Daily Market Reports | Jun 29 2021
This story features TEMPLE & WEBSTER GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: TPW
The company is included in ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7190.00 | – 15.00 | – 0.21% |
| S&P ASX 200 | 7307.30 | – 0.70 | – 0.01% |
| S&P500 | 4290.61 | + 9.91 | 0.23% |
| Nasdaq Comp | 14500.51 | + 140.12 | 0.98% |
| DJIA | 34283.27 | – 150.57 | – 0.44% |
| S&P500 VIX | 15.76 | + 0.14 | 0.90% |
| US 10-year yield | 1.48 | – 0.06 | – 3.78% |
| USD Index | 91.88 | + 0.03 | 0.03% |
| FTSE100 | 7072.97 | – 63.10 | – 0.88% |
| DAX30 | 15554.18 | – 53.79 | – 0.34% |
By Greg Peel
We Shall Overcome
Unsurprisingly the ASX200 opened down -35 points yesterday on the Sydney lockdown, snap lockdowns elsewhere, border closures, popped bubbles etc. It then chopped around for a while waiting for the daily case-count update.
Given the trend to date, no doubt the market was anticipating another exponential increase on the weekend numbers but at 18 – a lower figure – there appeared a glimmer of hope. Thus the index ultimately closed flat.
It was not simply a case of as-you-were. Sector and stock moves suggested we’re set to party like it’s 2020 all over again.
Winning individually were your previous stay-at-home stocks such as Temple & Webster ((TPW)), Kogan ((KGN)) and Redbubble ((RBL)), which rose 10.2%, 6.6% and 8.2% respectively. As to why you would want to replace all your furniture and homewares yet again is unclear.
Note Kogan is the most shorted stock on the market (11.8%). Temple & Webster is over 8% shorted.
Maybe you’d hit the online sites while a bit under the weather, as another trend from last year would attest. Endeavour Group ((EDV)) shares rose 3.4%, while the supermarkets had a good day and consumer staples was the best performing sector (+1.5%). Hope you’ve got your toilet paper.
The consumer discretionary winners above were of course countered by your travel stocks – Qantas ((QAN)) down -4.0%, Flight Centre ((FLT)) -3.4% and Webjet ((WEB)) -4.7%. Hence on the balance the discretionary sector rose 0.4%.
Webjet is the second most shorted stock on the market (10.2%). Flight Centre is over 9% shorted.
It’s retail cold turkey time for millennials who can’t get out to buy a new outfit on next week’s wages. Afterpay ((APT)) fell -7.5%, Zip Co ((Z1P)) -7.0% and the tech sector -2.8% to be the standout worst performer.
The banks managed to hold flat despite increased bad debt implications (although the market had already made an adjustment last week) while the other bigger winner on the day, after staples, was healthcare (+0.9%), because that’s where you go when people are sick.
The resource sectors all but sat it out with small gains, while telcos fell -0.3% on the assumption businesses won’t be able to pay their phone bills.
Wall Street posted a fairly similar rotation session last night as a well-vaccinated US begins to acknowledge the delta threat around the globe. The S&P500 managed a 0.2% gain but our futures are down -15 points this morning.
Stand by for the 11am case-count update. Also complicating today and tomorrow is end-of-year rebalancing. More on that below.
Zoom, Zoom
Sydney’s predicament has not been lost on Wall Street, as markets opened last night after our weekend developments. The fact Australia had done so well last year but is now struggling with delta is a point of concern.
And it’s not just us. Delta is impacting around the globe, including the US. Hong Kong, Spain and Portugal have banned flights from the UK.
The US has made up for a dismissive 2020 response under Trump with an excellent vaccination rollout under Biden, yet still there are new hotspots in which delta is prevailing. And plenty of Americans refuse to be vaccinated, or are at least wary.
So the 2020 party we started here yesterday kicked on in the US last night, with the likes of your stay-at-homers Zoom and Peloton posting solid gains, along with the FAAGs.
In the latter case, the market was boosted late in the session by news a judge had dismissed an antitrust case brought against Facebook by the US Federal Trade Commission. He did not dismiss the notion out of hand, rather did not believe the argument – that Facebook should divest of either Instagram or Whatsapp or both – given no lack of competition (eg Tik Tok).
He basically said go back and try again. And there remains another antitrust case in the offing brought by a group of US state attorneys general.
Facebook jumped 4% on the news, and the other FAAG’s were also boosted. Facebook has now joined Apple, Amazon and Google in the US$1trn club. Microsoft, which is not under any antitrust scrutiny, remains at US$2trn, and then its daylight down to the next big names such as your Berkshire Hathaways and Teslas on around US$600bn.
On the matter of rebalancing, which for the US is end of quarter (and half) rather than end of year, the point to note is the S&P500 has risen 7% over the quarter to ever new highs whereas US bond yield have remained relatively stable over the period, unlike the prior quarter.
This means that passive, 60:40 balanced funds – the most popular of all investments – are out of balance; too overweight equity value. Which implies they need to buy bonds and sell stocks.
(Australia’s experience is the same.)
Last night the US ten-year bond yield fell -6 basis points to 1.48%, having risen by about that on Friday night’s PCE inflation number.
But stocks were not sold as a whole – new highs again for the S&P and Nasdaq – on another clear rotation session from value/cyclicals and into growth. The Dow was the outright loser but around -50 points of the -150 point drop can be attributed to Boeing – the highest priced stock in the average – on news its 777 X airliner will not receive FAA approval until at least 2023 (2020 original goal).
The energy sector was the biggest loser as for the first time in a while, oil prices fell meaningfully. This no doubt represents a square-up for safety ahead of Thursday night’s OPEC meeting, with prices having grafted ever higher in recent weeks.
The energy sector was up 40% for the year to be the best performer, along with the banks, but unlike the banks, had not yet returned to pre-pandemic valuations.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1778.40 | – 3.10 | – 0.17% |
| Silver (oz) | 26.09 | – 0.01 | – 0.04% |
| Copper (lb) | 4.24 | – 0.01 | – 0.19% |
| Aluminium (lb) | 1.13 | + 0.02 | 1.72% |
| Lead (lb) | 1.01 | + 0.01 | 0.62% |
| Nickel (lb) | 8.26 | – 0.10 | – 1.16% |
| Zinc (lb) | 1.31 | + 0.01 | 0.54% |
| West Texas Crude | 72.91 | – 1.14 | – 1.54% |
| Brent Crude | 74.61 | – 1.57 | – 2.06% |
| Iron Ore (t) | 220.05 | + 1.35 | 0.62% |
As noted, oils down -1.5-2%.
Not much else stands out in a generally mixed session for commodities.
The Aussie has dipped -0.2% to US$0.7571, so no delta panic evident there either.
I bet Josh is having sleepless nights though.
Today
The SPI Overnight closed down -15 points or -0.2%.
Collins Foods ((CKF)) reports earnings today and UR Westfield ((URW)) holds its AGM.
Otherwise, the index will open today with a big ex-dividend discount on the list of property sector stocks and other similar funds dropping decent payouts.
Note that futures do not receive dividends, thus -15 points is not reflective of such.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ADH | Adairs | Downgrade to Hold from Add | Morgans |
| BLD | Boral | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| CSL | CSL | Downgrade to Neutral from Outperform | Credit Suisse |
| EVN | Evolution Mining | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| PME | Pro Medicus | Downgrade to Reduce from Hold | Morgans |
| S32 | South32 | Upgrade to Outperform from Neutral | Credit Suisse |
| WOW | Woolworths | Upgrade to Neutral from Underperform | Credit Suisse |
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: CKF - COLLINS FOODS LIMITED
For more info SHARE ANALYSIS: EDV - ENDEAVOUR GROUP LIMITED
For more info SHARE ANALYSIS: FLT - FLIGHT CENTRE TRAVEL GROUP LIMITED
For more info SHARE ANALYSIS: KGN - KOGAN.COM LIMITED
For more info SHARE ANALYSIS: QAN - QANTAS AIRWAYS LIMITED
For more info SHARE ANALYSIS: TPW - TEMPLE & WEBSTER GROUP LIMITED
For more info SHARE ANALYSIS: URW - UNIBAIL-RODAMCO-WESTFIELD SE
For more info SHARE ANALYSIS: WEB - WEB TRAVEL GROUP LIMITED