Daily Market Reports | Mar 29 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 (Jun) | 6848.00 | + 49.00 | 0.72% |
| S&P ASX 200 | 6824.20 | + 33.60 | 0.49% |
| S&P500 | 3974.54 | + 65.02 | 1.66% |
| Nasdaq Comp | 13138.73 | + 161.04 | 1.24% |
| DJIA | 33072.88 | + 453.40 | 1.39% |
| S&P500 VIX | 18.86 | – 0.95 | – 4.80% |
| US 10-year yield | 1.66 | + 0.05 | 2.85% |
| USD Index | 92.77 | – 0.11 | – 0.12% |
| FTSE100 | 6740.59 | + 65.76 | 0.99% |
| DAX30 | 14748.94 | + 127.58 | 0.87% |
By Greg Peel
Bridge Crossed?
The ASX200 shot up from the open on Friday to above 6800 and despite drifting a bit lower during the session, managed to hold above. This time, no one came in with selling at what has been staunch resistance.
The index gained 0.5% on the day to end a meandering week. The trend was positive enough for a 1.7% weekly gain.
All sectors closed in the green on Friday bar healthcare (-0.7%). Healthcare had enjoyed a strong week otherwise on a big drop in the Aussie and on CSL ((CSL)) beginning to produce the AstraZeneca vaccine locally.
Telcos was the best performer (+1.3%) despite TPG Telecom ((TPG)) falling -6.7% after the company’s founder and longstanding chairman announced his retirement. Telstra ((TLS)) rose 2.4% to cap a solid week which began with the announced intention of splitting the company into four, and ended with an announced intention to de-list in New Zealand.
The resource sectors had a strong session on the back of commodity prices, with materials rising 1.2% and energy 0.9%. With that boat still wedged in the Suez Canal, oil prices were up another 4.5% on Friday night.
The banks were well supported to offset the insurance companies in the financials sector (+0.4%), with a flood of water now leading to a flood of claims.
Technology (+1.2%) followed up the Nasdaq while elsewhere, not much was happening.
Top individual performer of the day was lithium/tantalum miner Pilbara Minerals ((PLS)), which rose 9.5% on no news. The stock was nevertheless added to the ASX200 on Monday, so the move may reflect fund managers/ETF sponsors in the process of reallocation.
With Wall Street staging another late surge on Friday night, our futures were up 49 points on Saturday morning, suggesting that 6800 mark can now be kissed goodbye. It’s not quite blue sky above – it’s still a long way up to the pre-pandemic high – but it’s a start.
Any kick-on this week may nevertheless be hampered by end-of-quarter rebalancing and squaring up, so it might be a bit messy through to Wednesday. Then there’s one more day before Easter.
We’ve also had disturbing news over the weekend regarding a cyber attack on both the government and Nine Entertainment ((NEC)).
And the latest covid scare in Brisbane is not boding well for a return to Queensland travel over the holiday weekend.
Not with a Whimper
For six sessions in a row, Wall Street had been travelling along nicely before a wave of selling came in in the last half hour. On Thursday night, that pattern swung the other way. On Friday night, the late surge was even more extensive.
Blink and you would have missed a couple of hundred points in the Dow.
Most interesting was the Nasdaq, which swung from -0.5% down with an hour to go to close up 1.2%. Early weakness can be attributed to the US ten-year bond yield having another spurt, up 5 basis points to 1.66%, but that’s where it stayed, and the rally began regardless.
The jump in yields came even as the February PCE inflation number did no more than meet expectations.
Talk is that while FANG & Co, the 2020 covid winners plus the Teslas of the world had run too far and were in need of a pullback, bond yields around 1.7% are hardly going to sink the ship. In the “taper tantrum” of 2013, the ten-year yield shot up to 3% and the Nasdaq powered on.
It’s been an interesting March quarter, featuring both the sudden drop in bond prices and bifurcation of the stock market into winners and losers, being value/cyclicals versus growth. As quarter-end approaches, fund managers have difficult reallocation decisions to make.
And that’s the active managers. Passive managers, who track indices large and small, have to reallocate regardless of view. And your standard 60/40 equity/bond balanced fund will clearly need some tweaking.
The same goes for ETF sponsors.
Friday night clearly was not a matter of rotation reversal and squaring up, with all three indices charging higher. The underlying trend continues to be driven by the “reopening” trade, particularly as America approaches the warmer months.
But that also brings the risk of a return to rising case-counts, and that’s already beginning to happen. While this should be countered by the rapid vaccine rollout (Biden now setting a 200m vaccination target in 100 days, doubling the original target), the situation remains fluid.
The standout story on Wall Street for the week has been the sudden trashing of big media companies. Viacom-CBS and Discovery (Channel) were both thumped around -30% on Friday night to make -50% in a couple of sessions, having roughly quadrupled in price since October.
News Corp’s in the mix as well, but Fox News is being sued for lying about the election, while Disney was dragged down on Friday night as well, supposedly in sympathy. Word is there are two very large blocks of stock on offer in both Viacom and Discovery.
Speculation is the sale may be margin call-related.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1733.30 | + 5.90 | 0.34% |
| Silver (oz) | 25.03 | – 0.03 | – 0.12% |
| Copper (lb) | 4.07 | + 0.08 | 2.05% |
| Aluminium (lb) | 1.02 | + 0.02 | 2.32% |
| Lead (lb) | 0.88 | + 0.00 | 0.54% |
| Nickel (lb) | 7.38 | + 0.07 | 0.90% |
| Zinc (lb) | 1.27 | + 0.01 | 0.89% |
| West Texas Crude | 60.97 | + 2.55 | 4.36% |
| Brent Crude | 64.57 | + 2.79 | 4.52% |
| Iron Ore (t) | 161.45 | + 1.25 | 0.78% |
It’s a very long way around the Cape of Good Hope to get any goods to or from Europe and Asia. It’s an extra week of sailing, and think of the fuel cost. Even Vasco Da Gama would be shaking his head.
This, and another dip in the greenback, is underscoring commodity prices.
Hence the Aussie is up 0.7% at US$0.7636.
The SPI Overnight closed up 49 points or 0.7% on Saturday morning.
The Week Ahead
It’s a shortened week, with all Western markets closed on Friday.
On Wednesday China will release March PMIs, and then everyone else will release manufacturing PMIs on Thursday.
The US will see consumer confidence on Tuesday and then private sector unemployment on Wednesday. This will be followed by the March non-farm payroll numbers on the Friday, because Good Friday is not a national holiday in the US.
Australia’s economic highlight for the week is private sector credit on Wednesday.
Synlait Milk ((SM1) will report earnings tomorrow, after Bega Cheese ((BGA)) holds an EGM and Wesfarmers ((WES)) its AGM today.
The ex-div season is winding down but there’s a last hurrah tomorrow when just about all REITs and similar funds go ex-div together.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BEN | Bendigo And Adelaide Bank | Upgrade to Outperform from Neutral | Macquarie |
| CBA | Commbank | Upgrade to Neutral from Underperform | Macquarie |
| CSL | CSL | Upgrade to Outperform from Neutral | Credit Suisse |
| DHG | Domain Holdings | Downgrade to Neutral from Outperform | Macquarie |
| GNC | Graincorp | Upgrade to Outperform from Neutral | Credit Suisse |
| NWL | Netwealth Group | Upgrade to Buy from Neutral | Citi |
| PMV | Premier Investments | Upgrade to Accumulate from Hold | Ord Minnett |
| PNV | Polynovo | Upgrade to Outperform from Neutral | Macquarie |
| REA | REA Group | Upgrade to Outperform from Neutral | Macquarie |
| RSG | Resolute Mining | Downgrade to Neutral from Buy | Citi |
| Downgrade to Underperform from Outperform | Macquarie | ||
| SIG | Sigma Healthcare | Downgrade to Neutral from Buy | Citi |
| URW | Unibail-Rodamco-Westfield | Downgrade to Sell from Hold | Ord Minnett |
| WBC | Westpac Banking | Downgrade to Neutral from Outperform | Macquarie |
| WTC | Wisetech Global | Upgrade to Outperform from Neutral | Macquarie |
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: BGA - BEGA CHEESE LIMITED
For more info SHARE ANALYSIS: CSL - CSL LIMITED
For more info SHARE ANALYSIS: NEC - NINE ENTERTAINMENT CO. HOLDINGS LIMITED
For more info SHARE ANALYSIS: PLS - PLS GROUP LIMITED
For more info SHARE ANALYSIS: TLS - TELSTRA GROUP LIMITED
For more info SHARE ANALYSIS: TPG - TPG TELECOM LIMITED
For more info SHARE ANALYSIS: WES - WESFARMERS LIMITED