{"id":81299,"date":"2019-07-08T09:05:50","date_gmt":"2019-07-07T23:05:50","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=81299"},"modified":"2019-07-08T09:05:52","modified_gmt":"2019-07-07T23:05:52","slug":"the-monday-report-426","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2019\/07\/08\/the-monday-report-426\/","title":{"rendered":"The Monday Report"},"content":{"rendered":"\n\n\n\n\n\n\n\n\n\n\n\n\n
World Overnight<\/strong><\/span><\/td>\n<\/tr>\n
SPI Overnight (Sep)<\/strong><\/span><\/td>\n6678.00<\/strong><\/span><\/td>\n– 12.00<\/strong><\/span><\/td>\n– 0.18%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6751.30<\/strong><\/span><\/td>\n+ 33.30<\/strong><\/span><\/td>\n0.50%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n2990.41<\/strong><\/span><\/td>\n– 5.41<\/strong><\/span><\/td>\n– 0.18%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n8161.79<\/strong><\/span><\/td>\n– 8.44<\/strong><\/span><\/td>\n– 0.10%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n26922.12<\/strong><\/span><\/td>\n– 43.88<\/strong><\/span><\/td>\n– 0.16%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n13.28<\/strong><\/span><\/td>\n+ 0.71<\/strong><\/span><\/td>\n5.65%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n2.05<\/strong><\/span><\/td>\n+ 0.10<\/strong><\/span><\/td>\n4.86%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n97.29<\/strong><\/span><\/td>\n+ 0.55<\/strong><\/span><\/td>\n0.57%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7553.14<\/strong><\/span><\/td>\n– 50.44<\/strong><\/span><\/td>\n– 0.66%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n12568.53<\/strong><\/span><\/td>\n– 61.37<\/strong><\/span><\/td>\n– 0.49%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

No Lead Required<\/u><\/p>\n

Another day, another 30 point gain for the ASX200, as it continues its seemingly relentless push towards the old high. With rate cuts in the bag, and tax cuts in the bag, the TINA trade continues to underpin, and even a day off on Wall Street made no difference.<\/p>\n

Notably, the local VIX volatility index is just over 10, which is a clear signal of complacency.<\/p>\n

Investors continued to take profits in the big miners on Friday, sending materials down -0.9%. News out of China is that relevant state ministries are highly concerned about the sharp rise in the price of iron ore. They are subsequently investigating, and have threatened to “severely” crack down on any irregular behaviour.<\/p>\n

The only other sector to close in the red were utilities (-0.4%), but would not have done so if toll roads and airports were in the right sector.<\/p>\n

APRA confirmed on Friday that the prior “at least 7%” mortgage serviceability rate will be abandoned for a 2.5% above prevailing rate requirement. Not exactly new news, but the banks (+0.6) had a positive session.<\/p>\n

Confirmed tax cuts also proved beneficial for the consumer sectors, while healthcare (+1.4%) just keeps revelling in those coughs and sneezes.<\/p>\n

Leading the individual ASX200 names on Friday was EclipX Group ((ECX)), up 20% on the announcement the company had sold its troubled Graysonline business. The stock has now recovered around three-quarters of what it lost in March.<\/p>\n

News from the advertising industry that outdoor revenues increased another 5.2% in the June quarter following a 5.9% increase in March had oOh!media ((OML)) up 9%.<\/p>\n

On the other side of the ledger, SpeedCast International ((SDA)) can’t find a bottom, falling another -4.8%, and Fortescue Metals ((FMG)) took the silver with a -4.3% fall.<\/p>\n

The rally on Friday came despite the potential for Wall Street volatility on Friday night on the release of the June jobs report. Suffice to say the futures were down -12 points on Saturday morning.<\/p>\n

Maybe Not<\/u><\/p>\n

The US added 224,000 jobs in June, far above forecasts of 164,000. An increase in participation pushed the unemployment rate up to 3.7% from 3.6%. Annualised wage growth was unchanged at 3.1%.<\/p>\n

After the weak (75,000) number in May, economists had expected a rebound, but not by quite so much.<\/p>\n

The news was nevertheless somewhat of a tree falling in the forest, given the bulk of market participants were enjoying an unofficial long weekend. The US ten-year yield shot up 10 basis points to 2.05%, the US dollar index jumped 0.6%, and the Dow fell over -200 points on low volume.<\/p>\n

The strong jobs number has brought into doubt the assumed Fed rate cut at the end of the month. Certainly it has put paid to any notion of a -50 point cut, if that was ever a possibility. But just when you thought Friday could be the start of an overdue pullback on Wall Street, the indices bounced after the close in Europe and recovered most of the losses.<\/p>\n

The down-then-up session, thin trading notwithstanding, underscored two major features of Wall Street’s recent rally to new all-time highs: it’s all about the Fed; and there remains a lot of cash on the sidelines held by fund managers who have been left behind in what has been described as one of the most hated of bull markets. Hated because it’s difficult to countenance surging stock markets and slowing global growth, yet there is no alternative<\/em> investment to stocks.<\/p>\n

The Fed is no longer “patient”, according to the most recent policy statement, but nor is it trigger-happy. It is very much data-dependent, and after taking on board this jobs number will now be watching closely as data drops during the month for the likes of inflation and June quarter economic growth.<\/p>\n

Inflation data are due out this week and Wednesday night Jerome Powell will provide a biannual testimony to Congress, with the minutes of the June meeting also due on Wednesday.<\/p>\n

The US earnings season begins in earnest at the end of next week, so Fed-watching is the name of the game until then.<\/p>\n

Tonight it will be interesting to see what the bulk of the market thought about the jobs numbers, and about China insisting Trump has to drop his tariffs if any trade deal is to be reached.<\/p>\n

Commodities<\/u><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Spot Metals,Minerals & Energy Futures<\/strong><\/span><\/td>\n<\/tr>\n
Gold (oz)<\/strong><\/span><\/td>\n1398.30<\/strong><\/span><\/td>\n– 16.60<\/strong><\/span><\/td>\n– 1.17%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n14.97<\/strong><\/span><\/td>\n– 0.27<\/strong><\/span><\/td>\n– 1.77%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n2.66<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 0.74%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.80<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.46%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.84<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.42%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n5.61<\/strong><\/span><\/td>\n+ 0.05<\/strong><\/span><\/td>\n0.83%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.10<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.92%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n57.73<\/strong><\/span><\/td>\n+ 0.94<\/strong><\/span><\/td>\n1.66%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n64.23<\/strong><\/span><\/td>\n+ 0.93<\/strong><\/span><\/td>\n1.47%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t) futures<\/strong><\/span><\/td>\n114.25<\/strong><\/span><\/td>\n– 8.05<\/strong><\/span><\/td>\n– 6.58%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Iron ore traders did not like the news of government scrutiny.<\/p>\n

Gold traders did not like the jump in the greenback, and the tempering of Fed rate cut expectations.<\/p>\n

Base metals held up reasonably well against the greenback.<\/p>\n

Not so the Aussie, which fell -0.6% to US$0.6981. Here we are again.<\/p>\n

The SPI Overnight closed down -12 points on Saturday morning.<\/p>\n

The Week Ahead<\/u><\/p>\n

The Fed chair will testify before a House Committee on Wednesday night and a Senate Committee on Thursday night. The minutes of the June Fed meeting are due on Wednesday night, followed by the US CPI on Thursday and PPI on Friday.<\/p>\n

China releases inflation numbers on Wednesday and trade numbers on Friday.<\/p>\n

Locally we’ll see ANZ job ads today, the NAB business confidence survey on Tuesday, Westpac consumer confidence survey on Wednesday and housing finance data on Thursday.<\/p>\n

Perseus Mining ((PRU)) releases earnings numbers tomorrow and Whitehaven Coal ((WHC)) kicks off the quarterly production report season on Thursday.<\/p>\n

The Australian share market over the past thirty days…<\/strong><\/p>\n

<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
AGL<\/td>\nAGL ENERGY<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
IAG<\/td>\nINSURANCE AUSTRALIA<\/td>\nDowngrade to Equal-weight from Overweight<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
IGO<\/td>\nINDEPENDENCE GROUP<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
ILU<\/td>\nILUKA RESOURCES<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
MND<\/td>\nMONADELPHOUS GROUP<\/td>\nDowngrade to Neutral from Buy<\/td>\nUBS<\/td>\n<\/tr>\n
NHC<\/td>\nNEW HOPE CORP<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
NWL<\/td>\nNETWEALTH GROUP<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
ORG<\/td>\nORIGIN ENERGY<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
PLS<\/td>\nPILBARA MINERALS<\/td>\nUpgrade to Hold from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
RHC<\/td>\nRAMSAY HEALTH CARE<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
SDA<\/td>\nSPEEDCAST INTERN<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
SUN<\/td>\nSUNCORP<\/td>\nDowngrade to Underweight from Equal-weight<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

For more detail go to FNArena's Australian Broker Call Report<\/a>, which is updated each morning, Mon-Fri.<\/p>\n

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here<\/a>. (Subscribers can access prices on the website.)<\/em><\/p>\n

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)<\/strong><\/em><\/p>\n

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Wrap of events affecting the market on Friday night and the weekend and a preview of the week ahead.<\/p>\n","protected":false},"author":8,"featured_media":81301,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[84],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/81299"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=81299"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/81299\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/81301"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=81299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=81299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=81299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}