Daily Market Reports | Apr 28 2022
| World Overnight | |||
| SPI Overnight | 7285.00 | + 52.00 | 0.72% |
| S&P ASX 200 | 7261.20 | – 56.80 | – 0.78% |
| S&P500 | 4183.96 | + 8.76 | 0.21% |
| Nasdaq Comp | 12488.93 | – 1.81 | – 0.01% |
| DJIA | 33301.93 | + 61.75 | 0.19% |
| S&P500 VIX | 31.60 | – 1.92 | – 5.73% |
| US 10-year yield | 2.82 | + 0.05 | 1.66% |
| USD Index | 102.97 | + 0.62 | 0.61% |
| FTSE100 | 7425.61 | + 39.42 | 0.53% |
| DAX30 | 13793.94 | + 37.54 | 0.27% |
The ASX tried it yesterday and Wall Street tried it last night – finding a bottom after the rout. Dow up 61.
By Greg Peel
May Day
After another rout on Wall Street – again tech-driven – our futures showed down -120 points yesterday morning, but the ASX200 fell only -85 points in the first half hour and found the bottom for the day. A sharp rally in the next half hour was then kyboshed by the CPI numbers.
But not for long. Having fallen some -260 points in two sessions, and with commodity prices stabilising overnight, the index managed to shake off the CPI and at least recover some ground. Given we all shop at supermarkets and fill up at servos, you might call it “buy the fact”.
Australia’s March quarter headline CPI rose 2.1% to 5.1% annual, having risen 1.3% to 3.5% in the December quarter. The market had forecast a 1.7% gain to 4.7%.
The trimmed mean, or core rate, which does not include food & energy, rose 1.4% to 3.7% having risen 1.0% to 2.6% in December. This is the rate the RBA likes to keep in the 2-3% band.
Australia last saw such numbers in the wake of the 1990s recession, not counting the GST bump of 2001.
Heading into the release, most economists were expecting the first RBA rate hike to come in June, with only a few suggesting May despite the election. Now consensus has shifted to a 15 point hike in May to 0.25% followed by another 25 points in June to 0.50%.
If the RBA does decide to hold out, and only the election will stop it on these numbers, the June hike will be 40 points to 0.50%, economists suggest. The last time the RBA hiked right ahead of an election was in 2007, when John “interest rates will always be lower under the Coalition” Howard was sent packing.
How did markets respond yesterday?
The Aussie shot up to US71.90c but has since fallen back to US71.27c on greenback strength. The Aussie two-year yield rose 3 points to 2.35% but the ten-year fell -5 to 3.05%, having already moved well ahead of the RBA.
The hardest hit ASX200 sector was technology (-2.5%), but that was a given on the back of a Nasdaq plunge overnight.
Next worst performer was, unusually, consumer staples (-1.9%), falling more than discretionary (-1.1%), as supermarket prices hit the hip pocket. (These are numbers from as far ago as January – I think we’ve already felt the pinch.)
That sentiment followed to the banks (-1.6%) and even healthcare lost its takeover interest premium (-1.3%).
Holding the fort were energy (+1.0%) on a bounce-back in oil prices, which also aided utilities (+0.6%), while stability in commodity prices had materials up 0.3%.
Real estate, which includes shopping malls, rose 0.4% into the teeth of inflation-impacted demand, but many rental agreements are CPI-adjusted.
But hold the phone. Wall Street attempted to find a bottom last night so our futures are up 52 points this morning after a torrid three days.
Metabolic
Meta Platforms, who you might know as Facebook, reported after the close on Wall Street this morning and is currently up 17% in the aftermarket. Mind you, the stock was down -50% year to date ahead of its earnings result, including a -25% plunge on the day of its previous result release.
During the session, Wall Street showed signs of finding a bottom in its latest sell-off, amidst a shower of earnings results.
Microsoft (Dow), which reported after the bell on Tuesday night, closed up 5% while payment system elder Visa (Dow), deemed to be redundant when BNPL very briefly ruled the world, rose 6.5%. The two made up half of the Dow’s gains at the high last night of up 450 points, battling the descent of Boeing, which fell -7.5% on result.
Wall Street ran out of puff mid-session before recovering somewhat and then losing it again by the close. It was a classic bottom-finding session and very reminiscent of the last market low, which was followed by a sharp rally.
Maybe Meta can be the fuel tonight.
There was no earnings season in progress last time nonetheless, and there’s still a long way to go, including Apple and Amazon tonight.
For those of us who grew up with Hot Wheels, or where appropriate, Barbie, Mattel jumped 11% last night on a private equity takeover offer.
We might also note that with the Fed in blackout ahead of next week’s meeting, the US ten-year bond yield ended its two-day slide in rising 5 points to 2.82%.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1886.00 | – 19.70 | – 1.03% |
| Silver (oz) | 23.27 | – 0.20 | – 0.85% |
| Copper (lb) | 4.48 | + 0.01 | 0.17% |
| Aluminium (lb) | 1.50 | + 0.01 | 0.57% |
| Lead (lb) | 1.05 | – 0.02 | – 1.83% |
| Nickel (lb) | 15.25 | + 0.34 | 2.28% |
| Zinc (lb) | 1.95 | + 0.00 | 0.01% |
| West Texas Crude | 102.02 | + 0.32 | 0.31% |
| Brent Crude | 105.15 | – 0.12 | – 0.11% |
| Iron Ore (t) | 150.52 | + 0.13 | 0.09% |
The news yesterday was the suspension of Russian gas exports to Poland and Bulgaria, given these two “unfriendlies” refuse to pay in roubles. Or is it because the two former Eastern Bloc countries are taking in Ukrainian refugees? “Unfriendly” Germany has subsequently said it will continue to pay in US dollars or euros.
Oil prices were nevertheless little moved last night after Tuesday night’s bounce-back, and the world awaits the announcement of lockdowns in Beijing.
Consolidation in base metal prices continued, but gold has again taken a fall.
The Aussie, as noted, is back to where it was 24 hours ago at US$0.7128 given another 0.6% gain in the US dollar index.
Today
The SPI Overnight closed up 52 points or 0.7%.
Japan reports March CPI today.
The first estimate of US March quarter GDP is out tonight.
It’s a big day for miner quarterly reports today.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BPT | Beach Energy | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| GWA | GWA Group | Downgrade to Hold from Add | Morgans |
| PRU | Perseus Mining | Upgrade to Outperform from Neutral | Macquarie |
| UMG | United Malt | Upgrade to Outperform from Neutral | Credit Suisse |
| Downgrade to Hold from Add | Morgans | ||
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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