Daily Market Reports | May 26 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) | 7081.00 | – 35.00 | – 0.49% |
| S&P ASX 200 | 7115.20 | + 69.30 | 0.98% |
| S&P500 | 4188.13 | – 8.92 | – 0.21% |
| Nasdaq Comp | 13657.17 | – 4.00 | – 0.03% |
| DJIA | 34312.46 | – 81.52 | – 0.24% |
| S&P500 VIX | 18.84 | + 0.44 | 2.39% |
| US 10-year yield | 1.56 | – 0.04 | – 2.74% |
| USD Index | 89.68 | – 0.15 | – 0.17% |
| FTSE100 | 7029.79 | – 21.80 | – 0.31% |
| DAX30 | 15465.09 | + 27.58 | 0.18% |
By Greg Peel
Here we go again
Melbourne cases rise to nine from four. Reimplementation of certain restrictions but no snap lockdown, yet. No unknown missing link, but those nine people had been to a lot of places – one to the AFL at the MCG.
It will be interesting to see today whether the Australian market has become inured to these small outbreaks, which in recent times have been swiftly contained. But travel stocks, for one, have seen a bit of support of late as vaccines (slowly) roll out. Maybe not today.
The futures are showing down -35 points this morning, which is -0.5% to the S&P500’s -0.2%. Yesterday the ASX200 rallied 1% to match the S&P.
The index shot out of the blocks from the open yesterday but faded into lunchtime. Buying gradually built up again, and when the index crossed 7100 late in the game it received a kicker to the close.
The banks again led the way (+1.1%), and this time it was not a matter of rotation. The iron ore price finally found some support so there was a rush back into materials (+0.9%), even as gold stocks reversed the previous day’s gains. Gold was back up again last night.
Healthcare also continued to find support (+1.0%), with signs CSL ((CSL)) is finally seeing a return to foot traffic at its US collection centres.
Consumer discretionary had another strong session (+1.3%), with bargain hunters moving into Kogan ((KGN)). It bounced 6.6%.
So far it all looks very cyclical, until you consider property posted the biggest move on the day (+1.5%), followed by telcos (+1.4%) and staples (+0.9%), which all looks defensive, except that utilities fell -0.4% to be the only loser on the day.
So in reality the rally was broad based, including smaller gains from energy (+0.3%), despite a big jump in oil prices, and technology (+0.3%).
Yesterday’s move suggested another possible break out of the range above 7100, but the futures suggest we’ll be safely back inside today.
Follow the Data
US consumer confidence has slipped back in May for the first time in six months, on the Conference Board’s measure. All three major confidence surveys, including the twice a month survey from Michigan Uni, have shown a pullback this month.
This comes as the US vaccine rollout continues to hit milestones ahead of expectation. Key segments in Confidence Board’s survey found Americans are jubilant about economic growth but concerned about the rising cost of living and job prospects.
House prices in America’s biggest cities soared to an annual growth rate of 13.3% in March, to be some 30% above the 2006 peak.
New home sales nonetheless fell -6% month on month in April. It’s not hard to see why. US house prices in general, driven by low rates and reopening excitement, have passed the point of affordability. New home sales are also impacted by too-high prices due to big jumps in building materials such as lumber and copper.
Are the wheels beginning to fall off for the US economy? No. Such ups and downs were always expected in an unprecedented recovery from an unprecedented recession. The Fed has long been expecting such, and hence is not concerned.
If anything, the Fed’s lack of inflation fear is starting to be more widely accepted. There are still plenty in the structural inflation camp, but a -4 point drop in the US ten-year yield to 1.56% last night suggests the bond market is more inclined to agree with the Fed as well.
Yet the drop in the bond yield did not have the impact on growth stocks it would have a few months ago. The Nasdaq closed flat.
The Dow and S&P both opened solidly last night, kicking on from Monday’s gains, but then chopped and meandered during the session to close slightly down. Volumes were low on Monday night, and low again last night.
This suggests investors really don’t know which way to go at present.
Maybe they’re waiting for Friday night’s read on PCE inflation, the Fed’s preferred measure. Will that match the 4.2% spike in CPI inflation seen in April? If not, inflation fears may ease further.
Looking further ahead, Friday week’s May jobs numbers will also be telling, following the shockingly small April number.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1898.80 | + 18.30 | 0.97% |
| Silver (oz) | 27.98 | + 0.23 | 0.83% |
| Copper (lb) | 4.49 | – 0.01 | – 0.33% |
| Aluminium (lb) | 1.08 | + 0.00 | 0.06% |
| Lead (lb) | 0.98 | + 0.00 | 0.44% |
| Nickel (lb) | 7.75 | + 0.08 | 1.08% |
| Zinc (lb) | 1.33 | – 0.00 | – 0.21% |
| West Texas Crude | 66.07 | + 0.02 | 0.03% |
| Brent Crude | 68.57 | + 0.13 | 0.19% |
| Iron Ore (t) | 191.65 | + 3.40 | 1.81% |
Three moves stand out from last night. Nickel saw some buying, iron ore finally found some buying and thanks to lower US bonds yields, gold moved back up as well.
Otherwise it was all a bit dull, and there was no move in currencies either.
The Aussie is steady at US$0.7752.
Today
The RBNZ met this morning.
Today brings Australia’s March quarter construction work done, ahead of next week’s GDP result. While we’ll all be keen to see just what sort of a bounce the quarter saw, at such times the news is rather old.
ALS Ltd ((ALQ)) will report earnings today and Mesoblast ((MSB)) will provide quarterly numbers.
Computershare ((CPU)) and Viva Energy ((VEA)) hold AGMs.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALL | Aristocrat Leisure | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| CTD | Corporate Travel | Upgrade to Outperform from Neutral | Macquarie |
| DMP | Domino's Pizza | Upgrade to Neutral from Sell | Citi |
| ILU | Iluka Resources | Downgrade to Accumulate from Buy | Ord Minnett |
| NHC | New Hope Corp | Downgrade to Neutral from Outperform | Credit Suisse |
| NUF | Nufarm | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| PX1 | Plexure Group | Downgrade to Hold from Buy | Ord Minnett |
| RMD | ResMed | Upgrade to Accumulate from Hold | Ord Minnett |
| SM1 | Synlait Milk | Upgrade to Hold from Reduce | 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: ALQ - ALS LIMITED
For more info SHARE ANALYSIS: CPU - COMPUTERSHARE LIMITED
For more info SHARE ANALYSIS: CSL - CSL LIMITED
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: MSB - MESOBLAST LIMITED
For more info SHARE ANALYSIS: VEA - VIVA ENERGY GROUP LIMITED