Daily Market Reports | Mar 17 2021
This story features CSL LIMITED, and other companies. For more info SHARE ANALYSIS: CSL
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Mar) | 6803.00 | – 30.00 | – 0.44% |
| S&P ASX 200 | 6827.10 | + 54.10 | 0.80% |
| S&P500 | 3962.71 | – 6.23 | – 0.16% |
| Nasdaq Comp | 13471.57 | + 11.86 | 0.09% |
| DJIA | 32825.95 | – 127.51 | – 0.39% |
| S&P500 VIX | 19.79 | – 0.24 | – 1.20% |
| US 10-year yield | 1.62 | + 0.01 | 0.87% |
| USD Index | 91.87 | + 0.07 | 0.08% |
| FTSE100 | 6803.61 | + 53.91 | 0.80% |
| DAX30 | 14557.58 | + 96.16 | 0.66% |
By Greg Peel
Easy Money
“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest”.
The ASX200 opened slightly higher yesterday as the futures had suggested but at 11.30am jumped up an additional 68 points, to be up 85 points, on the release of the minutes of the March RBA meeting. Even though Philip Lowe is beginning to sound a bit like a broken record, as the extract above attests.
But that broken record is encouraging, as is the RBA’s intention to maintain the three-year rate at 0.1% by rolling forward the maturity of its bond purchases to keep up to three years (while interest rate futures represent a synthetic, fixed maturity, actual physical bonds are only three years in maturity the day they’re issued).
The minutes were worth a full -10 basis point reduction in the benchmark ten-year bond yield to 1.68%.
They were hence a fillip for all things yield-paying, not counting iron ore miners. Materials (-0.6%) and energy (-0.2%) were the only sectors to close in the red on lower respective commodity prices.
Technology (+3.0%) was tediously the biggest mover on the day because the Nasdaq had gone up, but the real impact came from healthcare (+2.4%) as investors begin to reassess CSL ((CSL)) and its blood collecting issues.
By rights the banks should fall on lower bond yield from an interest margin perspective but they’re also among the biggest dividend payers, so it’s a case of push & pull. They rose 0.7%. Utilities, industrials and property all did well on lower yields and RBA assurance.
The most notable individual stock move of the day was that of property fund manager Charter Hall Group ((CHC)), for which a 5.5% gain on the day is not common (but increasingly more so in recent times).
Sellers moved in in the afternoon to take a bit of the gloss off but what we might note is that the ASX200 did finally manage to break through the 6800 barrier, which in recent sessions has proven the trigger point for profit-taking.
That said, the index closed at 6827 and despite Wall Street doing not a lot last night our futures are showing -30 this morning which would indeed take us back under 6800, if accurate.
However, the March SPI contract expires tomorrow, so we have to take futures volatility with a grain of salt at this point.
Waiting for Jay
We recall that Wall Street had meandered around without conviction on Monday before a late burst of buying when the VIX volatility index dipped below 20. Last night was much the same but for the late buying, with the VIX trading slightly under and slightly over 20 all session (19.91 close).
The day began with a greater than expected fall in February retail sales, of -3.0%. This sent bond yields lower and stock indices weaker but the impact didn’t last long.
In January sales had jumped a remarkable 7.6%, buoyed not just by pent-up demand but by the eleventh hour extension of unemployment support that put fresh cheques in bank accounts. By February, spending subsided.
Moreover, US tax refunds are typically paid in February but this year were delayed to March and the month also featured the Big Freeze. So not only have economists shrugged off the weak February number, with new stimulus cheques hitting bank accounts, along with tax refunds, and more stable weather, March sales are expected to look a lot like January.
The Big Freeze was also blamed for a -2.2% fall in industrial production in February.
The US ten-year yield ultimately closed up one point at 1.62% and while the Nasdaq was the day’s outperformer, with the Dow finally pulling back after a seven-day winning streak, the end result was largely benign.
For tonight the FOMC will release its latest policy statement and the Fed chair will hold his press conference. Like Philip Lowe, Jerome Powell is unlikely to do any other than stick to his own broken record, but Wall Street is waiting with baited breath.
Powell might be playing down recent bond yield spikes but Wall Street wants to know just when the Fed might see a need to begin tapering its QE bond purchases. We recall the Great Taper Tantrum of 2013, and more recently the Christmas plunge of 2018 when the freshly minted Powell made the mistake of signalling monetary tightening.
So Wall Street would really like to know.
The best performers by the close were the tech-based sectors, and the worst banks and energy. This is an unsurprising switch from the pattern that has pervaded since November.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1731.70 | + 1.00 | 0.06% |
| Silver (oz) | 25.90 | – 0.32 | – 1.22% |
| Copper (lb) | 4.07 | – 0.05 | – 1.31% |
| Aluminium (lb) | 0.98 | + 0.00 | 0.13% |
| Lead (lb) | 0.87 | – 0.01 | – 0.88% |
| Nickel (lb) | 7.39 | + 0.08 | 1.03% |
| Zinc (lb) | 1.26 | – 0.02 | – 1.20% |
| West Texas Crude | 64.68 | – 0.67 | – 1.03% |
| Brent Crude | 68.28 | – 0.61 | – 0.89% |
| Iron Ore (t) | 166.30 | + 2.65 | 1.62% |
We have copper down again but iron ore up, while oil prices slip once more.
Gold has gone back to sleep after some trying times. I note Bitcoin had another one of its swoons following new highs.
Incremental gains in the US dollar are incrementally reducing the Aussie, for now. It’s down -0.2% at US$0.7743.
Today
The SPI Overnight closed down -30 points or -0.4%.
All eyes on the Fed tonight.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BWP | BWP Trust | Upgrade to Neutral from Sell | UBS |
| FLT | Flight Centre | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| GMG | Goodman Grp | Upgrade to Buy from Neutral | UBS |
| QAN | Qantas Airways | Upgrade to Buy from Neutral | Citi |
| Upgrade to Outperform from Neutral | Macquarie | ||
| RIC | Ridley Corp | Upgrade to Outperform from Neutral | Credit Suisse |
| SGP | Stockland | Downgrade to Neutral from Buy | UBS |
| VCX | Vicinity Centres | Downgrade to Hold from Buy | Ord Minnett |
| WPL | Woodside Petroleum | Upgrade to Buy from Neutral | UBS |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: CHC - CHARTER HALL GROUP
For more info SHARE ANALYSIS: CSL - CSL LIMITED