{"id":92443,"date":"2021-03-22T09:20:28","date_gmt":"2021-03-21T22:20:28","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=92443"},"modified":"2021-03-22T09:20:30","modified_gmt":"2021-03-21T22:20:30","slug":"the-monday-report-22-march-2021","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/03\/22\/the-monday-report-22-march-2021\/","title":{"rendered":"The Monday Report – 22 March 2021"},"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 (Jun)<\/strong><\/span><\/td>\n6661.00<\/strong><\/span><\/td>\n– 15.00<\/strong><\/span><\/td>\n– 0.22%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6708.20<\/strong><\/span><\/td>\n– 37.70<\/strong><\/span><\/td>\n– 0.56%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n3913.10<\/strong><\/span><\/td>\n– 2.36<\/strong><\/span><\/td>\n– 0.06%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n13215.24<\/strong><\/span><\/td>\n+ 99.07<\/strong><\/span><\/td>\n0.76%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n32627.97<\/strong><\/span><\/td>\n– 234.33<\/strong><\/span><\/td>\n– 0.71%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n20.95<\/strong><\/span><\/td>\n– 0.63<\/strong><\/span><\/td>\n– 2.92%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.73<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.12%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n91.92<\/strong><\/span><\/td>\n+ 0.07<\/strong><\/span><\/td>\n0.08%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n6708.71<\/strong><\/span><\/td>\n– 70.97<\/strong><\/span><\/td>\n– 1.05%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n14621.00<\/strong><\/span><\/td>\n– 154.52<\/strong><\/span><\/td>\n– 1.05%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Measured Response<\/u><\/p>\n

After a tough night on Wall Street, in which the S&P500 had fallen -1.5% and the Nasdaq -3%, the ASX200 opened down -72 points in the first hour on Friday. Then immediately shot back up to almost square.<\/p>\n

The Australian market had already been weak on Thursday, but despite the afternoon seeing a gradual sell-off, what remained a surprise was the technology sector. It closed flat. Yes, Nasdaq down -3%, Afterpay ((APT)) down -2.4% and the sector closed flat.<\/p>\n

Wonders never cease.<\/p>\n

The energy sector was also somewhat of a surprise. Oil prices fell -8% overnight but the sector only fell -2.0%. Oil prices rebounded to halve that loss on Friday night but there was another sizeable fall in the iron ore price. Materials (-1.4%) was weak again on Friday.<\/p>\n

Industrials fell -1.7%, led by a -3.3% fall for Sydney Airport ((SYD)). February traffic numbers showed little sign of any rebound.<\/p>\n

We recall that February saw flash lockdowns in both Victoria and Western Australia. That would help explain why no one much wanted to fly domestically, but also why February retail sales fell a worse than expected -1.1%, having risen 0.5% in January. Big falls were booked in those two states.<\/p>\n

Retail sales are still running at an average annual rate of 8.7%, which is not only above pre-pandemic levels but well above the historical average. Consumer discretionary only fell -0.2%.<\/p>\n

The banks (-0.3%) and Healthcare (-0.5%) made downside contributions, while telcos (+0.3%), property (+0.8%) and utilities (+1.2%) provided some counter. Utilities were driven by a 2.2% gain for AGL Energy ((AGL)) after the renewal of its Portland smelter contract was finalised.<\/p>\n

There were no particularly sizeable individual stocks moves, with the downside top five dominated by gold miners and the standout on the upside being Harvey Norman ((HVN)), which rose 3.6% in defiance of the sales data, probably because Gerry refuses to give back the company’s JobKeeper windfall.<\/p>\n

We’ve had over the weekend a disturbingly icy meeting between Chinese and US officials in Alaska, and some rain in NSW. A lot of rain in NSW, which will not let up until Wednesday. That will impact in the usual disaster fashion – immediate impact on the NSW economy followed by spending on rebuilding and replacing damaged furniture etc.<\/p>\n

Our futures were down -15 points on Saturday morning.<\/p>\n

Friday Reversal<\/u><\/p>\n

A year ago, the Fed announced one year of relief from capital level requirements for US banks so they could deal with covid fallout without having to to go the market for top-ups. Dividends were nonetheless restricted and buybacks banned. That relief is due to expire at the end of this month.<\/p>\n

Given the Fed’s current dovish stance it was considered possible the central bank would extend that relief period when it specifically met to make a decision on Friday night. The decision was no extension. Bank share prices initially fell on the news, but did fight back later in the session.<\/p>\n

It is not beyond the realms one or more US banks will need now to raise capital, but otherwise the announcement is not so bad, analysts suggest. And bank share prices have been surging since November, spurred on by rising bonds yields, so a bit of give-back on Friday night was no big deal.<\/p>\n

Dow component JPMorgan had been down as much as -4% during the day but closed down only -1.6% after some late buying. The other Dow component bank, Goldman Sachs, closed down -1.1%.<\/p>\n

The banks helped the Dow down -0.7% but this was mirrored by a 0.8% gain in the Nasdaq. It had been a tough weak for the Nasdaq, including the -3% plunge on Thursday night, so a bit of Friday reversal was no great surprise, and bond yields behaved themselves on the day. The S&P split the difference in closing flat.<\/p>\n

While all three majors closed down for the week, the S&P pretty much went sideways on the rotation split.<\/p>\n

Perhaps surprising on Friday night was a flat close for the energy sector, despite the WTI crude price rebounding almost 4% following Thursday night’s -8% plunge. The energy sector has played buddy to the banks sector since November, keeping pace on rising oil prices, so perhaps there was some reluctance to leap back in.<\/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>\n1744.90<\/strong><\/span><\/td>\n+ 8.90<\/strong><\/span><\/td>\n0.51%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n26.25<\/strong><\/span><\/td>\n+ 0.25<\/strong><\/span><\/td>\n0.96%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n4.08<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.19%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.99<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.51%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.87<\/strong><\/span><\/td>\n0.00<\/strong><\/span><\/td>\n0.00%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n7.31<\/strong><\/span><\/td>\n+ 0.06<\/strong><\/span><\/td>\n0.77%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.28<\/strong><\/span><\/td>\n+ 0.02<\/strong><\/span><\/td>\n1.49%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n61.42<\/strong><\/span><\/td>\n+ 2.26<\/strong><\/span><\/td>\n3.82%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n64.53<\/strong><\/span><\/td>\n+ 2.13<\/strong><\/span><\/td>\n3.41%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n160.20<\/strong><\/span><\/td>\n– 5.80<\/strong><\/span><\/td>\n– 3.49%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Other than the oils, the standout moves on Friday night were in iron ore and gold.<\/p>\n

Up until Chinese New Year the iron ore price had been tracking a two-steps forward, one step back pattern. Since then it’s the other way around – one step forward and two back.<\/p>\n

Gold had a good night despite a slightly higher greenback, likely because US bond yields were steady.<\/p>\n

It seems the weak retail sales number had its impact on the Aussie. It’s down -0.6% at US$0.7715.<\/p>\n

The SPI Overnight closed down -15 points on Saturday morning.<\/p>\n

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

Wall Street will be watching the data this week, beginning with existing home sales tonight and new home sales tomorrow. Durable goods orders on Wednesday are important at this time, but most important will be Friday’s personal income & spending data.<\/p>\n

For they include the Fed’s preferred inflation measure – the core personal consumption & expenditure (PCE) number.<\/p>\n

On Wednesday the world will see flash estimates for March manufacturing PMIs.<\/p>\n

Australia will see February trade data on Wednesday.<\/p>\n

The local ex-dividend season is now winding down, although there’s a bit of late burst on Thursday, and Cochlear ((COH)) is among that number.<\/p>\n

The out-of-cycle earnings season has a bit of a spurt this week, with results due from Sigma Healthcare ((SIG)) tomorrow, Premier Investments ((PMV)) on Wednesday, Brickworks ((BKW)) on Thursday and WH Soul Pattinson ((SOL)) on Friday.<\/p>\n

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

<\/p>\n\n\n\n\n\n\n
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
BLD<\/td>\nBoral<\/td>\nDowngrade to Lighten from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
CLV<\/td>\nClover Corp<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
TLS<\/td>\nTelstra Corp<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/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":92445,"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\/92443"}],"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=92443"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/92443\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/92445"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=92443"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=92443"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=92443"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}