the Republicans will reject any increase out of hand – the result will be as high as 39.4%.
If you add in state taxes in highest-taxed states of New York, New Jersey and California, net capital gains tax would push close to 60% (for higher earners).
So a rethink had Wall Street surging back on Friday night, underpinned by more positive earnings results and more solid economic data.
Not all companies reporting on the day fared well. Misses were posted by Dow components American Express, Intel and Honeywell, leading to a drag on that average on the day.
Kimberley Clark reported weak sales, cycling last year’s toilet paper hoarding frenzy.
In economic news, a flash estimate of the US April manufacturing PMI suggested a result of a record 60.5, up from 59.1 in March. Services came in at 63.1, up from 60.4.
New home sales rose 20.7% in March to the highest level since 2006. We all know what happened in 2007.
The major indices did fade off a bit to the close after the S&P500 hit a new record intra-day high, meaning the broad market index closed down -0.1% for the week – its first losing week in five.
With tax issues on the shelf for now, attention will focus closely on earnings this week as several of the Really Big Tech names post their results.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1783.90 | – 9.70 | – 0.54% |
| Silver (oz) | 26.12 | – 0.43 | – 1.62% |
| Copper (lb) | 4.28 | + 0.01 | 0.22% |
| Aluminium (lb) | 1.07 | + 0.00 | 0.37% |
| Lead (lb) | 0.91 | + 0.00 | 0.47% |
| Nickel (lb) | 7.25 | + 0.02 | 0.26% |
| Zinc (lb) | 1.27 | – 0.00 | – 0.31% |
| West Texas Crude | 61.43 | + 0.08 | 0.13% |
| Brent Crude | 65.58 | + 0.52 | 0.80% |
| Iron Ore (t) | 183.60 | – 2.15 | – 1.16% |
Strength across the board for the stuff we actually use as the US dollar index fell a full -0.5%.
It’s somewhat of a conundrum that the greenback should weaken on strong economic data but the flipside is a rush to the “safe haven” of the reserve currency in times of trouble.
It didn’t help gold though, which having had a recent burst has now stalled again.
The Aussie has responded to the greenback with a 0.6% gain to US$0.7753.
The SPI Overnight closed up 4 points on Saturday morning.
The Week Ahead
It’s the biggest week in the US earnings season by number of reporting stocks, with some of the biggest names among them.
It’s also another big week for US economic data releases, kicking off with durable goods orders tonight.
There follow numbers for consumer confidence and house prices tomorrow night, trade on Wednesday and PCE inflation on Friday. On Thursday, the first estimate of March quarter GDP is due, ahead of a fresh Fed policy statement release.
The eurozone releases its GDP result on Friday.
Australia will see March quarter CPI data on Wednesday and PPI on Friday. Monthly results are due for trade (preliminary) on Wednesday and private sector credit on Friday.
It’s another big week locally for corporate quarterly updates, including several resource sector reports and sales numbers from the supermarkets, along with others.
Atlas Arteria ((ALX)) holds its AGM tomorrow, followed by AMP ((AMP)), which should be a cracker, and Janus Henderson ((JHG)) on Friday.
New Zealand is closed today, in case you hadn’t noticed.
One element that may weigh on the market today is the three-day snap lockdown called in WA, killing off Anzac Day yesterday, and a growing number of hotel quarantine cases in NSW in particular.
This bug ain’t going away in a hurry.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALG | Ardent Leisure | Downgrade to Sell from Hold | Ord Minnett |
| AMC | Amcor | Downgrade to Neutral from Outperform | Macquarie |
| API | Aus Pharmaceutical Ind | Downgrade to Neutral from Buy | Citi |
| CGF | Challenger | Downgrade to Neutral from Outperform | Credit Suisse |
| EVN | Evolution Mining | Downgrade to Neutral from Outperform | Macquarie |
| GXY | Galaxy Resources | Upgrade to Neutral from Underperform | Credit Suisse |
| HUB | HUB24 | Upgrade to Accumulate from Hold | Ord Minnett |
| PLS | Pilbara Minerals | Downgrade to Sell from Neutral | Citi |
| RBL | Redbubble | Downgrade to Hold from Add | Morgans |
| WSA | Western Areas | Upgrade to Add from Hold | Morgans |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: A2M - A2 MILK COMPANY LIMITED
For more info SHARE ANALYSIS: AGL - AGL ENERGY LIMITED
For more info SHARE ANALYSIS: ALX - ATLAS ARTERIA
For more info SHARE ANALYSIS: AMP - AMP LIMITED
For more info SHARE ANALYSIS: AX1 - ACCENT GROUP LIMITED
For more info SHARE ANALYSIS: BKL - BLACKMORES LIMITED
For more info SHARE ANALYSIS: HVN - HARVEY NORMAN HOLDINGS LIMITED
For more info SHARE ANALYSIS: JBH - JB HI-FI LIMITED
For more info SHARE ANALYSIS: JHG - JANUS HENDERSON GROUP PLC
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: MP1 - MEGAPORT LIMITED
For more info SHARE ANALYSIS: NUF - NUFARM LIMITED
For more info SHARE ANALYSIS: NXL - NUIX LIMITED