Daily Market Reports | May 11 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) | 7096.00 | – 52.00 | – 0.73% |
| S&P ASX 200 | 7172.80 | + 92.00 | 1.30% |
| S&P500 | 4188.43 | – 44.17 | – 1.04% |
| Nasdaq Comp | 13401.86 | – 350.38 | – 2.55% |
| DJIA | 34742.82 | – 34.94 | – 0.10% |
| S&P500 VIX | 19.66 | + 2.97 | 17.80% |
| US 10-year yield | 1.60 | + 0.03 | 1.59% |
| USD Index | 90.29 | + 0.06 | 0.07% |
| FTSE100 | 7123.68 | – 6.03 | – 0.08% |
| DAX30 | 15400.41 | + 0.76 | 0.00% |
By Greg Peel
Material Gains
Some fool suggested yesterday that the local market might go a bit quiet ahead of tonight’s budget, and that the big jump in the Aussie on Friday night would weigh on offshore earners, and that 7100 was a brick wall of resistance for the ASX200.
Some people have no idea.
It took all of seven minutes for the index to sail through 7100 yesterday as if it wasn’t there. At that point the technical algos and momentum algos would have kicked into gear. Just after midday the index hit a peak up 87 points.
At that point it appeared the rally was starting to lose steam, but after a brief lunch break the index surged again to close on its highs.
It was all about the materials sector (+3.4%). And while base metals and gold all benefited from Friday rallies, it was really all about iron ore. Iron ore closed Friday up 5%. It closed yesterday up another, extraordinary, 8%.
Chinese officials have already been on the phone to Australia’s big miners complaining about iron ore prices. Don’t know what the response was, but I know what mine would be. As China-Australia tensions have escalated, Chinese steel makers have rushed in to stockpile ore lest Beijing decides to take some action a la wine, lobsters, barley, coal et al. The recent scrapping of Victoria’s Belt&Road involvement, and the subsequent cessation of “dialogue” in response, have served to push the iron ore price through US$200/t like a freight train.
No doubt there are plenty of Chinese speculators enjoying the ride as well.
And I can imagine Josh’s speech to be given tonight will have an iron price estimate crossed out and rewritten several times.
All sectors closed in the green yesterday, likely on the technical trade of a break-up in the index, except for utilities (-0.1%). Healthcare’s 0.4% gain stood out as an underperformance, which is the impact the big jump in the Aussie did have.
The banks (0.6%) appeared to lag a bit as well, but this was net of ANZ Bank ((ANZ)) going ex-dividend. Otherwise, only staples (+0.7%) failed to break the 1% level.
The 1.1% gain for consumer discretionary was all about casino wars. Private equity firm Blackstone increased its bid for embattled Crown Resorts ((CWN)) and was soon met by a competitive bid from casino rival Star Entertainment ((SGR)) in the form of a scrip swap, or an alternate cash & scrip offer, which it believes gazumps Blackstone’s offer.
Star shares rose 7.7% and Crown 7.3%. I’d roll the dice and question what the ACCC might think about it all.
On any day a 2.7% gain for Woolworths ((WOW)) would be impressive. After having put it off during covid, the company has finally decided to go ahead and spin off its pubs business, Endeavour Group.
Pipping the casinos was Fortescue Metals ((FMG)), with 7.9%, beaten only by lithium miner Pilbara Minerals ((PLS)), up 10.6%.
To the downside, it was mostly about tech, other than a -13.1% fall for a2 Milk ((A2M)) following yet another downgrade (the fourth for FY21) and an -8.9% drop for Incitec Pivot ((IPL)) after updating on its US ammonia plant.
I could go on, but Wall Street has taken a tumble overnight and our futures are down -52 this morning, so today won’t look quite so flash. Although 7100 should by rights now become support.
Blow Off?
After Friday night’s bad-news-good rally on Wall Street, the Dow kicked on last night to be up over 300 points at its high. There it hit 35,000 for the first time, and pulled back.
The S&P500 however never made it above the flatline in the morning, as the Nasdaq had started to fall. And then continued to fall, led down by Big Tech and other momentum names.
It was not that investors had had a change of heart over the weak jobs number on Friday. That only serves to cement the Fed’s position, and it is agreed it is no sign of the economic recovery derailing. The issue is one of just how much is the “reopening trade” already priced in, and having reported blow-away earnings numbers in the past couple of weeks, what now can drive Big Tech ever further?
A swag of analyst downgrades among Big Tech names, such as Facebook and Amazon, and including veteran Intel (Dow), provided a bit of a trigger, even though most were just to Hold. Elon Musk playing the idiot on SNL didn’t help either (Tesla down -5.2%), albeit he did indeed admit he has Asperger’s. But all EV stocks were suddenly trashed last night after EV truck builder Workforce posted an earnings miss.
Ford (Dow) picked the wrong day to announce a launch date for the EV version of its iconic F150 pick-up, but only fell -0.9%.
This year’s sector outperformer, energy, got the wobbles on news of a ransomware attack on the Colonial pipeline, which delivers 45% of East Coast gasoline supply. The company said it would have the problem fixed by the weekend, and supply will not be much affected, hence crude and refined products prices did not much respond.
The attack has been attributed to Russian criminals. Joe said he’s going to have a quiet word to Vlad.
Meanwhile, as of Friday, 88% of S&P500 companies had reported earnings, and according to FactSet the run-rate is for the highest year on year growth in earnings since the equivalent March quarter 2010 (the QE rally out of the GFC).
Such results underpin the feeling that Wall Street really can’t run any higher from here.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1836.00 | + 5.30 | 0.29% |
| Silver (oz) | 27.27 | – 0.17 | – 0.62% |
| Copper (lb) | 4.69 | – 0.01 | – 0.14% |
| Aluminium (lb) | 1.15 | + 0.01 | 0.90% |
| Lead (lb) | 1.00 | – 0.00 | – 0.30% |
| Nickel (lb) | 8.05 | – 0.04 | – 0.55% |
| Zinc (lb) | 1.37 | + 0.00 | 0.16% |
| West Texas Crude | 64.92 | + 0.02 | 0.03% |
| Brent Crude | 68.21 | – 0.07 | – 0.10% |
| Iron Ore (t) | 229.55 | + 16.80 | 7.90% |
Iron ore and oil as discussed.
Elsewhere nothing to write home about.
The Aussie has pulled back -0.2% to US$7834.
Today
The SPI Overnight closed down -52 points or -0.7%.
China will release April inflation data tonight.
Josh will grin from ear to ear tonight as he splashes about all those iron ore tax revenues.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ANZ | ANZ Banking Group | Downgrade to Neutral from Outperform | Credit Suisse |
| Downgrade to Equal-weight from Overweight | Morgan Stanley | ||
| COE | Cooper Energy | Upgrade to Add from Hold | Morgans |
| CRN | Coronado Global Resources | Downgrade to Neutral from Outperform | Macquarie |
| CSR | CSR | Downgrade to Hold from Accumulate | Ord Minnett |
| GUD | GUD Holdings | Downgrade to Neutral from Buy | Citi |
| IAP | IRONGATE GROUP LIMITED | Upgrade to Accumulate from Hold | Ord Minnett |
| NAB | National Australia Bank | Downgrade to Hold from Accumulate | Ord Minnett |
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: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: CWN - CROWN RESORTS LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED
For more info SHARE ANALYSIS: PLS - PLS GROUP LIMITED
For more info SHARE ANALYSIS: SGR - STAR ENTERTAINMENT GROUP LIMITED
For more info SHARE ANALYSIS: WOW - WOOLWORTHS GROUP LIMITED