Daily Market Reports | Apr 27 2021
This story features WESTPAC BANKING CORPORATION, and other companies. For more info SHARE ANALYSIS: WBC
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7026.00 | + 6.00 | 0.09% |
| S&P ASX 200 | 7045.60 | – 15.10 | – 0.21% |
| S&P500 | 4187.62 | + 7.45 | 0.18% |
| Nasdaq Comp | 14138.78 | + 121.97 | 0.87% |
| DJIA | 33981.57 | – 61.92 | – 0.18% |
| S&P500 VIX | 17.64 | + 0.31 | 1.79% |
| US 10-year yield | 1.57 | + 0.00 | 0.19% |
| USD Index | 90.84 | – 0.02 | – 0.02% |
| FTSE100 | 6963.12 | + 24.56 | 0.35% |
| DAX30 | 15296.34 | + 16.72 | 0.11% |
By Greg Peel
Lacking the Will
They say never short a dull market but markets that fail to find any upside traction in a session do tend to close lower. That appeared to be the case yesterday as the ASX200 showed signs of an Anzac Day hangover and drifted rather aimlessly before closing down -15. Volumes were low.
Materials was the only clear sector winner on the day, gaining 0.4% as iron ore hit a record high (up over US$190/t this morning). Property squeezed out a 0.1% gain.
The banks closed flattish despite Westpac ((WBC)) announcing a -$282m earnings write-down due to everything from provisions for litigation to customer refunds, payments and associated costs. The bank also revealed a $288m gain from its investment in recently US-listed crypto exchange Coinbase. All up the shares lost -0.2%.
Industrials lost -0.2% but for other sectors it was a case of rather uniform falls of -0.6-1.0% for no obvious reason. We might argue the virus situation is getting a bit dodgy again but WA is back out of lockdown so things seem under control.
It’s not every day an insurance company jumps 10.2% but that was the case for nib Holdings ((NHF)) after upgrading earnings guidance. The market has been pretty down on health insurers in recent times given many, particularly the young, are finding premiums just too inaccessible.
It was a drop down to Fortescue Metals ((FMG)) in second place on the index, leading the iron ore charge with 4.8%.
The exit from Whitehaven Coal ((WHC)) continues, dropping another -6.8% yesterday, while selling was ongoing in Blackmores ((BKL)) as we await Beijing’s reaction to the Belt&Road backdown. It fell -4.6%.
Kogan’s ((KGN)) weak update last week, cycling the initial covid sales surge, had it down another -4.1% with fellow big covid winner, JB Hi-Fi ((JBH)), falling another -4.0%.
All in all a lacklustre session. All metal prices are up overnight, not just iron ore, but the Aussie has jumped a full 0.7% to be back over US78c so it’s a bit of a tit for tat.
Wall Street has seen a relatively quiet session overnight as well, although the Nasdaq was back in the spotlight.
The futures are up 6 points this morning. Could be another dull one.
Only one direction
Tesla reported after the bell last night and beat on all of earnings, revenue and its most important metric, gross margin. The shares are down -1.8% in the aftermarket.
That about sums up US earnings season to date. While the S&P500 continues to creep up to ever new all-time highs (including last night), earnings beats are not much being rewarded.
With about a third of the 500 having reported the scorecard remains net positive, but this is the biggest week in the season by a margin and includes a lot of the mega-cap tech stocks such as FAMG (Microsoft not Netflix, which has already disappointed with its result ahead of taking out seven Oscars).
Those stocks were being bought up last night ahead of their result releases, hence outperformance from the Nasdaq (new high), which is why actual result releases are rarely prompting further gains.
An interesting element of result releases so far has been the high number of “mentions” of the word “inflation” in accompanying statements and conference calls. Corporate America is still struggling with how recent strong economic data and an expected bumper GDP number this week will not translate into systemic inflation, but rather be transitory as the Fed insists.
Don’t fight the Fed, they say, with the FOMC steadfastly believing covid headwinds will be to blame for any short term spike in inflation and because there’s nothing to fear, inflation will be allowed to run a little “hot” for a period before there’s any thought of tapering or rate hikes.
So with that put option in place, asset prices have nowhere to go but up, be it stocks or commodities or house prices or bitcoin (which jumped back 9% over the weekend). Major US home builders are trading at all-time highs. The Dow Transport index continues to surge back from covid lockdowns.
There’s little to do but hang on for the ride.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1781.00 | + 4.10 | 0.23% |
| Silver (oz) | 26.18 | + 0.21 | 0.81% |
| Copper (lb) | 4.38 | + 0.04 | 0.96% |
| Aluminium (lb) | 1.09 | + 0.01 | 1.32% |
| Lead (lb) | 0.93 | + 0.02 | 1.70% |
| Nickel (lb) | 7.47 | + 0.14 | 1.88% |
| Zinc (lb) | 1.29 | + 0.00 | 0.20% |
| West Texas Crude | 61.91 | – 0.23 | – 0.37% |
| Brent Crude | 65.79 | – 0.32 | – 0.48% |
| Iron Ore (t) | 191.45 | + 6.35 | 3.43% |
All green on screen in metals and another big leap in the iron ore price.
The oils are letting the side down somewhat.
All countered, of course, by a 0.7% jump in the Aussie to US$0.7805.
Today
The SPI Overnight closed up 6 points.
The Bank of Japan holds a policy meeting today as the country returns to a state of emergency with three months to go before the big event that surely is not going to happen.
The US will see consumer confidence numbers.
Oil Search ((OSH)) and South32 ((S32)) release quarterly reports today and Atlas Arteria ((ALX)) holds its AGM.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALG | Ardent Leisure | Downgrade to Sell from Hold | Ord Minnett |
| AMC | Amcor | Downgrade to Neutral from Outperform | Macquarie |
| API | Aus Pharmaceutical Ind | Downgrade to Neutral from Buy | Citi |
| AX1 | Accent Group | Downgrade to Neutral from Buy | Citi |
| CGF | Challenger | Downgrade to Neutral from Outperform | Credit Suisse |
| EVN | Evolution Mining | Downgrade to Neutral from Outperform | Macquarie |
| ORG | Origin Energy | Upgrade to Outperform from Neutral | Macquarie |
| PLS | Pilbara Minerals | Downgrade to Sell from Neutral | Citi |
| RBL | Redbubble | Downgrade to Hold from Add | Morgans |
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: ALX - ATLAS ARTERIA
For more info SHARE ANALYSIS: BKL - BLACKMORES LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED
For more info SHARE ANALYSIS: JBH - JB HI-FI LIMITED
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: NHF - NIB HOLDINGS LIMITED
For more info SHARE ANALYSIS: S32 - SOUTH32 LIMITED
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION
For more info SHARE ANALYSIS: WHC - WHITEHAVEN COAL LIMITED