The Monday Report – 28 February 2022

This story features LIFE360 INC, and other companies. For more info SHARE ANALYSIS: 360

The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

World Overnight
SPI Overnight	7118.00	+ 166.00	2.39%
S&P ASX 200	6997.80	+ 7.20	0.10%
S&P500	4384.65	+ 95.95	2.24%
Nasdaq Comp	13694.62	+ 221.04	1.64%
DJIA	34058.75	+ 834.92	2.51%
S&P500 VIX	27.59	– 2.73	– 9.00%
US 10-year yield	1.99	+ 0.02	0.86%
USD Index	96.62	– 0.35	– 0.36%
FTSE100	7489.46	+ 282.08	3.91%
DAX30	14567.23	+ 515.13	3.67%

By Greg Peel

Now What?

On Thursday night Wall Street turned around sharply mid-session to turn another big fall into a comeback rally. On Friday our futures were suggesting up 85 points from the open in line with Wall Street, but managed only 55 from the opening bell.

Thereafter, the ASX200 began sliding back, with successive attempts at re-rallying throughout the session failing each time. It seemed Australian investors were not prepared to blindly run with Wall Street in such a fluid situation, ahead of a weekend. Too risky.

On Friday night Wall Street’s rally kicked on, in spectacular fashion. Thursday provided the green light and Friday was FOMO all the way. Our futures closed up 166 points on Saturday morning.

But there have since been some developments.

Russia’s advance on Kyiv has stalled. Putin has put short-range nuclear weapons in Belarus on high alert. Some Russian banks have been removed from SWIFT. Sanctions have been imposed on Vladimir Putin.

On Friday, Russia agreed to talks with Ukraine on the Belarussian border. This appears to have been what Wall Street wanted to hear.

What to make of it all? Thursday’s mid-session turnaround was triggered when Biden outlined sanctions to be imposed on Russia. What was important to the market was not what was included, but what was omitted. Aside from no sanctions on energy exports, the US did not go as far as to play the SWIFT card, given European resistance.  

Wall Street feared disruption of the global banking system if Russia were to be removed from SWIFT. Now it has been, partly. What do the Russians want to talk about? Peace? Or surrender now or we’ll use the nukes?

I’m not going to speculate.

Outside of geopolitics, the local earnings season raged on on Friday. Once again there were some very big moves.

Block ((SQ2)) reported overnight in the US, and the local listing jumped 32.5% on Friday. The tech sector gained 8.1%. Next best was property on 1.5%.

On Thursday, Life360 ((360)) fell -28.8% on result. On Friday it bounced 22.0%. The result did not change Morgan Stanley’s Overweight rating or target price.

City Chic Collective ((CCX)) fell -30.9% on Thursday on result. It bounced 12.9% on Friday following broker reviews.

Tyro Payments ((TYR)) fell -26% on Monday when it reported. It jumped 10.9% on Friday. There’s a lot of this going on. BWX ((BWX)) reported on Friday and fell -26%. Stand by.

It can go both ways though. Blackmores ((BKL)) fell -9.2% on result on Thursday and another -10.5% on Friday. Magellan Financial Group ((MFG)) reported on Friday and fell -10.1%.

I could go on, but I won’t. The only other point worth mentioning is the worst performing sector on the day was financials, down -1.0%, countering gains elsewhere. Upheaval in the global banking system, and/or rate hike renewed hesitance from central banks, possibly.

Consumer staples fell -0.8%. SE Queensland and Northern NSW are underwater.

Little more to say

US inflation as measured by personal consumption & expenditure rose to an annual rate of 6.1% in January, to mark the highest rate since 1982. The core PCE rose to 5.2%, the highest since 1983. But these numbers no longer shock.

The belief on Wall Street is that Ukraine/Russia will not derail the Fed’s tightening plans. It may, nevertheless, make the Fed a little less trigger-happy. A full 50 point move this month is no longer expected. Forecasts of seven consecutive rate hikes are now being reeled in, with four this year the more popular choice.

Wall Street posted its biggest gain to date in 2022 on Friday night and the Dow its biggest since November. The Dow closed less than -0.1% down for the week, while the S&P500 gained 0.8% and the Nasdaq 1.1%.

Aside from the SWIFT element, all that matters from here, one presumes, is the aforementioned talks between Russia and Ukraine. The problem is, there is some confusion around when exactly the talks will take place.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1889.00	– 2.30	– 0.12%
Silver (oz)	24.27	+ 0.22	0.91%
Copper (lb)	4.52	+ 0.01	0.25%
Aluminium (lb)	1.56	– 0.01	– 0.64%
Lead (lb)	1.08	+ 0.01	0.49%
Nickel (lb)	11.32	– 0.33	– 2.82%
Zinc (lb)	1.66	– 0.00	– 0.29%
West Texas Crude	91.59	– 0.79	– 0.86%
Brent Crude	97.93	– 0.52	– 0.53%
Iron Ore (t)	133.45	– 3.50	– 2.56%

Materials was the best performing sector in the S&P on Friday. This would not, it would appear, as a result of actual commodity price moves.

Coal, however, is on a run again.

Oil markets have stalled, awaiting the next piece of news.

Indeed in markets across the globe, all will be awaiting the next piece of news.

The Aussie is off slightly at US$0.7159.

The SPI Overnight closed up 166 points or 2.4%.

The Week Ahead

The local result season officially ends today. There will be a few results to be released in March, mostly smaller resource stocks.

The ex-dividend season now takes over, stepping up the pace from this week. Fortescue Metals ((FMG)) is on the list today.

Australia’s December quarter GDP result is out on Wednesday. Lead-in numbers this week include corporate profits and inventories today and the current account tomorrow.

The RBA meets tomorrow.

Today we’ll see January retail sales and tomorrow, February house prices. On Thursday it’s January building approvals and the trade balance.

It’s jobs week in the US, with the private sector number out on Wednesday and non-farm payrolls on Friday.

China releases its February PMIs today. Everyone else releases manufacturing PMIs tomorrow and services on Thursday.

On Friday S&P will announce changes to S&P/ASX index components, to become effective two weeks later.

For upcoming earnings result dates, and a summary of results to date, please refer to the FNArena Corporate Results Monitor.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AGI	Ainsworth Game Technology	Downgrade to Neutral from Outperform	Macquarie
APX	Appen	Downgrade to Hold from Buy	Ord Minnett
ARB	ARB Corp	Upgrade to Neutral from Underperform	Credit Suisse
		Upgrade to Outperform from Neutral	Macquarie
BKL	Blackmores	Downgrade to Neutral from Outperform	Credit Suisse
BSL	BlueScope Steel	Upgrade to Overweight from Equal-weight	Morgan Stanley
COH	Cochlear	Upgrade to Buy from Neutral	Citi
		Upgrade to Equal-weight from Underweight	Morgan Stanley
		Upgrade to Add from Hold	Morgans
COL	Coles Group	Upgrade to Neutral from Sell	UBS
CQR	Charter Hall Retail REIT	Downgrade to Neutral from Outperform	Credit Suisse
DEL	Delorean Corp	Downgrade to Hold from Add	Morgans
DMP	Domino's Pizza Enterprises	Upgrade to Neutral from Underperform	Credit Suisse
		Upgrade to Add from Hold	Morgans
HMC	HomeCo	Upgrade to Buy from Hold	Ord Minnett
ILU	Iluka Resources	Downgrade to Underperform from Neutral	Credit Suisse
NXT	NextDC	Upgrade to Buy from Accumulate	Ord Minnett
PAN	Panoramic Resources	Upgrade to Add from Hold	Morgans
PRU	Perseus Mining	Buy	Citi
PTB	PTB Group	Downgrade to Hold from Add	Morgans
PTM	Platinum Asset Management	Upgrade to Neutral from Underperform	Credit Suisse
QUB	Qube Holdings	Upgrade to Buy from Accumulate	Ord Minnett
RHC	Ramsay Health Care	Upgrade to Buy from Neutral	Citi
SBM	St. Barbara	Downgrade to Neutral from Outperform	Credit Suisse
SDF	Steadfast Group	Upgrade to Buy from Accumulate	Ord Minnett
SGM	Sims	Downgrade to Neutral from Outperform	Macquarie
SGP	Stockland	Upgrade to Outperform from Neutral	Credit Suisse
		Upgrade to Neutral from Underperform	Macquarie
SOM	SomnoMed	Upgrade to Add from Hold	Morgans
TPG	TPG Telecom	Downgrade to Hold from Add	Morgans
UWL	Uniti Group	Upgrade to Buy from Accumulate	Ord Minnett
VRT	Virtus Health	Downgrade to Neutral from Outperform	Macquarie
WGN	Wagners Holding Co	Upgrade to Outperform from Neutral	Macquarie
WOR	Worley	Downgrade to Underperform from Neutral	Credit Suisse
		Downgrade to Neutral from Outperform	Macquarie
		Downgrade to Lighten from Hold	Ord Minnett
WOW	Woolworths Group	Upgrade to Buy from Neutral	Citi
		Upgrade to Neutral from Underperform	Credit Suisse
XRO	Xero	Upgrade to Neutral from Underperform	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