{"id":83183,"date":"2019-10-21T09:09:14","date_gmt":"2019-10-20T22:09:14","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=83183"},"modified":"2019-10-21T09:09:16","modified_gmt":"2019-10-20T22:09:16","slug":"the-monday-report-21-october-2019","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2019\/10\/21\/the-monday-report-21-october-2019\/","title":{"rendered":"The Monday Report – 21 October 2019"},"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 (Dec)<\/strong><\/span><\/td>\n6602.00<\/strong><\/span><\/td>\n– 14.00<\/strong><\/span><\/td>\n– 0.21%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6649.70<\/strong><\/span><\/td>\n– 35.00<\/strong><\/span><\/td>\n– 0.52%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n2986.20<\/strong><\/span><\/td>\n– 11.75<\/strong><\/span><\/td>\n– 0.39%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n8089.54<\/strong><\/span><\/td>\n– 67.31<\/strong><\/span><\/td>\n– 0.83%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n26770.20<\/strong><\/span><\/td>\n– 255.68<\/strong><\/span><\/td>\n– 0.95%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n14.25<\/strong><\/span><\/td>\n+ 0.46<\/strong><\/span><\/td>\n3.34%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.75<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.57%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n97.28<\/strong><\/span><\/td>\n– 0.34<\/strong><\/span><\/td>\n– 0.35%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7150.57<\/strong><\/span><\/td>\n– 31.75<\/strong><\/span><\/td>\n– 0.44%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n12633.60<\/strong><\/span><\/td>\n– 21.35<\/strong><\/span><\/td>\n– 0.17%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Soggy End<\/u><\/p>\n

It was a soggy end to an otherwise positive week for the ASX200 on Friday as a choppy first hour gave way to capitulation on the release of Chinese data. A brief attempt to recover around lunchtime was quickly snuffed out.<\/p>\n

China’s GDP grew by 6.0% in the September quarter, down from 6.2% in June and missing 6.1% forecasts, adding more fuel to the slowing global growth story.<\/p>\n

Data for the month of September were nevertheless slightly better, with industrial production growing 5.8% year on year, up from 4.4% in August and beating 5.0% forecasts. Retail sales grew by 7.8% as expected, up from 7.5%. Fixed asset investment grew by 5.4% year to date, as expected.<\/p>\n

Private sector fixed asset investment, which accounts for 60% of FAI, dropped to 4.7% growth year to date from 4.9% in August.<\/p>\n

It was otherwise a Friday, with Brexit risk over the weekend, so a time to withdraw some positions. All sectors closed in the red.<\/p>\n

Sector falls were relatively even, suggesting market-selling, although consumer staples stood out with a -1.2% fall having been a strong performer earlier in the week. Materials (-0.2%) was the best performer. The iron ore price had fallen heavily overnight but was showing signs of stabilising on Friday.<\/p>\n

Gold miner St Barbara ((SBM)) was the worst performing index stock on the day, falling -9.0% after issuing a weak production report. Afterpay Touch ((APT)) dropped -7.3% after the RBA said it may look into BNPL operators who prevent merchants from passing on costs to customers. Zip Co ((Z1P)) fell -6.3%.<\/p>\n

We head into the new week knowing the never ending Brexit saga still has no ending in sight, and without any new news on the trade front other than Trump being under fire regarding his decision to hold next month’s G7 meeting at his own resort.<\/p>\n

It will also be the biggest week of the US earnings season.<\/p>\n

Flying Low<\/u><\/p>\n

Wall Street also had that Friday-feeling on Friday night following a week of trade-related optimism. A weak opening was blamed on the Chinese data.<\/p>\n

The Dow took a further dip mid-session when news broke Boeing had withheld communications between employees during the initial 737 Max certification process, that suggest a senior pilot may have unknowingly lied to the regulator. Boeing shares fell -6%.<\/p>\n

That may not seem too significant, but because Boeing is nominally the highest priced stock in the Dow, irrespective of market cap, it provides for a disproportionate move in terms of Dow points each day.<\/p>\n

Another big Dow influencer is Johnson & Johnson, which also fell -6% on an announced recall of one “lot” of allegedly carcinogenic baby powder. The pharma giant is already up to its eyeballs in opioid lawsuits on the one hand, with talcum issues on the other.<\/p>\n

Boeing and J&J ensured the -1.0% fall in the Dow compared to the S&P500’s -0.4%.<\/p>\n

The S&P consumer discretionary sector also had a weak session after Credit Suisse released a note suggesting this year’s “holiday season” (Americans are reluctant to say “Christmas” lest it offend anyone) will not be as strong as recent consumer trends might suggest.<\/p>\n

Weakness belied what so far has been a positive earnings season. Of the 15% of S&P companies reporting to date, 84% have beaten on earnings and 64% on revenues. While these numbers are statistically above average, no one disagrees forecasts had been marked down too sharply going into the season.<\/p>\n

Thus the earnings beats tally needs to be strong just to match expectation.<\/p>\n

Wall Street will open tonight with the knowledge Boris Johnson’s attempt for a Brexit deal has gone the way of each of Theresa May’s attempts — surprise, surprise — and thus he has reluctantly requested an extension. An election is now looking more likely, which would put us right back where we started.<\/p>\n

Oh joy.<\/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>\n1489.60<\/strong><\/span><\/td>\n– 2.20<\/strong><\/span><\/td>\n– 0.15%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n17.51<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.06%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n2.60<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.13%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.78<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.94%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.99<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.15%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n7.48<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.01%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.12<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.75%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n53.78<\/strong><\/span><\/td>\n– 0.27<\/strong><\/span><\/td>\n– 0.50%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n59.42<\/strong><\/span><\/td>\n– 0.53<\/strong><\/span><\/td>\n– 0.88%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t) futures<\/strong><\/span><\/td>\n85.70<\/strong><\/span><\/td>\n– 0.25<\/strong><\/span><\/td>\n– 0.29%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Nothing to see here.<\/p>\n

We will note the iron ore price slide did ease a bit on Friday night.<\/p>\n

We can also note the Aussie continues to recover as the greenback continues to weaken, up another 0.3% on Friday night to US$0.6848. The RBA will be livid.<\/p>\n

The SPI Overnight closed down -14 points or -0.2% on Saturday morning, ahead of the Brexit vote.<\/p>\n

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

Some 25% of S&P500 companies will report this week.<\/p>\n

US data this week include existing home sales tomorrow, house prices on Wednesday, durable goods and new home sales on Thursday along with a flash estimate of October manufacturing PMI. Note that it was this series which sent Wall Street into a tail spin last month.<\/p>\n

Friday is consumer sentiment, which is also becoming increasingly more important.<\/p>\n

The ECB will hold a policy meeting on Thursday.<\/p>\n

It’s a quiet week locally on the economic front, but not on the stock market front.<\/p>\n

This week brings a barrage of AGMs and quarterly reports – too many to highlight another than day by day.<\/p>\n

Today brings production reports from Lynas Corp ((LYC)) and Syrah Resources ((SYR)) along with AGMs for Stockland ((SGP)) and WorleyParsons ((WOR)).<\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
AQZ<\/td>\nALLIANCE AVIATION<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
BLD<\/td>\nBORAL<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
BOQ<\/td>\nBANK OF QUEENSLAND<\/td>\nDowngrade to Sell from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
HRL<\/td>\nHRL HOLDINGS<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
HT1<\/td>\nHT&E LTD<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
IAG<\/td>\nINSURANCE AUSTRALIA<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
IFL<\/td>\nIOOF HOLDINGS<\/td>\nUpgrade to Neutral from Sell<\/td>\nCiti<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
NCK<\/td>\nNICK SCALI<\/td>\nUpgrade to Buy from Sell<\/td>\nCiti<\/td>\n<\/tr>\n
NWL<\/td>\nNETWEALTH GROUP<\/td>\nDowngrade to Hold from Buy<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
OZL<\/td>\nOZ MINERALS<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
PPT<\/td>\nPERPETUAL<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
SDF<\/td>\nSTEADFAST GROUP<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
SXL<\/td>\nSOUTHERN CROSS MEDIA<\/td>\nDowngrade to Neutral from Outperform<\/td>\nMacquarie<\/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":83185,"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\/83183"}],"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=83183"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/83183\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/83185"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=83183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=83183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=83183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}