Daily Market Reports | May 10 2021
This story features PRO MEDICUS LIMITED, and other companies. For more info SHARE ANALYSIS: PME
The company is included in ASX50, ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH
| World Overnight | |||
| SPI Overnight (Jun) | 7055.00 | – 4.00 | – 0.06% |
| S&P ASX 200 | 7080.80 | + 19.10 | 0.27% |
| S&P500 | 4232.60 | + 30.98 | 0.74% |
| Nasdaq Comp | 13752.24 | + 119.39 | 0.88% |
| DJIA | 34777.76 | + 229.23 | 0.66% |
| S&P500 VIX | 16.69 | – 1.70 | – 9.24% |
| US 10-year yield | 1.58 | + 0.02 | 1.02% |
| USD Index | 90.23 | – 0.66 | – 0.73% |
| FTSE100 | 7129.71 | + 53.54 | 0.76% |
| DAX30 | 15399.65 | + 202.91 | 1.34% |
By Greg Peel
Brick Wall
On Friday, Wall Street strength had the ASX200 rallying strongly from the open to just after 11am when it hit its head on 7100 and subsequently retreated. A typical Friday afternoon drift-off then flowed.
7100 is cemented as the May barrier.
Underneath the surface the story was mixed, with seven sectors closing in the green and four in the red.
Leading the downside was, again, technology (-2.3%), despite the Nasdaq seeing some late buying on Thursday night. Afterpay ((APT)) fell another -4.1% to be the third worst performing stock on the market, while Nearmap ((NEA)), now in legal proceedings, fell another -5.0% to be second worst.
Healthcare technology company Pro Medicus ((PME)) appeared to have been simply a victim of selling in high PE growth stocks (as with tech) in falling -7.8% on no news.
Utilities was the second worst performing sector with AGL Energy ((AGL)) falling another -3.0%. The stock is now down -38% since November and seeking palliative care.
Pro Medicus aside, healthcare dropped -0.9%, likely on strength in the currency, and if so, is in for a rough session today. The Aussie’s up at US$0.7850.
To the upside, energy gained 0.8% on a stronger oil price but materials won the day with 1.1% thanks to iron ore breaching US$200/t for the first time. This has appeared to have triggered a FOMO stampede, as iron ore was up another 5% on Friday.
Consumer discretionary was next best (+0.6%) as traders decided no new cases detected in NSW was reason enough to pile back into the heavily shorted travel names Webjet ((WEB)) and Flight Centre ((FLT)), as well as Corporate Travel Management ((CTD)). They rose 7.4%, 7.3% and 6.3% respectively to top the index board.
The initial rally on Friday morning had reflected strength on Wall Street, and on Friday night Wall Street saw another rally with this time the Nasdaq leading the way. The S&P gained 0.7%, but our futures closed down -4 points on Saturday morning.
This despite a 5% gain for iron ore and 3% for copper. Clearly the 0.8% jump in the Aussie is having an impact.
And/or perhaps traders are not ready for another assault on 7100 until all is revealed in the federal budget tomorrow night.
Bad News Good
After the US gained over 900,000 new jobs in March, excited economists were forecasting a number over 1,000,000 for April. Suffice to say when the number came in at just 266,000, gobs were seriously smacked.
The US ten-year yield plunged -7 basis points to 1.49%.
It was great news for stocks, and particularly growth stocks that had spent the week in the red. All three major indices spiked up from the open, with the Nasdaq the outperformer, and stayed there for the rest of the session, as investors worshipped at the shrine of Jerome Powell.
One good jobs report does not a trend make, the Fed chair said in the wake of the March number. Fears of the Fed needing to taper sooner rather than later rapidly dissipated.
Yet the ten-year yield bounced back almost immediately, and actually closed up a point to 1.58%. This did not, nevertheless, upset the stock market rally on the day.
Commentators were quick to point out that non-farm payrolls data are notoriously “noisy” and subject to substantial revision on the one hand, and on the other hand, Powell is right to imply the return of jobs growth will be a stop-start affair. The return to growth across industries is very mixed, and the April report noted women have actually dipped in participation when men have increased.
We note that schools are still for the most part closed in the US.
The weak April number has not swayed everyone in terms of inflation fears, but for Wall Street, it’s an underscoring of the TINA factor. Where else do you put your money?
The Dow booked five straight days of upside for the week to consecutive records, rising 2.6%. The Nasdaq bounced back on Friday night but closed the week down -1.5%.
While bond yields may have recovered from early falls, the US dollar did not. It dropped -0.8% on its index. That provided a solid boost for US commodities producers, and indeed a boost for commodity prices, but unfortunately works the other way for us here downunder.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1830.70 | + 16.00 | 0.88% |
| Silver (oz) | 27.44 | + 0.15 | 0.55% |
| Copper (lb) | 4.70 | + 0.15 | 3.21% |
| Aluminium (lb) | 1.14 | + 0.01 | 1.03% |
| Lead (lb) | 1.00 | + 0.03 | 2.85% |
| Nickel (lb) | 8.10 | – 0.03 | – 0.32% |
| Zinc (lb) | 1.36 | + 0.04 | 2.70% |
| West Texas Crude | 64.90 | + 0.19 | 0.29% |
| Brent Crude | 68.28 | + 0.02 | 0.03% |
| Iron Ore (t) | 212.75 | + 10.10 | 4.98% |
Any thought that US$200/t might be a peak for iron ore in the short term have been somewhat shattered.
The dollar-drop appears to have sparked the Chinese into action after a three-day break earlier in the week, with copper leading the charge. For nickel, it’s a supply issue.
The oils took a breather, but it didn’t stop energy being the best performing sector on the S&P500 on Friday night. Energy closed up 7% for the week.
Gold likes a weaker greenback.
The Aussie is up 0.8% at US$0.7850.
The SPI Overnight closed down -4 points.
The Week Ahead
Over to you Josh. While one assumes the big ticket budget items have already been pre-announced, there could well be more in it tomorrow night for everyone.
It might thus be a slow couple of sessions.
NAB will release its April business confidence survey today, instead of on the usual Tuesday. Westpac follows with the May consumer confidence results on Wednesday.
China releases inflation numbers tomorrow and the US follows with its CPI on Wednesday and PPI on Thursday.
The US also sees industrial production and retail sales numbers on Friday.
The UK reports March quarter GDP on Wednesday.
Commonwealth Bank ((CBA)) will wrap up bank reporting season with a quarterly update on Wednesday.
Pendal Group ((PDL)) reports earnings today, and across the week reports are due from AusNet Services ((AST)), CSR ((CSR)), Pushpay Holdings ((PPH)), GrainCorp ((GNC)), Orica ((ORI)) and Xero ((XRO)).
Note ANZ Bank ((ANZ)) goes ex-dividend today.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ANZ | ANZ Banking Group | Downgrade to Neutral from Outperform | Credit Suisse |
| Downgrade to Equal-weight from Overweight | Morgan Stanley | ||
| COE | Cooper Energy | Upgrade to Add from Hold | Morgans |
| CRN | Coronado Global Resources | Downgrade to Neutral from Outperform | Macquarie |
| CSL | CSL | Upgrade to Outperform from Neutral | Macquarie |
| CSR | CSR | Downgrade to Hold from Accumulate | Ord Minnett |
| DMP | Domino's Pizza | Downgrade to Neutral from Outperform | Macquarie |
| FLT | Flight Centre | Upgrade to Neutral from Sell | Citi |
| GUD | GUD Holdings | Downgrade to Neutral from Buy | Citi |
| IAP | IRONGATE GROUP LIMITED | Upgrade to Accumulate from Hold | Ord Minnett |
| NAB | National Australia Bank | Downgrade to Hold from Accumulate | Ord Minnett |
| SEK | Seek Ltd | Upgrade to Neutral from Underperform | 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: AGL - AGL ENERGY LIMITED
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: CBA - COMMONWEALTH BANK OF AUSTRALIA
For more info SHARE ANALYSIS: CSR - CSR LIMITED
For more info SHARE ANALYSIS: CTD - CORPORATE TRAVEL MANAGEMENT LIMITED
For more info SHARE ANALYSIS: FLT - FLIGHT CENTRE TRAVEL GROUP LIMITED
For more info SHARE ANALYSIS: GNC - GRAINCORP LIMITED
For more info SHARE ANALYSIS: ORI - ORICA LIMITED
For more info SHARE ANALYSIS: PDL - PENDAL GROUP LIMITED
For more info SHARE ANALYSIS: PME - PRO MEDICUS LIMITED
For more info SHARE ANALYSIS: PPH - PUSHPAY HOLDINGS LIMITED
For more info SHARE ANALYSIS: WEB - WEB TRAVEL GROUP LIMITED
For more info SHARE ANALYSIS: XRO - XERO LIMITED