{"id":81689,"date":"2019-07-29T09:08:53","date_gmt":"2019-07-28T23:08:53","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=81689"},"modified":"2019-07-29T09:08:54","modified_gmt":"2019-07-28T23:08:54","slug":"the-monday-report-429","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2019\/07\/29\/the-monday-report-429\/","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>\n6750.00<\/strong><\/span><\/td>\n+ 19.00<\/strong><\/span><\/td>\n0.28%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6793.40<\/strong><\/span><\/td>\n– 24.60<\/strong><\/span><\/td>\n– 0.36%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n3025.86<\/strong><\/span><\/td>\n+ 22.19<\/strong><\/span><\/td>\n0.74%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n8330.21<\/strong><\/span><\/td>\n+ 91.67<\/strong><\/span><\/td>\n1.11%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n27192.45<\/strong><\/span><\/td>\n+ 51.47<\/strong><\/span><\/td>\n0.19%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n12.16<\/strong><\/span><\/td>\n– 0.58<\/strong><\/span><\/td>\n– 4.55%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n2.08<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.34%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n98.01<\/strong><\/span><\/td>\n+ 0.22<\/strong><\/span><\/td>\n0.22%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7549.06<\/strong><\/span><\/td>\n+ 60.01<\/strong><\/span><\/td>\n0.80%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n12419.90<\/strong><\/span><\/td>\n+ 57.80<\/strong><\/span><\/td>\n0.47%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Safety Net <\/u><\/p>\n

The ASX200 opened lower on Friday and continued to fall through to late morning, at which stage it was down almost -40 points. By 2pm it was down only -7 points.<\/p>\n

I spoke last week of momo and FOMO and Friday was a classic display of both in action, albeit this time in competition. As I had noted, momentum trades work until they don’t – you follow the trend in the knowledge it won’t last forever and on the turn you get out fast. That would be your down -40.<\/p>\n

Fear of missing out has meant many an investor who has been slow on the uptake, or simply did not believe new highs were going to be reached so swiftly, has been sitting ready to swoop on any sign of a pullback. A chance was presented on Friday morning.<\/p>\n

As for the late afternoon fade to the close, well that’s probably more of a weekend squaring thing.<\/p>\n

The resource sectors were largely left out of last week’s rally as commodity prices kept them in check. On Friday, materials (+0.5%) rose on a bounce in the iron ore price and energy (+0.3%) followed the oil price. Otherwise, every other sector closed in the red.<\/p>\n

It was a uniform give-back of some of ground made during the week, particularly in the yield-paying sectors. Albeit healthcare, consumer discretionary and IT all chimed in as well.<\/p>\n

There is not a lot to be garnered from Friday’s trade as at some point we were always going to see a breather in what has been a race to the top. Alaphilippe tired on the mountain. Does Egan Bernal see his chance? The futures are up 19 points this morning.<\/p>\n

Mineral Resources ((MIN)) was the best index performer on the day with an 8.3% gain following its production report release, and news China has approved the company’s lithium deal with Albemarle. It is also often overlooked that MinRes is an iron producer as well.<\/p>\n

ResMed ((RMD)) reported earnings and rose a sleepy 5.6%, while auto-parts distributor GUD Holdings ((GUD)) fell -4.9% on its earnings result.<\/p>\n

The biggest loser on the day was satellite company Speedcast International ((SDA)), which has just not had any meaningful reprieve since its latest profit warning at the beginning of the month. It fell -8.4%.<\/p>\n

We go into this week in high anticipation of the Fed statement release on Thursday morning our time, but also wary that a handful of earnings reports this week warn us that our own results season is about to ramp up. An excessive number of broker ratings downgrades on valuation terms all through July tell us either the market has run well ahead of itself, or analysts have no idea. But we have also had an excessive number of profit warnings as well.<\/p>\n

Easy as A-B-C<\/u><\/p>\n

Apple, Amazon, Microsoft, Google – these four stocks are just so big that any significant move in share price on the day translates directly into a significant move in US indices, with little else being relevant.<\/p>\n

We saw it with Microsoft’s earnings result earlier on, which also moved the Dow because Microsoft is the only Dow component among the four, with the other three having too-large nominal share prices. We are still awaiting Apple. On Friday night it was the turn of Google and Amazon.<\/p>\n

Shares in Google parent Alphabet surged 10% on its result, which was pretty much why the Nasdaq was up 1.1% and the S&P 0.7% with the Dow up only 0.2%. Even Amazon’s -1.3% fall was not enough to counter.<\/p>\n

Other than announcing its earnings would be fed back into executing on its same-day delivery aspirations, Amazon conceded growth in its cloud business had begun to slow from earlier strong rates. It appears Amazon is now conceding some cloud business to Microsoft and Google.<\/p>\n

Chip-maker Intel (Dow) fell -1.1% on its result but also had little impact. Solid results were posted by the likes of Twitter (+9%) and Starbucks (+9%).<\/p>\n

The other big news of the day was the first estimate of US June quarter GDP, which came in at 2.1% growth (annual). This is well down on March’s 3.1% growth but ahead of 1.9% expectations. The “beat” was provided by the US consumer – some 70% of GDP – which offset weakness in manufacturing and export businesses impacted by you know what.<\/p>\n

Consumer spending rose 4.3% in the quarter compared to 1.1% in March. Let’s see how they go when they are hit by Trump’s final tariff tranche.<\/p>\n

On that note, US and Chinese trade delegations meet today in Beijing.<\/p>\n

The GDP result follows on from a long line of strong US economic data releases over July, yet still the Fed is expected to cut this week. If it does cut as expected, it may well simply be a case of that expectation driving the decision.<\/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>\n1418.30<\/strong><\/span><\/td>\n+ 4.30<\/strong><\/span><\/td>\n0.30%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n16.35<\/strong><\/span><\/td>\n– 0.03<\/strong><\/span><\/td>\n– 0.18%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n2.71<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 0.59%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.80<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 1.72%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.94<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 2.13%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n6.39<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.11%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.10<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.44%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n56.20<\/strong><\/span><\/td>\n+ 0.29<\/strong><\/span><\/td>\n0.52%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n63.46<\/strong><\/span><\/td>\n+ 0.36<\/strong><\/span><\/td>\n0.57%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t) futures<\/strong><\/span><\/td>\n118.75<\/strong><\/span><\/td>\n+ 1.75<\/strong><\/span><\/td>\n1.50%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Despite Fed rate cut expectations, the US dollar continues to plod higher. Around commodity markets on Friday night moves were mixed, but nothing stands out as exceptional.<\/p>\n

What does stand out is the Aussie, down -0.6% at US$0.6906. At this rate we might be heading into a Summer of Love.<\/p>\n

The SPI Overnight closed up 19 points or 0.3%.<\/p>\n

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

Fed on Wednesday night.<\/p>\n

Ahead of the statement release, US data include consumer confidence, PCE inflation and pending home sales tomorrow and the July private sector jobs report on Wednesday. After the Fed we see the manufacturing PMI on Thursday and factory orders and July non-farm payrolls on Friday.<\/p>\n

China releases its manufacturing and services PMIs on Wednesday and everyone else releases manufacturing PMIs on Thursday.<\/p>\n

Locally the big release this week is June quarter CPI, due on Wednesday, followed by PPI on Friday.<\/p>\n

Monthly data releases include building approvals tomorrow, private sector credit on Wednesday, house prices on Thursday and retail sales on Friday.<\/p>\n

Alacer Gold ((AQG)), Credit Corp ((CCP)) and CYBG ((CYB)) report earnings tomorrow, followed by Genworth Mortgage Insurance ((GMA)) and Janus Henderson ((JHG)) on Wednesday and Rio Tinto ((RIO)) on Thursday.<\/p>\n

Orica ((ORI)) hosts an investor day tomorrow and ALS ltd ((ALQ)) holds its AGM on Wednesday.<\/p>\n

Wednesday also brings a late rush of last minute resource sector production reports ahead of the new month.<\/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\n\n\n\n\n\n\n\n\n\n
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ASB<\/td>\nAUSTAL<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
BPT<\/td>\nBEACH ENERGY<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
BSL<\/td>\nBLUESCOPE STEEL<\/td>\nUpgrade to Overweight from Equal-weight<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
CPU<\/td>\nCOMPUTERSHARE<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
ECX<\/td>\nECLIPX GROUP<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
EVN<\/td>\nEVOLUTION MINING<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
FMG<\/td>\nFORTESCUE<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
GOR<\/td>\nGOLD ROAD RESOURCES<\/td>\nDowngrade to Neutral from Outperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
IAG<\/td>\nINSURANCE AUSTRALIA<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
ILU<\/td>\nILUKA RESOURCES<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Neutral from Buy<\/td>\nUBS<\/td>\n<\/tr>\n
JBH<\/td>\nJB HI-FI<\/td>\nDowngrade to Sell from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
MFG<\/td>\nMAGELLAN FINANCIAL GROUP<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
MYR<\/td>\nMYER<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
RIO<\/td>\nRIO TINTO<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
RRL<\/td>\nREGIS RESOURCES<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Sell from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
SBM<\/td>\nST BARBARA<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
SHL<\/td>\nSONIC HEALTHCARE<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
SXY<\/td>\nSENEX ENERGY<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
VRT<\/td>\nVIRTUS HEALTH<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/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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FNArena is proud about its track record and past achievements: Ten Years On<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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":81692,"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\/81689"}],"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=81689"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/81689\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/81692"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=81689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=81689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=81689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}