Daily Market Reports | May 12 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) | 7020.00 | – 45.00 | – 0.64% |
| S&P ASX 200 | 7097.00 | – 75.80 | – 1.06% |
| S&P500 | 4152.10 | – 36.33 | – 0.87% |
| Nasdaq Comp | 13389.43 | – 12.43 | – 0.09% |
| DJIA | 34269.16 | – 473.66 | – 1.36% |
| S&P500 VIX | 21.84 | + 2.18 | 11.09% |
| US 10-year yield | 1.62 | + 0.02 | 1.37% |
| USD Index | 90.18 | – 0.11 | – 0.12% |
| FTSE100 | 6947.99 | – 175.69 | – 2.47% |
| DAX30 | 15119.75 | – 280.66 | – 1.82% |
By Greg Peel
The Market Giveth…
Well in the end I was right – it was a quiet couple of days ahead of the budget, based on the ASX200 rising a net 17 points over Monday and Tuesday. And I was right in suggesting 7100 should offer support, as while the index did crash through yesterday to be down almost -100 points by midday, it recovered somewhat in the afternoon to close just under that level.
It’s a moot point nonetheless, given Wall Street has had another swoon overnight and our futures are down -45 points this morning.
It appears Monday’s session was indeed technically and thus algo driven on the break-up through 7100 more than one of investor demand. For investors wasted no time in reversing that trade yesterday. To a great extent everything that went up on Monday came back down yesterday.
The standouts were technology (-4.2%), which followed down the Nasdaq, and energy (-2.7%), which seems a bit excessive but perhaps had something to with budget fears (favouring green).
BNPL was slaughtered yesterday, with Zip Co ((Z1P)) down -9.1% and Afterpay ((APT)) down -8.7% to be the biggest index losers. Tech names Redbubble ((RBL)) and Nearmap ((NEA)) followed with -8.2% and -7.7%.
We might see some recovery today in tech given the Nasdaq staged a big comeback from early weakness last night.
A -1.2% fall for materials suggests a nervous rush to take profits after Monday’s gain over 3%, given the iron ore price shot up 8% on Monday night and is only down a smidge this morning.
Ditto the banks (-1.0%), which basically reversed Monday if we net out ANZ Bank’s ((ANZ)) dividend on Monday. National Bank ((NAB)) and Westpac ((WBC)) both go ex tomorrow and Macquarie Group ((MQG)) next Monday but it’s too late to buy for the dividend.
Consumer staples was the only sector to close in the green (+0.3%) as investors continued to pile in for Woolworths’ ((WOW)) pub spin-off. The benefit here is not only an expected large return of capital to shareholders but a chance for Woolies (+1.1%) to move up in the ESG ranks.
The winners’ board was underwhelming yesterday as one would expect but the standouts were litigation specialist Omni Bridgeway ((OBL)), which popped on Monday and again yesterday (4.3%) and Boral ((BLD)), which received and rejected a takeover bid from Seven Group ((SVW)). It rose 3.4%.
In the former case, cast your mind back to the 2011 Brisbane floods and recall the attribution of the opening of the floodgates of the Whivenhoe Dam. A law suit has only now been settled and Omni Bridgeway has enjoyed part of the spoils.
But we’re going to open down today and thus leave 7100 behind, dependent on to what extent investors might see a buying opportunity. One has to say Wall Street is looking a little skittish at the moment. The next major support level is 6800.
Oh and regarding last night’s Labor budget – sorry, Coalition, although you could be forgiven – there was not a lot we didn’t already know. Market-wise we can look to infrastructure and healthcare spending but that was well telegraphed. Perhaps the clanger was confirmation the international border will be closed until at least mid-2022.
Make up your minds
All last week Wall Street rotated out of growth and into value, as evidenced by big falls for the Nasdaq and consecutive daily records for the Dow. There was some optimism (of ongoing monetary support) on Friday on a weak jobs number, but a close on the lows for all three major indices on Monday night did look a bit ominous.
And so it was that for no specific reason the Dow plunged -670 points from the open and the Nasdaq again fell over -2%.
“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?
… I suggested yesterday. And if we try to find three reasons why Wall Street is otherwise nervous, they would be inflation, inflation and inflation. Despite lower than expected inflation data to date, and Friday’s weak jobs number, Wall Street still does not believe the Fed.
An interesting case in point:
Data last night showed a record 8 million job openings in the US in March, and separately, 44% of small businesses reported job openings went unfilled in April. But on last count there remain some 8 million Americans unemployed.
A sign of the times? The reason the two can’t net out is because those losing their jobs in the pandemic simply do not have the skill-set to fill today’s job vacancies. Waiters and factory workers do not necessarily make great computer programmers. The US may be facing a twenty-first century issue of structural unemployment, while the skilled worker shortage threatens wage inflation.
But wait. While the US ten-year yield rose 2 points last night to 1.62% and the VIX volatility index spiked, after several sessions of selling the buyers decided it was time to move back into growth at cheaper prices. The Nasdaq completely recovered.
The Dow recovered somewhat but it appears last night was a rotation out of rotation – take profits on record-breaking Dow names and other value stocks to fund reinvestment in growth at lower PE levels (or in the case of many of the high flyers, price-to-revenue, given they haven’t yet made a profit).
Is this just a one-session flip over? Wall Street’s not the easiest to read at present.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1837.90 | + 1.90 | 0.10% |
| Silver (oz) | 27.63 | + 0.36 | 1.32% |
| Copper (lb) | 4.80 | + 0.11 | 2.29% |
| Aluminium (lb) | 1.16 | + 0.01 | 0.89% |
| Lead (lb) | 1.00 | + 0.00 | 0.24% |
| Nickel (lb) | 8.15 | + 0.10 | 1.21% |
| Zinc (lb) | 1.37 | + 0.00 | 0.07% |
| West Texas Crude | 65.28 | + 0.36 | 0.55% |
| Brent Crude | 68.66 | + 0.45 | 0.66% |
| Iron Ore (t) | 228.90 | – 0.65 | – 0.28% |
Declining scrap supplies have been cited for copper’s standout rally last night.
Otherwise the only moves of note were in iron ore – only notable because it wasn’t up – and oil.
The hacked pipeline is leading airlines to either reduce services or have planes make refuelling stops outside of the east coast which they otherwise wouldn’t. By rights a blockage of product (such as avgas) supply should back up crude inventories, but oil prices reflect neither this nor renewed fighting in the Middle East.
The Aussie is up 0.1% at US$0.7842.
Today
The SPI Overnight closed down -45 points or -0.6%.
The Westpac consumer confidence survey is out today.
The UK reports March quarter GDP.
The US sees April CPI numbers. Be afraid.
Commonwealth Bank ((CBA)) provides a quarterly update today.
AusNet Services ((AST)), CSR ((CSR)) and Pushpay Holdings ((PPH)) report earnings.
ResMed ((RMD)) goes ex.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| A2M | a2 Milk Co | Downgrade to Underperform from Neutral | Macquarie |
| CRN | Coronado Global Resources | Downgrade to Neutral from Outperform | Macquarie |
| CSR | CSR | Downgrade to Hold from Accumulate | Ord Minnett |
| IAP | IRONGATE GROUP LIMITED | Upgrade to Accumulate from Hold | Ord Minnett |
| NAB | National Australia Bank | Downgrade to Hold from Accumulate | Ord Minnett |
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CHARTS
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: BLD - BORAL LIMITED
For more info SHARE ANALYSIS: CBA - COMMONWEALTH BANK OF AUSTRALIA
For more info SHARE ANALYSIS: CSR - CSR LIMITED
For more info SHARE ANALYSIS: MQG - MACQUARIE GROUP LIMITED
For more info SHARE ANALYSIS: NAB - NATIONAL AUSTRALIA BANK LIMITED
For more info SHARE ANALYSIS: OBL - OMNI BRIDGEWAY LIMITED
For more info SHARE ANALYSIS: PPH - PUSHPAY HOLDINGS LIMITED
For more info SHARE ANALYSIS: RMD - RESMED INC
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION
For more info SHARE ANALYSIS: WOW - WOOLWORTHS GROUP LIMITED