Daily Market Reports | Jun 25 2021
This story features KOGAN.COM LIMITED, and other companies. For more info SHARE ANALYSIS: KGN
The company is included in ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7228.00 | + 51.00 | 0.71% |
| S&P ASX 200 | 7275.30 | – 23.20 | – 0.32% |
| S&P500 | 4266.49 | + 24.65 | 0.58% |
| Nasdaq Comp | 14369.71 | + 97.98 | 0.69% |
| DJIA | 34196.82 | + 322.58 | 0.95% |
| S&P500 VIX | 15.97 | – 0.35 | – 2.14% |
| US 10-year yield | 1.49 | 0.00 | 0.00% |
| USD Index | 91.81 | – 0.01 | – 0.01% |
| FTSE100 | 7109.97 | + 35.91 | 0.51% |
| DAX30 | 15589.23 | + 132.84 | 0.86% |
By Greg Peel
Covid Watch
It was a choppy session on the ASX yesterday as an anxious market awaited the latest covid news. A weak start took us to the 11am case-count announcement which, at 11 new cases, looked ominous.
But the market thought not, as the index rallied back from down -34 to be almost square at 12.30pm when the premier confirmed no additional restrictions would be forthcoming at this stage, while calling it the “scariest time” since covid began.
The market continued to chop around until 3pm, when it appears a big sell order hit the market, taking the index from down -5 to down -42 in the last hour until market-on-close orders restored that to -23.
All a bit of a mess really, but fear not, the futures are up 51 points this morning.
In the end, only three sectors closed in the green. Technology (+2.1%) was again driven by BNPL, as Afterpay ((APT)) announced it will allow select customers to shop via the Afterpay app at US stores including Amazon, Macy’s and Nike. That was worth 6.2%.
On that consumer discretionary connection, we note Kogan ((KGN)) – the most heavily shorted stock on the ASX – rallied 5.9%, likely on an assumption stay-at-home Sydneysiders might return to 2020 behaviour. However, the sector fell -0.5%.
Staples raced up 1.9%, which is huge for that sector. Anticipated toilet paper clean-out?
Well it’s all a bit hard to gauge. Woolworths ((WOW)) fell -11.2% but only because the Endeavour booze & gambling business spun off, so actually from the outset it’s a zero sum equation. Endeavour ((EDV)) opened at $6.50 but closed at $6.02. Woolworths shares closed down -$4.76.
Coles ((COL)) jumped 1.3% and the sector 1.9%. Woolies has now become ESG friendly with Endeavour the opposite, while in the middle Coles retains its alcohol business and a handful of pubs but not the extent of what Woolies had.
Materials (+0.3%) was the only other green sector while healthcare (-1.8%), energy (-1.2%) and financials (-0.7%) were the big downside movers. While lockdown fears linger for the banks, if we put the three together we might simply assume some end-of-year profit-taking, particularly in the banks and energy which had been recent stars.
If so, they picked the wrong day, as Wall Street has rallied overnight on infrastructure news and the S&P500 closed up 0.6%, sending our futures up 0.7%.
This might also acknowledge that Gladys is determined not to go into full lockdown as long as cases can be successfully contract-traced, with only one of the current cases stemming from an unknown source.
But we’ll stand by for the 11am and 12.30pm announcements again today.
One Step Forward
“I clearly didn’t get all I wanted,” said Joe. “They gave more than, I think, maybe they were inclined to give in the first place. But this reminds me of the days we used to get an awful lot done up in the United States Congress.”
Despite Republican senators having blocked everything the Democrats have tried to achieve up to this point, last night a bipartisan group of senators agreed to a infrastructure deal worth US$579bn of new spending and close to US$1trn over five years, and US$1.2trn over eight.
The deal included no tax increases. Instead, for now it is hoped much of the cost can be covered elsewhere, particularly through closing the so-called tax gap (tax avoidance) and cracking down on dole fraud, among other measures.
But while it’s all well and good, it still has to pass through Congress and it is unclear whether even all Democrats will be on board, let alone a sufficient number of Republicans.
Hence while it was a strong day on Wall Street, the reality is the major indices were already strong ahead of the mid-session announcement, and the news was simply an extra kicker. It ended as a session in which both Growth and Value proved winners.
Investors appear to have lost their fear of backing Growth, given a ten-year bond rate now seemingly well anchored, and last night Microsoft closed above the US$2trn mark for the first time.
The Nasdaq managed a 0.7% gain despite news a judicial committee had voted to put forward all six antitrust bills targeting the alleged FAAG monopolies. Apple and Amazon fell on the day, while Facebook and Google closed higher. Microsoft is not considered a target – it’s just bloody big.
In economic news, US durable goods orders rose 2.3% in May which was short of forecasts. While orders for big ticket autos and aeroplanes are growing, supply chain issues are still impacting.
The other side of that equation are job vacancies, which along with supply problems are a widespread issue across US businesses. Weekly new jobless claims fell -7000 to -411,000 last week but forecasts were for 380,000. New jobless claims have grown every week since the pandemic began, yet businesses can’t find workers.
After the bell, the latest US bank stress test results were announced, with all banks on watch passing with flying colours. As of July 1, all covid-related dividend and buyback restrictions will be lifted by the Fed, and given banks are chock full of capital beyond stress test requirements, investors are anticipating a spree.
But how much anticipation is already priced in? We’ll see tonight.
And tonight is PCE night.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1774.50 | – 3.80 | – 0.21% |
| Silver (oz) | 25.92 | + 0.06 | 0.23% |
| Copper (lb) | 4.24 | + 0.08 | 2.01% |
| Aluminium (lb) | 1.09 | + 0.00 | 0.27% |
| Lead (lb) | 0.99 | + 0.01 | 1.24% |
| Nickel (lb) | 8.22 | + 0.10 | 1.25% |
| Zinc (lb) | 1.31 | + 0.01 | 1.00% |
| West Texas Crude | 73.30 | + 0.22 | 0.30% |
| Brent Crude | 75.60 | + 0.22 | 0.29% |
| Iron Ore (t) | 214.90 | – 1.70 | – 0.78% |
What’s good for infrastructure is good for metals, although we have been here before, when Biden first announced his massive infrastructure stimulus plans. The interim has seen a notable pullback.
And it could be weeks before this deal, or any amended deal, makes it through Congress, if at all.
The Aussie is up another 0.3% at US$0.7586 and may well creep back up over 76 and go to sleep again.
Today
The SPI Overnight closed up 51 points or 0.7%.
China will release industrial profits numbers today.
The US will see consumer sentiment and the Fed’s preferred PCE inflation measure for May.
CSR ((CSR)) holds its AGM.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ABP | Abacus Property | Downgrade to Neutral from Outperform | Credit Suisse |
| ADH | Adairs | Downgrade to Hold from Add | Morgans |
| Downgrade to Hold from Accumulate | Ord Minnett | ||
| BLD | Boral | Upgrade to Hold from Lighten | Ord Minnett |
| CSL | CSL | Downgrade to Neutral from Buy | Citi |
| EBO | EBOS | Downgrade to Hold from Add | Morgans |
| PME | Pro Medicus | Downgrade to Reduce from Hold | Morgans |
| RMD | Resmed | Upgrade to Outperform from Neutral | Macquarie |
| SHL | Sonic Healthcare | Downgrade to Neutral from Buy | Citi |
| WOW | Woolworths | Upgrade to Neutral from Underperform | Credit Suisse |
| WSA | Western Areas | Downgrade to Equal-weight from Overweight | Morgan Stanley |
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: COL - COLES GROUP LIMITED
For more info SHARE ANALYSIS: CSR - CSR LIMITED
For more info SHARE ANALYSIS: EDV - ENDEAVOUR GROUP LIMITED
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: WOW - WOOLWORTHS GROUP LIMITED