Daily Market Reports | Aug 05 2021
This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7398.00 | – 13.00 | – 0.18% |
| S&P ASX 200 | 7503.20 | + 28.70 | 0.38% |
| S&P500 | 4402.66 | – 20.49 | – 0.46% |
| Nasdaq Comp | 14780.53 | + 19.24 | 0.13% |
| DJIA | 34792.67 | – 323.73 | – 0.92% |
| S&P500 VIX | 17.97 | – 0.07 | – 0.39% |
| US 10-year yield | 1.18 | + 0.01 | 0.68% |
| USD Index | 92.28 | + 0.20 | 0.22% |
| FTSE100 | 7123.86 | + 18.14 | 0.26% |
| DAX30 | 15692.13 | + 137.05 | 0.88% |
By Greg Peel
Another Milestone
The ASX200 shot up 35 points from the open yesterday to pass the 7500 level once more, then became frightened and ran away. Late morning it was almost flat again. Perhaps emboldened by the S&P500 hitting a new high overnight, our index became the little engine that could, closing at 7503 – a new high.
Volumes were weak.
Driving the gains were the resources sectors, which stood out with 1.2% for materials and 0.9% for energy. The iron ore price ticked up slightly overnight, but base metals were all down, and so too the oils.
Lithium stocks have continued to surge, but to move materials by that much suggests investors trying to get in ahead of BHP Group ((BHP)) and Fortescue Metals ((FMG)) dividend/buyback announcements. As for energy, well, oil prices tanked again last night.
Concrete supplier Adbri ((ABC)) nonetheless rose 4.7% for reasons unclear.
Staples, utilities and property all saw positive sessions, suggesting a defensive bent, but healthcare fell -0.5% to be the worst performer on Aussie strength and little sign of improvement in CSL’s ((CSL)) US plasma collections.
The banks helped with a 0.3% gain. Revised June retail sales data released yesterday showed no change from the preliminary report. Discretionary closed flat.
BNPL was back in focus again last night. The tech sector didn’t move but outside the index, Splitit ((SPT)) jumped 23%. Next target?
Also outside the index, Genworth Mortgage Insurance Australia ((GMA)) rose 7.6% on its earnings result and reinstated dividend, while BWP Trust ((BWP)), which owns Bunnings’ real estate, fell -2.2%.
Inside the index, it appears the market had overestimated this year’s auto-market surge. GUD Holdings ((GUD)) fell -3.3% on its result.
Litigation specialist Omni Bridgeway ((OBL)) topped the index with a 5.6% gain, which appears to be a delayed response from Tuesday’s positive update.
For a day in which a new all-time high was reached, it was otherwise a largely dull session.
Having hit its own new high on Tuesday night, last night the S&P500 fell -0.6% and our futures are down -0.2% this morning.
Cautionary Tales
The ADP private sector jobs report showed 330,000 jobs added in July. Forecasts were for 653,000. Another sign that US reopening growth may have peaked.
But the US services sector PMI jumped to 64.1 in July from 60.1 in June, implying rocket-ship expansion on reopening. So we know where what jobs there are can be found.
Despite the weak jobs number, and bearing in mind Friday’s non-farm payrolls number is the one that matters, last night Fed vice chair Richard Clarida suggested the Fed could begin tapering late this year, given the US economy will likely continue to grow, ahead of a first rate hike in 2023.
When Wall Street’s at an all-time high, you don’t mention the T-word. And while the US economy may well continue to grow, the question is at what pace? The delta spread, both domestically and abroad, is extending supply chain bottlenecks.
Are there clues in the macro outlook from micro sentiment? By that I mean let’s look at some interesting earnings result responses overnight.
Ride share pure-play Lyft beat expectations and posted maiden positive earnings. It fell -10.6%. Car rental company Avis Budget posted record growth (year on year). It fell -17%.
Both were covid losers amid last year’s lockdown, turned reopening winners that have surged in recent months. Too far? General Motors (Dow) is another come-back story from lockdown depths, boosted by its rapid EV expansion. GM upgraded guidance with its result and fell -9%.
By contrast, streaming service Roku was an obvious lockdown winner and despite re-openings, beat on all metrics in the June quarter, reporting in last night’s aftermarket. It’s currently down -8%.
Uber also reported after the bell. Uber managed to bungle through lockdowns on the offset of its food delivery service, but ride-share is back again this year. On a clear earnings beat, it’s down -4%.
Last night’s index split of Dow down -0.9%, S&P down -0.6% and Nasdaq up 0.1% implies not so much another clear rotation session, more so faith in the defensive, reliable Big Tech stocks. Falls for S&P industrials, materials and energy sectors point to fears of slowing economic growth.
It could all change tomorrow of course, as it often does. But for now, the earnings beats will probably keep rolling in but as to whether there’s more short-term index upside is looking less of a given.
On another note, the meme stockbroking hero, recently listed Robinhood, has itself become a meme stock. It rose 20% on Tuesday night and 50% last night to double its IPO price, having tanked on day one. Nothing to do with short positions, because there is very little stock available at this early stage.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1811.60 | + 1.10 | 0.06% |
| Silver (oz) | 25.37 | – 0.16 | – 0.63% |
| Copper (lb) | 4.32 | – 0.03 | – 0.73% |
| Aluminium (lb) | 1.17 | – 0.01 | – 0.86% |
| Lead (lb) | 1.11 | + 0.00 | 0.28% |
| Nickel (lb) | 8.77 | – 0.09 | – 0.99% |
| Zinc (lb) | 1.35 | – 0.00 | – 0.19% |
| West Texas Crude | 68.15 | – 2.41 | – 3.42% |
| Brent Crude | 70.22 | – 1.92 | – 2.66% |
| Iron Ore (t) | 183.15 | – 1.00 | – 0.54% |
Oil prices were down overnight on a “surprise” increase in weekly US crude inventories. They’re always a surprise.
Speaking of Robin Hood, Saudi Arabia last night announced a US30c/bbl price rise over benchmark for sales of oil to East Asia, and US10c for the US, while cutting prices for Europe to -US60c under benchmark.
The intention is to balance the supply/demand equation, and hence revenues, by taking from those economies that have recovered strongly and giving to those that haven’t.
Base metal prices continue to drift lower.
The Aussie is off -0.2% at US$0.7382, matching the greenback’s gain.
Today
The SPI Overnight closed down -13 points or -0.2%.
Final numbers for Australia’ June trade are out today.
The Bank of England holds a policy meeting.
Centuria Industrial REIT ((CIP)) reports earnings.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| A2M | a2 Milk Co | Upgrade to Neutral from Sell | Citi |
| BKW | Brickworks | Downgrade to Accumulate from Buy | Ord Minnett |
| COF | Centuria Office REIT | Overweight | Morgan Stanley |
| NAB | National Australia Bank | Upgrade to Add from Hold | Morgans |
| ORG | Origin Energy | Upgrade to Outperform from Neutral | Credit Suisse |
| Downgrade to Hold from Buy | Ord Minnett | ||
| RSG | Resolute Mining | Upgrade to Outperform from Neutral | Macquarie |
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CHARTS
For more info SHARE ANALYSIS: ABC - ADBRI LIMITED
For more info SHARE ANALYSIS: BHP - BHP GROUP LIMITED
For more info SHARE ANALYSIS: BWP - BWP TRUST
For more info SHARE ANALYSIS: CIP - CENTURIA INDUSTRIAL REIT
For more info SHARE ANALYSIS: CSL - CSL LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED
For more info SHARE ANALYSIS: OBL - OMNI BRIDGEWAY LIMITED
For more info SHARE ANALYSIS: SPT - SPLITIT PAYMENTS LIMITED