Daily Market Reports | Aug 09 2021
This story features WEB TRAVEL GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: WEB
The company is included in ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 7475.00 | + 30.00 | 0.40% |
| S&P ASX 200 | 7538.40 | + 27.30 | 0.36% |
| S&P500 | 4436.52 | + 7.42 | 0.17% |
| Nasdaq Comp | 14835.76 | – 59.36 | – 0.40% |
| DJIA | 35208.51 | + 144.26 | 0.41% |
| S&P500 VIX | 16.15 | – 1.13 | – 6.54% |
| US 10-year yield | 1.29 | + 0.07 | 6.00% |
| USD Index | 92.80 | + 0.53 | 0.57% |
| FTSE100 | 7122.95 | + 2.52 | 0.04% |
| DAX30 | 15761.45 | + 16.78 | 0.11% |
By Greg Peel
Late Bump
The ASX200 spent Friday bungling along doing nothing in a very Friday manner, up until 3.30pm. Then it suddenly jumped to close up 35 points to another new high. Volumes were again low.
Only three sectors closed in the red. Materials was the biggest drag (-1.0%), with dividend-related buying in the big miners now giving way to the reality of a -20% drop in iron ore prices from the peak. Utilities fell -0.6% and telcos -0.1%.
Technology enjoyed the biggest percentage gain (+2.1%). Just as it appeared the BNPL industry was in for a competition-driven de-rating, Square’s move on Afterpay ((APT)) has flipped the story to one of re-rating. Afterpay gained 5.5% and Zip Co ((Z1P)) was dragged along.
Healthcare rose 1.0% as the Victorian government announced its own AZ run-out sale (buy one, get one free!), opening up vaccinations to the 18-39s and seeing queues as a result.
It’s not getting any better for NSW nonetheless. Yet Webjet ((WEB)) appeared among the top five winners on Friday (+5.3%) in what can only be a buy-the-dip trade in a heavily shorted stock.
The banks had another positive session (+0.7%) to wrap a very positive week, and will likely be up again today based on Friday night’s US jobs report (more below).
Among individual stocks, News Corp ((NWS)) won the day with its earnings report, jumping 7.9%. News’ main businesses these days are US-based, so no one much cares about a week long social media ban for Sky News. But the biggest surprise was the News result was for once not driven by its stake in REA Group ((REA)).
REA fell -4.7% on its result. Ever since Rupert invested in the late 1990s start-up, REA has been the primary source of News Corp earnings. Not this time.
Domain Group ((DHG)) fell -4.9% in anticipation.
ResMed ((RMD)) also reported what appears a slightly lower-than-expected result, but rose 0.3% nevertheless.
As we look ahead to today’s trade, we note a mix of influences from Friday night.
On a US jobs beat, the US bond yield has jumped up, which is positive for banks, the US dollar has jumped up, which is positive for healthcare (Aussie down) and gold has been crunched, which will reflect on materials.
The futures closed up 30 points on Saturday morning.
Today we might say the August results season begins in earnest.
What Peak?
If only the US jabs report were as strong as the US jobs report. The US added 943,000 jobs in July, beating expectations of 845,000. The unemployment rate plunged to 5.4% from 5.9% in June.
The report went some way to allaying fears of the US economic recovery having already hit peak-pace. But on the flipside, it also reignites an assumption of the Fed being forced to move earlier than it has suggested.
There are a couple of caveats to the report nonetheless. Most of the gains in employment came from “reopening” sectors, such as hospitality. Late in July and into August, the surge in delta cases has led to restrictions being reinstated in some US states. Not lockdowns, yet, but threats to a full reopening in the short term.
Then there’s the Republican states where governors refuse to contemplate mask-wearing, or in the case of Texas, have banned mask wearing. These are the states with the lowest vaccination rates and highest delta case rates. Take South Dakota for example.
Last year, as the alpha variable raged, South Dakota defied the risk and allowed the annual Sturgis motorcycle rally to proceed. Cases in the state then surged. The rally is on again this year, with 700,000 bikers from around the country and around the world expected to attend. The state’s vaccination rate is 49%.
And on another matter, next month sees the expiry of additional unemployment benefits (a la JobSeeker). Given the benefit exceeds the wages of the lowest paid workers, many have eschewed looking for work, adding to the huge level of job vacancies.
After benefits expire, it is assumed these people will finally look for work, which will no doubt bump the unemployment rate back up (increased participation). But the question is, are these people qualified for the jobs employers are trying to fill?
For now, the response to the July number was a 7 basis point jump in the US ten-year yield to 1.29%, a 0.6% jump in the US dollar index, and new highs for both the S&P500 and, after some time, the Dow.
We recall that earlier this year, when the ten-year suddenly took off on the reopening trade (up to 1.75%), a clear rotations pattern resulted – buy value and cyclicals, sell growth. In more recent months that trade has been muddled, flipping back and forth, and yields have come all the way back down again.
But Friday night’s Dow up 0.4% and Nasdaq down -0.4% was very reminiscent. Having spent recent weeks defying falling yields, on the basis their defensiveness, it was the Big Tech names that were sold down on Friday night (from all-time highs in most cases).
A solid jobs report has revived taper-talk, but then the offset is delta. Not just in the US but across the globe, and now, more specifically, rolling lockdowns in Chinese cities.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1763.10 | – 41.00 | – 2.27% |
| Silver (oz) | 24.47 | – 0.66 | – 2.63% |
| Copper (lb) | 4.31 | + 0.03 | 0.80% |
| Aluminium (lb) | 1.17 | – 0.00 | – 0.33% |
| Lead (lb) | 1.06 | – 0.04 | – 3.23% |
| Nickel (lb) | 8.75 | + 0.04 | 0.43% |
| Zinc (lb) | 1.35 | – 0.00 | – 0.19% |
| West Texas Crude | 68.28 | – 0.81 | – 1.17% |
| Brent Crude | 70.70 | – 0.52 | – 0.73% |
| Iron Ore (t) | 171.20 | + 1.15 | 0.68% |
Chinese lockdowns have been blamed for weaker oil prices but base metal prices have held up, with a US dollar jump suggesting otherwise. Lead is the exception, but news on that front is thin.
Gold had been struggling to hang on to an earlier spike so it was Goodnight Irene on the dollar jump.
The Aussie is down -0.7% at US$0.7357.
The SPI Overnight closed up 30 points or 0.4%.
The Week Ahead
Locally, earnings results and lots of them, including Amcor ((AMC)), Suncorp ((SUN)) and Transurban ((TCL)) today.
Economically we’ll see NAB’s business confidence survey tomorrow and Westpac’s consumer survey on Wednesday.
The US will report July CPI on Wednesday and PPI on Thursday, while China will report both today.
Japan is closed today.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BLD | Boral | Downgrade to Neutral from Buy | UBS |
| CIP | Centuria Industrial REIT | Downgrade to Accumulate from Buy | Ord Minnett |
| CSR | CSR | Upgrade to Buy from Neutral | UBS |
| DEL | Delorean | Upgrade to Add from Hold | Morgans |
| LNK | Link Administration | Upgrade to Outperform from Neutral | Credit Suisse |
| OML | oOh!Media | Downgrade to Neutral from Outperform | Credit Suisse |
| PNI | Pinnacle Investment Management | Downgrade to Hold from Add | Morgans |
| RWC | Reliance Worldwide | Upgrade to Buy from Neutral | UBS |
| SGM | Sims | Upgrade to Outperform from Neutral | 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
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