Daily Market Reports | Mar 01 2021
This story features HARVEY NORMAN HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: HVN
The company is included in ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Mar) | 6658.00 | + 29.00 | 0.44% |
| S&P ASX 200 | 6673.30 | – 160.70 | – 2.35% |
| S&P500 | 3811.15 | – 18.19 | – 0.48% |
| Nasdaq Comp | 13192.35 | + 72.92 | 0.56% |
| DJIA | 30932.37 | – 469.64 | – 1.50% |
| S&P500 VIX | 27.95 | – 0.94 | – 3.25% |
| US 10-year yield | 1.46 | – 0.06 | – 3.82% |
| USD Index | 90.88 | + 0.66 | 0.73% |
| FTSE100 | 6483.43 | – 168.53 | – 2.53% |
| DAX30 | 13786.29 | – 93.04 | – 0.67% |
By Greg Peel
Nowhere to run to
The ASX200 ended the month of February by putting in its worst day since last September, wiping out all of the month's gains and rendering the earnings result season somewhat moot.
The results season had begun with Wall Street in a period of limbo, allowing the day's releases to be the primary focus for investors. And they saw that it was good. Beats were running at well above historical levels. Indeed, the season has ended with beats still well above historical levels, but later in the month macro influences ruined the party.
All sectors closed in the red on Friday, with industrials (-1.0%), utilities (-1.6%) and consumer staples (-1.9%) "outperforming", despite the fact the week's volatility was all about rising bond yields.
On Friday the Australian ten-year yield rose another 17 basis points to 1.90%.
Technology was the worst performer, down a full -5.3%. The sector was always going to underperform in blindly mimicking the Nasdaq's move overnight, but the damage was done by Afterpay ((APT)). It came back from a trading halt having raised new capital, and announced its founders had each dumped $60m worth of stock. Afterpay fell -10.6%.
Consumer discretionary fell -3.2%. Harvey Norman ((HVN)) reported on the day and fell -1.1%, but also reporting were Kogan ((KGN)), which fell -10.4%, and PointsBet ((PBH)), down -10.6%.
In terms of market cap, the ASX200 was led down by the banks (-2.2%), healthcare (-2.7%), materials (-2.3%) and energy (-2.5%).
Consumer discretionary may have also been upset by the pullback in the Aussie from US80c accelerating further on Friday (down another -2% by Saturday morning), but this did not seem to help the exporters in the other direction.
Speaking of exporters, Orica ((ORI)) imploded after a trading update which highlighted the impact of China's coal ban. It fell -18.1% to be the day's worst index performer. Selling in Service Stream ((SSM)) continued on (-14.2%) after the company reported on Wednesday.
There were some trend-buckers nonetheless. Reporting on the day were Lynas Rare Earths ((LYC)) and Clinuvel Pharmaceuticals ((CUV)). They rose 5.7% and 3.6% respectively. Having reported earlier in the week, and also bucking the gold price trend, were miners Silver Lake Resources ((SLR)) and Perseus Mining ((PRU)), which put on 7.0% and 4.5%.
Unlikely winner on the day was AMP ((AMP)). Having first looked at acquiring the company, then just part of the company, then none of the company, Ares Management is now looking at taking 60% of AMP Capital’s private markets business. AMP rose 7.5%.
So, that was February. Today is March, and I can tell you that everything that happened in offshore markets during the final two weeks of February went into reverse on Friday night, from Wall Street to bond yields, commodity prices and currencies.
Our futures were up a tentative 29 points on Saturday morning.
Hall of Mirrors
I said earlier in February, when Wall Street went into stall-mode, that if markets cannot find any reason to go up further they will invariably go down. Last week the Dow fell -1.8% and the Nasdaq -4.9%, with the S&P500 in the middle at -2.5%.
On balance it was still a positive month, with the Dow netting a 3.2% gain to the Nasdaq's 0.9% and the S&P in the middle with 2.6%.
Thus while a -470 plunge for the Dow on Friday night was not a reversal of the week's trade, it was a reversal of the month's theme, backed up by the Nasdaq rising 0.6%.
Recent volatility has been all about rising bond yields. The US ten-year fell -6 basis points to 1.46% on Friday night.
Base metal prices surged all month, particularly copper. They all fell back on Friday night, with copper down -2%.
Oil prices had climbed steadily all month. They fell -3%.
The US dollar index had been at risk of breaking down through 90. It jumped 0.7%.
See any theme?
It was the last day of a volatile, yet on a net basis positive month for markets. Time to take profits and square up.
Any other news on the day was by the by, but there were some interesting economic data.
US consumer spending jumped 2.4% in January to mark the biggest jump in six months, as stimulus cheques flowed once again. Incomes rose 10.0%.
Inflationary? The Fed's preferred measure, core personal consumption & expenditure, rose 0.3% to 1.5% annualised, up from 1.3% in December. Yes, inflation is on the rise, but the core PCE still has to get to 2% to reach the Fed's target, and even then the Fed is prepared to let it run over 2% before considering any sort of monetary stimulus tapering.
Yet there's more fiscal stimulus to come.
As expected, the Senate has ruled against an increase to the minimum wage being allowable as part of the budget the Democrats can pass with a simple majority. Such an increase does not reflect government stimulus, as it would be paid by the private sector. Otherwise, Biden's US$1.9trn package should soon be voted on.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1735.60 | – 35.60 | – 2.01% |
| Silver (oz) | 26.70 | – 0.73 | – 2.66% |
| Copper (lb) | 4.19 | – 0.09 | – 2.12% |
| Aluminium (lb) | 0.98 | – 0.02 | – 2.04% |
| Lead (lb) | 0.93 | – 0.03 | – 3.60% |
| Nickel (lb) | 8.49 | – 0.23 | – 2.59% |
| Zinc (lb) | 1.27 | – 0.04 | – 2.71% |
| West Texas Crude | 61.50 | – 1.99 | – 3.13% |
| Brent Crude | 64.42 | – 2.57 | – 3.84% |
| Iron Ore (t) | 176.65 | + 2.35 | 1.35% |
Aside from speculative profit-taking, Friday's trade in base metals likely also reflected monthly rebalancing by commodity funds, for example selling copper because it has exceed its basket weighting, and buying something else in its place.
Not gold though. It would be easy to say that gold dropped on the greenback's rise but a fall back in US yields should have provided some support.
The oils would have also seen profit-taking and commodity fund rebalancing, and perhaps Texas starting to come back on line.
The Aussie good heavens. Having pulled back from US80c with a sharp -1.4% drop on Thursday, Friday saw a further -1.9% plunge to US$0.7707.
Dorothy's back in Kansas.
The SPI Overnight closed up 29 points or 0.4%.
The Week Ahead
The reporting season is over, but there's always a couple of stragglers in the following week. And overwhelmed stock analysts are still trying to catch up with last week's backlog.
Attention now turns to Australia's December quarter GDP out on Wednesday. Today we'll see component numbers for company profits and inventories, and tomorrow the current account.
Today also brings house prices, housing finance and ANZ Bank job ads. Tomorrow it's building approvals and on Thursday updated numbers for retail sales and trade.
It's jobs week in the US, with private sector numbers due on Wednesday and non-farm payrolls on Friday.
Today is global manufacturing PMI day and Wednesday the same for services PMIs.
China released its PMIs on Friday manufacturing 50.6, down from 51.3, and services 51.4, down from 51.5. But it should be noted that Chinese data always suffer distortions around Lunar New Year.
Don't panic when you see Fortescue Metals ((FMG)) plunge on the open today. It will remind us that the ex-dividend season, which lags result season, ramps up further this week.
The Australian share market over the past thirty days
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| A2M | a2 Milk Co | Downgrade to Lighten from Hold | Ord Minnett |
| ABY | ADORE BEAUTY GROUP | Upgrade to Buy from Neutral | UBS |
| ALX | Atlas Arteria | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| APA | APA | Upgrade to Buy from Hold | Ord Minnett |
| APE | EAGERS AUTOMOTIVE | Upgrade to Outperform from Neutral | Macquarie |
| Upgrade to Accumulate from Hold | Ord Minnett | ||
| APX | Appen | Upgrade to Buy from Accumulate | Ord Minnett |
| ASB | Austal | Upgrade to Hold from Lighten | Ord Minnett |
| ATL | Apollo Tourism & Leisure | Downgrade to Lighten from Hold | Ord Minnett |
| BOQ | Bank Of Queensland | Upgrade to Add from Hold | Morgans |
| CCX | City Chic | Downgrade to Neutral from Buy | Citi |
| FCL | Fineos Corp | Downgrade to Hold from Accumulate | Ord Minnett |
| FLT | Flight Centre | Upgrade to Outperform from Neutral | Macquarie |
| Upgrade to Hold from Lighten | Ord Minnett | ||
| Downgrade to Sell from Neutral | Citi | ||
| Downgrade to Underperform from Neutral | Credit Suisse | ||
| Downgrade to Equal-weight from Overweight | Morgan Stanley | ||
| Downgrade to Neutral from Buy | UBS | ||
| HLO | HELLOWORLD TRAVEL | Upgrade to Hold from Lighten | Ord Minnett |
| HVN | Harvey Norman Holdings | Downgrade to Neutral from Outperform | Credit Suisse |
| JHC | Japara Healthcare | Downgrade to Accumulate from Buy | Ord Minnett |
| MGX | Mount Gibson Iron | Downgrade to Neutral from Outperform | Macquarie |
| MPL | Medibank Private | Upgrade to Neutral from Underperform | Macquarie |
| Upgrade to Add from Hold | Morgans | ||
| MWY | Midway | Upgrade to Buy from Hold | Ord Minnett |
| NAN | Nanosonics | Upgrade to Add from Hold | Morgans |
| Upgrade to Hold from Lighten | Ord Minnett | ||
| NIC | Nickel Mines | Downgrade to Neutral from Buy | Citi |
| NTD | National Tyre & Wheel | Hold | Morgans |
| NUF | Nufarm | Upgrade to Outperform from Neutral | Macquarie |
| Downgrade to Neutral from Outperform | Credit Suisse | ||
| NVX | Novonix | Upgrade to Add from Hold | Morgans |
| NXT | Nextdc | Upgrade to Buy from Accumulate | Ord Minnett |
| QUB | Qube Holdings | Downgrade to Neutral from Outperform | Credit Suisse |
| Downgrade to Hold from Buy | Ord Minnett | ||
| RHC | Ramsay Health Care | Downgrade to Neutral from Buy | Citi |
| SCG | Scentre Group | Downgrade to Neutral from Outperform | Credit Suisse |
| SEK | Seek Ltd | Upgrade to Buy from Neutral | UBS |
| Downgrade to Underperform from Neutral | Macquarie | ||
| TPG | TPG Telecom | Upgrade to Buy from Neutral | UBS |
| WGN | Wagners Holding | Upgrade to Outperform from Neutral | Credit Suisse |
| Upgrade to Outperform from Neutral | Macquarie | ||
| WSA | Western Areas | Upgrade to Outperform from Neutral | Macquarie |
| WTC | Wisetech Global | Upgrade to Neutral from Sell | Citi |
For more detail go to FNArena's Australian Broker CallReport, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: AMP - AMP LIMITED
For more info SHARE ANALYSIS: CUV - CLINUVEL PHARMACEUTICALS LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED
For more info SHARE ANALYSIS: HVN - HARVEY NORMAN HOLDINGS LIMITED
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: LYC - LYNAS RARE EARTHS LIMITED
For more info SHARE ANALYSIS: ORI - ORICA LIMITED
For more info SHARE ANALYSIS: PBH - POINTSBET HOLDINGS LIMITED
For more info SHARE ANALYSIS: PRU - PERSEUS MINING LIMITED
For more info SHARE ANALYSIS: SLR - SILVER LAKE RESOURCES LIMITED
For more info SHARE ANALYSIS: SSM - SERVICE STREAM LIMITED