Daily Market Reports | Aug 13 2021
This story features QBE INSURANCE GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: QBE
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7526.00 | + 28.00 | 0.37% |
| S&P ASX 200 | 7588.20 | + 3.90 | 0.05% |
| S&P500 | 4460.83 | + 13.13 | 0.30% |
| Nasdaq Comp | 14816.26 | + 51.13 | 0.35% |
| DJIA | 35499.85 | + 14.88 | 0.04% |
| S&P500 VIX | 15.59 | – 0.47 | – 2.93% |
| US 10-year yield | 1.37 | + 0.03 | 2.09% |
| USD Index | 93.01 | + 0.10 | 0.11% |
| FTSE100 | 7193.23 | – 26.91 | – 0.37% |
| DAX30 | 15937.51 | + 111.42 | 0.70% |
By Greg Peel
The Definition of Insanity?
Day 4: Playing to script, the ASX200 shot up 24 points from the open yesterday, only to close up 4 — still a new closing high.
Yesterday was slightly different to the previous three nonetheless, given the index did not this time make a new intraday high and indeed, if not for a market-on-close pop, would have closed down -9. And this time the market did not wait for the daily Glad Wrap at 11am, turning tail in the first fifteen minutes.
So we still can’t confirm any delta impact, and yesterday’s announced Canberra lockdown had the rest of the country cheering. What we can confirm is the index runs away from 7600 every time it crosses that mark.
With the S&P500 up 0.3% last night our futures closed up 0.4% this morning, so we’ll probably see Day 5.
Despite this song being on repeat, yesterday’s action was more about earnings than any other notable influence. A quick glance of sector moves suggests the banks and materials decided to sit this one out and give someone else a go, but it was not that simple.
QBE Insurance ((QBE)) reported earnings and jumped 8.1%, rounding out results for the big three general insurers. Insurance Australia Group ((IAG)) had been the odd one out, falling on its result on Wednesday, but yesterday bounced 6.0%.
It should thus have been a good session for the financials sector, except that analysts had poured cold water on Wednesday’s result from Commonwealth Bank ((CBA)), and it fell -2.2% to leave the sector down less than -0.1%,.
Materials rose only 0.2%, but in reality much more because Rio Tinto ((RIO)) went ex, and a very big ex, to close down -6.9%. The bounce in the gold price was otherwise the counter.
Telcos were the standout performer on the day in rising 2.3%, all on Telstra’s ((TLS)) 3.7% jump post earnings result.
Utilities fell -1.7% thanks to AGL Energy’s ((AGL)) result, which was worth -5.5%.
Industrials managed to shake off the delta drag for once (+0.6%), thanks to a solid earnings response for Downer EDI ((DOW)), up 4.2%.
Healthcare fell -0.9% because the Aussie had shot up, but it shot down again last night.
Graincorp ((GNC)) was the winning index stock on the day, but it reports out of cycle. That doesn’t stop the company providing guidance upgrades every other month, and yesterday’s was worth 11.7%.
We’ve had a lot of rain.
A busy day of results yesterday warns us that there are much busier days to come from next week, but today not so, with only one stock noted on the FNArena calendar.
Not Transitory?
Wednesday night’s US CPI result for July of 5.4% annual growth matched June’s number, and at 0.5% month-on-month growth was the lowest of the past three months. The core rate actually fell back, missing expectations.
Wall Street breathed a sigh of relief, given evidence that inflation may indeed be proving transitory.
Then along came July’s PPI result. It showed record growth of 7.8% annual, on another 1.0% month-on-month gain, as had been the case in June. Forecasts were for 7.3%. The core PPI grew 6.2%, when 5.6% was expected.
While the US June quarter result season has been a cracker to date in terms of corporate earnings growth, the wholesale inflation numbers suggest inflation may not be so transitory after all, but rather retail margins are being squeezed. With China moving to lockdown ports as delta runs amok, supply chain shortages that have dogged the US and global economic recoveries look set to persist.
The US ten-year bond yield rose 3 basis points to 1.37%, and the US dollar rose once more. But after a couple of sessions of underperformance, last night the Nasdaq outperformed the Dow, and the S&P500 leaned to the Nasdaq’s side.
There was a simple reason. All three major indices fell initially on the PPI release, only to claw back through the session. But only because falls in the FAAMGs always draw in fresh buyers, and last night Apple rose 2% and Microsoft 1%.
Doesn’t sound like much? Give me these levers and I can move the earth. These are the only FAAMG stocks to be part of all three indices. Otherwise, the upside to downside volume on the NYSE last night very much favoured the downside.
By the end of the session it was still another day of new records for the Dow (just) and S&P500, with the Nasdaq still short.
But one of Wall Street’s problems in analysing performance on an index basis, is the sheer size of the Big Tech leviathans and their distortive impact on cap-weighted indices.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1753.90 | + 2.10 | 0.12% |
| Silver (oz) | 23.15 | – 0.38 | – 1.61% |
| Copper (lb) | 4.29 | + 0.02 | 0.52% |
| Aluminium (lb) | 1.17 | – 0.00 | – 0.33% |
| Lead (lb) | 1.06 | – 0.00 | – 0.06% |
| Nickel (lb) | 8.81 | + 0.11 | 1.30% |
| Zinc (lb) | 1.36 | – 0.01 | – 0.72% |
| West Texas Crude | 69.09 | – 0.16 | – 0.23% |
| Brent Crude | 71.15 | – 0.50 | – 0.70% |
| Iron Ore (t) | 161.45 | – 4.75 | – 2.86% |
More ups and downs for base metals but iron ore has dipped again.
Gold stabilised after Wednesday night’s big rebound.
The oils were only slightly weaker, despite the International Energy Agency downgrading its global crude demand forecasts due to delta. Thanks Scoop.
The Aussie is off -0.5% at US$0.7340. For now, 73 is the new 76.
Today
The SPI Overnight closed up 28 points or 0.4%.
Baby Bunting ((BBN)) reports earnings.
Don’t let on, but it's Friday the Thirteenth.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AX1 | Accent Group | Downgrade to Sell from Neutral | Citi |
| AZJ | Aurizon Holdings | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| Downgrade to Hold from Add | Morgans | ||
| CBA | CommBank | Downgrade to Sell from Neutral | Citi |
| Downgrade to Underperform from Neutral | Credit Suisse | ||
| JHX | James Hardie Industries | Upgrade to Buy from Neutral | Citi |
| KPG | Kelly Partners | Downgrade to Hold from Add | Morgans |
| MIN | Mineral Resources | Upgrade to Buy from Hold | Ord Minnett |
| MP1 | Megaport | Downgrade to Sell from Hold | Ord Minnett |
| NAB | National Australia Bank | Downgrade to Hold from Add | Morgans |
| PLS | Pilbara Minerals | Upgrade to Buy from Hold | Ord Minnett |
| SPK | Spark New Zealand | Downgrade to Neutral from Outperform | Credit Suisse |
| SUN | Suncorp Group | Upgrade to Outperform from Neutral | Credit Suisse |
| Downgrade to Neutral from Buy | Citi | ||
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.)
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CHARTS
For more info SHARE ANALYSIS: AGL - AGL ENERGY LIMITED
For more info SHARE ANALYSIS: BBN - BABY BUNTING GROUP LIMITED
For more info SHARE ANALYSIS: CBA - COMMONWEALTH BANK OF AUSTRALIA
For more info SHARE ANALYSIS: DOW - DOWNER EDI LIMITED
For more info SHARE ANALYSIS: GNC - GRAINCORP LIMITED
For more info SHARE ANALYSIS: IAG - INSURANCE AUSTRALIA GROUP LIMITED
For more info SHARE ANALYSIS: QBE - QBE INSURANCE GROUP LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED
For more info SHARE ANALYSIS: TLS - TELSTRA GROUP LIMITED