Daily Market Reports | Jul 13 2021
This story features GOODMAN GROUP, and other companies. For more info SHARE ANALYSIS: GMG
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7272.00 | + 20.00 | 0.28% |
| S&P ASX 200 | 7333.50 | + 60.20 | 0.83% |
| S&P500 | 4384.63 | + 15.08 | 0.35% |
| Nasdaq Comp | 14733.24 | + 31.32 | 0.21% |
| DJIA | 34996.18 | + 126.02 | 0.36% |
| S&P500 VIX | 16.17 | – 0.01 | – 0.06% |
| US 10-year yield | 1.36 | + 0.01 | 0.52% |
| USD Index | 92.23 | + 0.10 | 0.11% |
| FTSE100 | 7125.42 | + 3.54 | 0.05% |
| DAX30 | 15790.51 | + 102.58 | 0.65% |
By Greg Peel
Material Rebound
Wall Street tanked -1% on Thursday night and fully recovered on Friday night. The ASX200 tanked on Friday and all but fully recovered yesterday. It appears Wall Street is currently the piper and the Sydney delta outbreak is inconsequential.
However, if we take out yesterday’s standout 2.2% gain for the materials sector – a sector that did not post a big fall on Friday – we see that the six sectors that rebounded yesterday did not do so to the extent of full recovery.
Technology fell -2.8% on Friday and rose 0.8% yesterday. For consumer discretionary it was -1.6% and +0.2%. Financials -0.9% and +0.6%. Industrials -1.2% and +0.2%. Healthcare -1.0% and +0.8%. Other up/downs were more muted.
Property stood out in rising 1.2% after a -0.9% fall, driven by a 2.2% gain for sector heavyweight Goodman Group ((GMG)), which we can class as a lockdown winner.
Materials were driven by solid overnight gains for base metals and for iron ore yesterday. While mining and energy stocks are not covid-immune, as we saw recently with the gold mine in Darwin, and noting the extent of FIFO workers who live in the cities, but there aren’t too many open pits or oil rigs in Greater Sydney.
What there are, as of yesterday’s update, are 112 new cases. Having begun to rise incrementally, Sydney cases are now rising exponentially, and more worryingly, so is the number of source-unknown cases (48 yesterday).
It seems pretty inevitable the lockdown will be extended, and perhaps this time open-ended, with an announcement to come possibly as soon as today. Today’s update would have to show a big plunge otherwise.
State borders are once again slamming shut, Victoria’s long run of zero daily cases has now been compromised by a couple of removalists, and about the country there’s a general wailing and gnashing of teeth.
Returning to yesterday’s stock action, all of the top five index winners were resource sector or related stocks.
Mining contractor NRW Holdings ((NWH)) won the session with a 12.0% pop after client Boggabri Coal took up an option to acquire the majority of mobile mining equipment owned by NRW subsidiary Golding Contractors. Three actual miners were on the list, including Fortescue Metals ((FMG)), while Viva Energy ((VEA)) kicked on for a second session.
Outside the index, the standout moves were for Australian Pharmaceutical Industries ((API)) after “we’ll buy anything” Wesfarmers ((WES)) made an offer for the company’s Priceline chemist chain. API shares jumped 19.7%.
Audio/visual equipment provider Audinate Group ((AD8)) added another 8.5% after analysts gushed about the company’s prospects as shows and events return in the US, and the company’s guidance upgrade surprised.
After another triple-high session on Wall Street, our futures are up 20 points this morning.
Wanna Get High?
The Dow fell over -100 points from the open last night following Friday night’s rapid recovery from Thursday night’s -1% pullback. Not surprising, but the sellers were put quickly back in their boxes.
The three major indices then pushed their way up steadily to yet another triple-header of all-time highs. When the closing bell rang, the Dow was sitting smack on 35,000 for the first time, but just ticked back as the dust settled.
There were no specific drivers of last night’s kick-on, and investors are taking a punt ahead of tonight’s major events. The June CPI result will be released, and JP Morgan and Goldman Sachs, both Dow components, kick off the June quarter earnings season.
Wall Street is well prepared for another high CPI number. A response will likely come down to how it compares to May’s decades-high result. The June number will not resolve the transitory-structural debate, as spiking inflation is anticipated by both camps in the near term, and by the Fed.
Jerome Powell will be forced to defend the result, whatever it may be, in a scheduled testimony to Congress tomorrow night.
As for corporate earnings, the fact that we’re back at all-time highs again opens up the prospect for a repeat of March quarter market responses.
To reiterate, March saw a record number of “beats” but only those companies that really knocked it out of the park were rewarded with buying, and they were few. Common or garden beats were met with “sell the fact”. Misses were trounced.
Forecasts are for net S&P500 earnings growth to exceed 60% year on year. Back in the Dark Ages (pre-covid), 10% would be seen as extraordinary. Earnings are cycling the depths of the covid recession last year, so the numbers are justifiable.
The question then is: are valuations justifiable?
As of last night, the S&P500 has doubled from its March 2020 covid-low. Yes. The broad market index is up 37% year on year, but 100% from March.
So strap in.
Speaking of strapping in, in the wake of Branson’s little sortie into the heavens on the weekend Virgin Galactic shares fell -18% last night. Sell the fact? No, the company is cashing in on its success by announcing a capital raise.
If you didn’t book in early for US$200,000 a ride, it is expected new bookings will be at US$400,000. Please form an orderly queue.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1806.50 | – 1.40 | – 0.08% |
| Silver (oz) | 26.21 | + 0.14 | 0.54% |
| Copper (lb) | 4.25 | – 0.05 | – 1.19% |
| Aluminium (lb) | 1.13 | + 0.00 | 0.04% |
| Lead (lb) | 1.06 | – 0.00 | – 0.25% |
| Nickel (lb) | 8.44 | – 0.05 | – 0.57% |
| Zinc (lb) | 1.32 | – 0.02 | – 1.18% |
| West Texas Crude | 74.10 | – 0.46 | – 0.62% |
| Brent Crude | 75.20 | – 0.35 | – 0.46% |
| Iron Ore (t) | 218.45 | + 1.95 | 0.90% |
Not much to report. Just a bit of a pullback here and there.
We note iron ore seems to be consolidating just under US$220/t, but every time I say that it tends to jump one way or the other.
The Aussie has slipped a bit to US$0.7481.
Today
Today we’ll see the NAB business confidence survey for June.
China reports June trade numbers.
US CPI.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ABP | Abacus Property | Downgrade to Hold from Accumulate | Ord Minnett |
| CBA | CommBank | Downgrade to Underperform from Neutral | Macquarie |
| COF | Centuria Office REIT | Downgrade to Hold from Add | Morgans |
| NAB | National Australia Bank | Upgrade to Outperform from Neutral | Macquarie |
| SXY | Senex Energy | Downgrade to Neutral from Outperform | Macquarie |
| WSA | Western Areas | Downgrade to Neutral from Outperform | Macquarie |
| WTC | Wisetech Global | Downgrade to Neutral from Outperform | Macquarie |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: AD8 - AUDINATE GROUP LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED
For more info SHARE ANALYSIS: GMG - GOODMAN GROUP
For more info SHARE ANALYSIS: NWH - NRW HOLDINGS LIMITED
For more info SHARE ANALYSIS: VEA - VIVA ENERGY GROUP LIMITED
For more info SHARE ANALYSIS: WES - WESFARMERS LIMITED