Daily Market Reports | Sep 30 2021
| World Overnight | |||
| SPI Overnight | 7199.00 | + 23.00 | 0.32% |
| S&P ASX 200 | 7196.70 | – 78.90 | – 1.08% |
| S&P500 | 4359.46 | + 6.83 | 0.16% |
| Nasdaq Comp | 14512.44 | – 34.24 | – 0.24% |
| DJIA | 34390.72 | + 90.73 | 0.26% |
| S&P500 VIX | 22.56 | – 0.69 | – 2.97% |
| US 10-year yield | 1.54 | + 0.01 | 0.46% |
| USD Index | 94.37 | + 0.64 | 0.68% |
| FTSE100 | 7108.16 | + 80.06 | 1.14% |
| DAX30 | 15365.27 | + 116.71 | 0.77% |
By Greg Peel
Buyers v. Sellers
It was an old joke on stock trading floors that if the media rang you for comment on why the market went down today, you’d wave them off with “More sellers than buyers”. Or vice versa. Yesterday the ASX saw a staunch battle between the two.
The futures said down -82 points but the ASX200 opened down -100 in the first twenty minutes, before attempting a bounce. That failed, and by midday we were down -130 when the buyers again had a go. We got all the way back to down -65 by 3pm.
In came the late sellers and we were down -100 again at the close, but for a bounce on market-on-close orders.
An unconvincing rebound on Wall Street overnight has our futures up 23 points this morning, but it’s the last day of the quarter, so anything could happen.
Selling was relatively uniform among sectors yesterday, apart from small gains for defensives consumer staples (+0.1%) and utilities (+0.2%). Property missed out (-1.1%), but was fighting a big day of ex-divs.
A small bounce in the gold price had the punters running back in, with the top four index winners on the day all gold miners.
Gold was down again overnight.
This didn’t prevent the ongoing rout in the materials sector (-1.0%), and an overdue dip in oil prices had energy down -1.8% after a surging few days.
Technology was down -2.4% as one might expect on the Nasdaq fall overnight (and Square fell -5%), but it’s hard to tell whether the banks were always going to fall -1.1% or whether APRA had anything to do with it.
APRA announced it will consider possible macro-prudential policy responses to address the medium term risk created as a result of surging home loan sizes. Data released show 22% of new loans in the June quarter had a debt-to-income ratio of 6x, which the regulator deems “risky”. That’s up from 16% one year ago.
Didn’t we have that Royal thingy a while back?
Truth is economists have been tipping APRA tightening towards year-end for months now and surging house prices have not changed that tune.
Healthcare was hammered again yesterday -1.9% to mark a very weak run in spite of an increasingly supportive Aussie dollar, which is now below US72c. The space clearly had become overcrowded.
We’ll be happy to wave September goodbye after today but then we hit October. As yesterday’s action suggests, investors are jumpy and at odds so we may need some positive news to stave off the jitters.
Similar Theme
Wall Street saw a similar buyers versus sellers battle last night. The major indices attempted a rally from the open but it didn’t last. When the S&P500 held its ground at Tuesday night’s closing price the buyers had another go and were looking good up to 3pm, before most of that gain was given back.
The debt ceiling issue is looming larger every day and a government shutdown is not without precedent – the last being in 2011 after Obama lost control of Congress in the mid-terms. It didn’t last long – cutting off pay to public servants on the basis of partisan stubbornness does not make for elevated voter support. My guess would be the Republicans push it as far as they can to make a point, then withdraw and claim victory.
The US lost its AAA rating last time, and hasn’t got it back since. Wall Street is up about a million percent in the interim.
Inflation is of course the big topic of conversation and tonight sees the release of the Fed’s preferred measure, being the personal consumption & expenditure (PCE) index. It’s an August number, so a little old now, and also leaves out specific price-drivers otherwise captured in the CPI, such as rents.
Even the CPI doesn’t paint the full picture of household spending requirements, and given the core measure of both excludes fuel costs, it’s almost misleading. Either way, economists are more anxious about the September CPI numbers in a couple of weeks’ time.
There is also lingering nervousness about the Chinese property market. The last we know is that Evergrande will probably be restructured rather than bankrupted and yesterday the property developer sold its stake in a regional Chinese bank to help fund interest payments, as the PBoC injected yet more liquidity into the market.
Evergrande rallied 10% in Hong Kong.
It is notable that despite last night’s ups and downs on Wall Street, at no point did the S&P500 either exceed Tuesday night’s intraday high nor its intraday low. The US ten-year was steady. It doesn’t tell us much about sentiment, other than poised.
Maybe tonight will, although it’s end-of-quarter over there as well.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1726.10 | – 7.70 | – 0.44% |
| Silver (oz) | 21.52 | – 0.91 | – 4.06% |
| Copper (lb) | 4.17 | – 0.03 | – 0.69% |
| Aluminium (lb) | 1.31 | – 0.00 | – 0.21% |
| Lead (lb) | 0.99 | – 0.00 | – 0.34% |
| Nickel (lb) | 8.34 | – 0.04 | – 0.43% |
| Zinc (lb) | 1.39 | – 0.01 | – 0.58% |
| West Texas Crude | 74.83 | – 0.46 | – 0.61% |
| Brent Crude | 78.50 | + 0.30 | 0.38% |
| Iron Ore (t) | 114.80 | + 2.45 | 2.18% |
Having hit a new high for the year on Tuesday night, the US dollar picked up the pace last night, rising 0.7%.
The sea of red above would have a lot to do with that, although as I noted yesterday iron ore has never paid attention to the dollar.
It does mean the Aussie’s tumble continues, down another -0.8% to US$0.7176, but as with healthcare, it doesn’t seem to be doing our miners much good at this point.
Today
The SPI Overnight closed up 23 points or 0.3%.
Today brings numbers locally for building approvals and private sector credit.
China will release September PMIs.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AUB | AUB Group | Downgrade to Accumulate from Buy | Ord Minnett |
| CKF | Collins Foods | Upgrade to Outperform from Neutral | Macquarie |
| EVN | Evolution Mining | Upgrade to Equal-weight from Underweight | Morgan Stanley |
| IAG | Insurance Australia | Upgrade to Outperform from Neutral | Macquarie |
| VTG | Vita Group | 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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