Daily Market Reports | Jun 08 2021
This story features ALTIUM, and other companies. For more info SHARE ANALYSIS: ALU
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| World Overnight | |||
| SPI Overnight (Jun) | 7286.00 | + 5.00 | 0.07% |
| S&P ASX 200 | 7281.90 | – 13.50 | – 0.19% |
| S&P500 | 4226.52 | – 3.37 | – 0.08% |
| Nasdaq Comp | 13881.72 | + 67.23 | 0.49% |
| DJIA | 34630.24 | – 126.15 | – 0.36% |
| S&P500 VIX | 16.42 | 0.00 | 0.00% |
| US 10-year yield | 1.57 | + 0.01 | 0.58% |
| USD Index | 89.97 | – 0.17 | – 0.19% |
| FTSE100 | 7077.22 | + 8.18 | 0.12% |
| DAX30 | 15677.15 | – 15.75 | – 0.10% |
By Greg Peel
There’s a turn-up
The recent rally to new highs for the ASX200 has been driven mostly by cyclicals as growth is left behind. The banks have led the upward charge while the tech sector has wallowed, even as the Nasdaq has rebounded from its earlier pullback.
That rebound has been attributed to big Nasdaq names falling far enough to the point growth had actually become value. We have not seen the same response in the local tech sector.
Until yesterday.
Separate takeover offers (conditional, non-binding, yada yada) for Altium ((ALU)) and Hansen Technologies ((HSN)) sent those stocks up 39.0% and 22.6% respectively. Might there be more to come? Nuix ((NXL)) rose 6.2%, Appen ((APX)) 6.1% and EML Payments ((EML)) 4.2%, albeit the latter provided an update on its Irish problems.
Meanwhile, a steam train rolled down the Austrac to announce serious concerns regarding money laundering that may leave National Bank ((NAB)) and the casino companies hung out to dry. NAB shares fell -3.2% while NZ-based SkyCity Entertainment ((SKC)) dropped -6.5% to be the biggest index loser and Star Entertainment ((SGR)) fell -2.0%. Crown Resorts ((CWN)) only fell -1.5% because we’ve been here before.
We’ve also been here before for the banks – it was just NAB’s turn.
The net result was banks down -1.1% and tech up 2.8%, with the banks having much greater index clout.
The Melbourne situation is now starting to bite with contract tracers stumped. Corporate Travel Management ((CTD)) fell -5.1%, Webjet ((WEB)) -4.9% and Flight Centre ((FLT)) -4.8% to take out positions 2 to 4 on the losers’ board. The discretionary sector lost -0.9%.
Other winners on the day were defensives utilities (+0.8%) and property (+1.0%), although REITs have arguably become post-covid cyclicals that offer an inflation hedge.
The resources sectors took the day off (energy did indeed close 0.00%) but will be back in focus today given falls across the commodity price board.
In economic news, ANZ Bank’s job ads series showed a 7.9% rise in May to be 38.8% above pre-pandemic levels. May’s result represents a full twelve months of increases and equates to, according to ANZ, a 5.0% unemployment rate (April 5.5%).
That is, of course, if ever growing job vacancies can actually be filled. The current situation in the US suggests one cannot assume those out of work have the right qualifications or skills to fill the jobs on offer. In the past few months the number of Americans still out of work has largely matched the number of job vacancies, but there has been no movement.
The ASX200 failed to hold above 7300 yesterday, most commodity prices were down overnight, the Aussie is higher and the S&P500 is a tick lower, but our futures are up 5 points this morning.
Holding Pattern
The Dow hit a new intraday high from the open last night and then promptly retreated. The morning coin toss led to Nasdaq outperformance as the likes of Facebook pushed through to yet another all-time high.
Meanwhile, Apple announced operating system upgrades and new features across its suite of products and the share price didn’t budge.
Ahead of another round of share price dilution, AMC Entertainment jumped 25% before settling up 15%. A quiet day really. The US Securities & Exchange Commission (SEC) announced it is watching the meme stocks for “disruptions of the market, manipulative trading or other misconduct”.
Not for easily led fools though.
Treasury Secretary Janet Yellen, reliving her Fed chair days, said last night it was okay if Biden’s US$4trn spending plan led to inflation and higher rates.
“If we ended up with a slightly higher interest-rate environment it would actually be a plus for society’s point of view and the Fed’s point of view.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade. We want them to go back to a ‘normal environment’ and if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing.”
Wall Street shrugged. The Nasdaq rallied, the US ten-year yield ticked back one point to 1.57% and the S&P500 closed a smidge lower.
Thursday night brings the May CPI result, which will have investors holding their breath after April’s 4.2% shock. Wall Street will likely hold out for that result in the next couple of sessions.
Beyond that, there’s next month June quarter earnings season to look forward to. Since the March quarter results in April, Wall Street has gone nowhere but sideways. Earnings expectations are, again, elevated.
So they’ll have to deliver.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1899.70 | + 7.70 | 0.41% |
| Silver (oz) | 27.88 | + 0.07 | 0.25% |
| Copper (lb) | 4.44 | – 0.05 | – 1.03% |
| Aluminium (lb) | 1.08 | – 0.02 | – 1.69% |
| Lead (lb) | 0.97 | – 0.01 | – 0.63% |
| Nickel (lb) | 8.08 | – 0.05 | – 0.58% |
| Zinc (lb) | 1.35 | + 0.00 | 0.10% |
| West Texas Crude | 69.23 | – 0.39 | – 0.56% |
| Brent Crude | 71.47 | – 0.42 | – 0.58% |
| Iron Ore (t) | 202.85 | – 5.50 | – 2.64% |
Friday night’s miss on the US jobs number has been blamed for last night’s weakness across the board in commodity prices, but I’d wager that the weekend’s developments with regard Biden’s infrastructure bill and getting anything through the Senate in general also weighed.
It took months last year for agreement to be reached on a covid relief bill. In a repeat performance, the Republicans’ counter-offer on infrastructure is miles away from Biden’s target. The Senate Republican leader has vowed to block everything. The way things are going, so has Democrat Senator Joe Manchin, meaning the Dems can’t even use the VP casting vote to shut the Republicans down.
Get comfortable. This will be a long flight.
Focusing in on iron ore, China’s exports rose 28% year on year in May while imports rose 51% to the fastest pace since March 2010 (post-GFC infrastructure package). In the year to date to May, iron ore import volumes rose 6%.
Dollar value of iron ore imports rose 86%.
A -0.2% fall in the dollar index has been matched by a 0.2% gain in the Aussie to US$0.7758.
Today
The SPI Overnight closed up 5 points.
NAB’s business confidence survey for May is due today.
The US releases April trade numbers.
Aurizon Holdings ((AZJ)) holds an investor day.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ADI | APN Industria Reit | Downgrade to Hold from Add | Morgans |
| ART | Airtasker | Upgrade to Add from Hold | Morgans |
| BSL | Bluescope Steel | Upgrade to Buy from Neutral | Citi |
| CWY | Cleanaway Waste Management | Downgrade to Underperform from Neutral | Credit Suisse |
| EOS | ELECTRO OPTIC SYSTEMS | Upgrade to Buy from Neutral | Citi |
| FMG | Fortescue | Downgrade to Reduce from Hold | Morgans |
| GXY | Galaxy Resources | Downgrade to Accumulate from Buy | Ord Minnett |
| HPI | Hotel Property Investments | Upgrade to Add from Hold | Morgans |
| PLS | Pilbara Minerals | Upgrade to Neutral from Sell | Citi |
| Upgrade to Lighten from Sell | Ord Minnett | ||
| TRS | The Reject Shop | Downgrade to Hold from Buy | 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: ALU - ALTIUM
For more info SHARE ANALYSIS: APX - APPEN LIMITED
For more info SHARE ANALYSIS: AZJ - AURIZON HOLDINGS LIMITED
For more info SHARE ANALYSIS: CTD - CORPORATE TRAVEL MANAGEMENT LIMITED
For more info SHARE ANALYSIS: CWN - CROWN RESORTS LIMITED
For more info SHARE ANALYSIS: EML - EML PAYMENTS LIMITED
For more info SHARE ANALYSIS: FLT - FLIGHT CENTRE TRAVEL GROUP LIMITED
For more info SHARE ANALYSIS: HSN - HANSEN TECHNOLOGIES LIMITED
For more info SHARE ANALYSIS: NAB - NATIONAL AUSTRALIA BANK LIMITED
For more info SHARE ANALYSIS: NXL - NUIX LIMITED
For more info SHARE ANALYSIS: SGR - STAR ENTERTAINMENT GROUP LIMITED
For more info SHARE ANALYSIS: SKC - SKYCITY ENTERTAINMENT GROUP LIMITED
For more info SHARE ANALYSIS: WEB - WEB TRAVEL GROUP LIMITED