Overnight: Tech Still The Winner
|SPI Overnight (Sep)||6249.00||+ 10.00||0.16%|
|S&P ASX 200||6297.70||+ 29.20||0.47%|
|S&P500||2853.58||– 4.12||– 0.14%|
|Nasdaq Comp||7891.78||+ 3.46||0.04%|
|DJIA||25509.23||– 74.52||– 0.29%|
|S&P500 VIX||11.27||+ 0.42||3.87%|
|US 10-year yield||2.94||– 0.04||– 1.21%|
|USD Index||95.61||+ 0.52||0.55%|
|FTSE100||7741.77||– 34.88||– 0.45%|
By Greg Peel
It’s been a torrid time of late in Australia’s wealth management industry. Aside from the obvious RC scrutiny, the big name non-bank fund managers have been suffering from underperformance of market benchmarks and persistent funds outflows. Early last month, Magellan Financial ((MFG)), had fallen -21% year to date.
Yesterday Magellan bounced 14% after releasing its earnings result. The financials sector rose 1.1% to lead the ASX200 back to the 6300 mark, where it yet again stalled.
In percentage terms, consumer discretionary posted the best gain of the day with 1.7%, helped by a +6.7% response to Crown Resorts’ ((CWN)) earnings result, with Star Entertainment ((SGR)) jumping 5.9% in sympathy.
On the flipside, AGL Energy ((AGL)) fell -4.1% post-result to ensure utilities were the worst performer on the day, down -1.8%.
The Chinese stock market managed to rally 1.8% yesterday, leading some to suggest the big 2018 sell-off may have reached a bottom. The latest announcement of tit-for-tat tariffs on US imports drove sentiment, while CPI data showing 2.1% annual inflation when 1.9% was forecast was also well-received.
The “beat” on the CPI is credited to tariffs, so it’s unclear why this is good news. Things can only get worse from here in terms of prices to consumers, with no sign of any trade war resolution.
Chinese strength provided a boost for the local industrials (+0.8%) and materials (+0.1%) sectors. That 0.1% for materials is net of Rio Tinto ((RIO)) going ex-dividend so it was actually a strong session.
The FNArena Corporate Results Monitor, which is currently monitoring earnings results for the 300+ companies covered by FNArena database brokers which report in this main cycle, is showing over half of results missing expectations to date. But fear not, we’re only 5% into the season by number of stocks.
With Wall Street dozing in the summer sun, and barring any explosive tweets, it will most likely be earnings results that finally push the ASX200 through the 6300 brick wall, if that is to be the case.
The futures are up 10 points this morning, suggesting a possible breach from the open, but we’ve been here before. Quite a few times.
Last night the Nasdaq posted its eight consecutive positive session, making it the longest streak in 2018. Seems incongruous after we recently saw Netflix fall -11% and Facebook and Twitter both fall -20% following their earnings results, but Wall Street simply can’t find any reason not to keep investing in the stocks of today which will still be the stocks of tomorrow.
That eight-day streak has nevertheless been a very incremental one, while on-the-close selling in the broader market has ensured weaker closes for the Dow and S&P500 these past couple of sessions.
The selling probably represents traders about to go on holiday selling into a market in which everyone is on holiday.
The US Producer price index was released last night, and showed no change in July when a 0.2% rise was expected. Annual core PPI is running at 2.8%. The benign result is yet another reason to believe the Fed will not get too carried away.
To that end the US ten-year yield fell -4 basis points to 2.94%. Every time it looks like the ten-year might break 3%, which has been the expectation for about two years, it falls back again. One problem is because everyone has been expecting a breach, for some time, everyone is short longer dated Treasuries (long yield) to the gills.
There is little else much to say about another deathly quiet Wall Street session.
I do note with interest, however, that a US movie/TV streaming service that you’ve probably never heard of, called Roku, jumped 21% after reporting earnings last night. There are a plethora of streaming services in the US, not just Netflix and Apple TV, and while the American population might be large one wonders just how anyone decides what to subscribe and what the hell to watch.
It’ bad enough here with just a couple.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1212.10||– 1.40||– 0.12%|
|Silver (oz)||15.42||+ 0.02||0.13%|
|Copper (lb)||2.82||+ 0.04||1.57%|
|Aluminium (lb)||0.93||– 0.01||– 0.65%|
|Lead (lb)||0.95||– 0.01||– 1.20%|
|Nickel (lb)||6.26||– 0.03||– 0.52%|
|Zinc (lb)||1.20||– 0.00||– 0.31%|
|West Texas Crude (Sep)||66.70||– 0.18||– 0.27%|
|Brent Crude (Oct)||72.00||– 0.21||– 0.29%|
|Iron Ore (t)||69.40||0.00||0.00%|
The US dollar index jumped up 0.6% last night, largely on pound weakness, as concerns mount that there will be no Brexit deal agreed to with the EU and the UK will be left high and dry, with imports from Europe cut off.
That move weighed on commodity prices but among the base metals, worker strikes are now taking centre stage in both copper (Chile) and aluminium, (right here, as local Alcoa workers go on strike).
Iron ore sat it out last night.
Gold is back in another one of its hibernation periods.
The Aussie is down a solid -0.7% on the greenback’s gain.
The SPI Overnight closed up 10 points.
Japan will report June quarter GDP today.
The US sees CPI numbers tonight.
Locally, the quarterly RBA Statement on Monetary Policy is due today.
Next week the season ramps up in earnest, and don’t even mention the week after.
Rudi will connect with Sky News Business via Skype to talk share markets, corporate results and broker calls, probably around 11.15am.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|A2M||A2 MILK||Downgrade to Sell from Neutral||Citi|
|ABC||ADELAIDE BRIGHTON||Downgrade to Lighten from Hold||Ord Minnett|
|ECX||ECLIPX GROUP||Downgrade to Neutral from Buy||Citi|
|Downgrade to Neutral from Outperform||Credit Suisse|
|Downgrade to Hold from Buy||Deutsche Bank|
|EVN||EVOLUTION MINING||Upgrade to Equal-weight from Underweight||Morgan Stanley|
|FBU||FLETCHER BUILDING||Downgrade to Underperform from Outperform||Credit Suisse|
|IGO||INDEPENDENCE GROUP||Downgrade to Underweight from Equal-weight||Morgan Stanley|
|RRL||REGIS RESOURCES||Upgrade to Hold from Reduce||Morgans|
|SDA||SPEEDCAST INTERN||Upgrade to Add from Hold||Morgans|
|SEK||SEEK||Upgrade to Hold from Reduce||Morgans|
|TAH||TABCORP HOLDINGS||Upgrade to Hold from Lighten||Ord Minnett|
|TCL||TRANSURBAN GROUP||Downgrade to Neutral from Outperform||Credit Suisse|
|VCX||VICINITY CENTRES||Upgrade to Outperform from Neutral||Credit Suisse|
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