World Overnight | |||
SPI Overnight (Dec) | 6741.00 | + 23.00 | 0.34% |
S&P ASX 200 | 6740.70 | + 1.50 | 0.02% |
S&P500 | 3039.42 | + 16.87 | 0.56% |
Nasdaq Comp | 8325.99 | + 82.87 | 1.01% |
DJIA | 27090.72 | + 132.66 | 0.49% |
S&P500 VIX | 13.11 | + 0.46 | 3.64% |
US 10-year yield | 1.85 | + 0.05 | 2.89% |
USD Index | 97.75 | – 0.08 | – 0.08% |
FTSE100 | 7331.28 | + 6.81 | 0.09% |
DAX30 | 12941.71 | + 47.20 | 0.37% |
By Greg Peel
Fade Away
The futures suggested up 24 points yesterday morning and indeed the ASX200 rose 27 on the opening rotation but that was the end of that. The index drifted steadily back down all session to close flat.
On Friday the banks were looking popular ahead of earnings result releases beginning this week but yesterday they succumbed to analyst assumptions of a heightened risk of dividend cuts and/or dilutive DRPs in falling -0.3%. Never mind that analysts have been making this call for some time. Remediation provisions just keep on growing at the same time the Kiwis want bigger capital buffers.
Should stick to rugby. Oh wait…
Consumer staples (-0.7%) was the worst performing sector on the day thanks to a -2.7% drop in Coles ((COL)) ahead of its quarterly sales release today. The fall was not matched by Woolworths ((WOW)), which reports tomorrow. Little Shop backlash?
Aside from IT, for which a -0.3% drop is inconsequential, all other sectors closed in the green, led out by +0.5% gains for materials and energy on stronger commodity prices.
Particularly strong was the lithium price, after a period of wallowing in the mire of oversupply, due to protests in Chile blocking access to the salt flats. The top three ASX200 stock moves yesterday were the lithium trio of Pilbara Minerals ((PLS)), Galaxy Resources ((GXY)) and Orocobre ((ORE)), with daylight fourth.
On the other side of the ledger, Sims Metal Management ((SGM)) slashed its guidance for the second time in a mere six weeks as scrap prices crash. It fell another -8.8% and is now down -28% from its September high.
Yesterday may have been the case of taking some risk off the table after a decent run lately, ahead of tomorrow’s local CPI result, which will inform the chance of a Cup Day rate cut, and the Fed decision due on Wednesday night which, if not a cut, would send Wall Street tumbling.
The RBA governor speaks today so look out for any hints. The market ascribes a very low chance of a November cut given recent commentary.
Moon River
Wall Street learned over breakfast that Europe’s richest and the world’s third richest man has put in a takeover bid for Tiffany’s, sending that stock up 30%. Bernard Arnault has previously had success in turning around the likes of Dior and Bulgari, and at US$100bn is twice as rich as the second richest man in France. Must be doing something right.
Google has made an offer for Fitbit, which thus also jumped 30%. Loaded with cash and watching Apple’s wearables sales surging, Google must have decided a backdoor entry is quicker than product development. The company has been forced to write down its investment in IPO dud Uber, and reported after the bell last night to be down -2% in the aftermarket.
But there’s nothing like a bit of M&A to get the juices flowing on a stock market, and nor does it hurt when America’s second biggest company wins a major government cloud contract. Microsoft (Dow) has alone scooped up the US$10bn prize when it was assumed a Microsoft/Amazon shared deal was more likely. Amazon is considering an appeal. Microsoft shares hit their own all-time high.
On the subject of big companies, AT&T (Dow) last night reported profits and jumped 4.3%, which is a big move for a telco that still has “telegraph” implied in its name.
But amidst all the early excitement, Wall Street simply opened higher last night and stayed there. The all-time high was breached from the opening trade.
Aside from all of the above, a primary driver last night was talk from both sides of the Pacific that progress is being made on trade and the parties are converging on a deal. We are reminded that every time Wall Street has hit a new all-time high this year, China has suddenly back-pedalled and Trump has spoiled the party with new tariffs or tariff increases.
Could this time be different?
Commodities
Spot Metals,Minerals & Energy Futures | |||
Gold (oz) | 1493.00 | – 11.00 | – 0.73% |
Silver (oz) | 17.82 | – 0.18 | – 1.00% |
Copper (lb) | 2.67 | + 0.02 | 0.76% |
Aluminium (lb) | 0.78 | + 0.01 | 1.13% |
Lead (lb) | 1.02 | + 0.01 | 0.99% |
Nickel (lb) | 7.53 | – 0.05 | – 0.67% |
Zinc (lb) | 1.17 | + 0.01 | 1.17% |
West Texas Crude | 55.81 | – 0.85 | – 1.50% |
Brent Crude | 61.61 | – 0.41 | – 0.66% |
Iron Ore (t) futures | 87.65 | 0.00 | 0.00% |
Base metals sparked back into life last night on said positive trade talk, countered by “risk-on” evident for the gold price.
A public holiday in Singapore halted iron ore trading.
The usual speculation over US crude inventories and a solid four-day run had oil prices pulling back.
The Aussie is up 0.2% at US$0.6837.
Today
The SPI Overnight closed up 23 points or 0.3%.
As noted, Philip Lowe speaks today.
Tonight brings US consumer confidence data.
Coles reports quarterly sales today, UR-Westfield ((URW)) quarterly earnings and Senex Energy ((SXY)) quarterly production.
Bendigo & Adelaide Bank ((BEN)), Bega Cheese ((BGA)), Fortescue Metals ((FMG)) and Vocus Group ((VOC)) are among those companies holding AGMs.
The Australian share market over the past thirty days…
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
API | AUS PHARMACEUTICAL IND | Downgrade to Neutral from Buy | Citi |
CIM | CIMIC GROUP | Upgrade to Neutral from Underperform | Credit Suisse |
COL | COLES GROUP | Downgrade to Underperform from Neutral | Credit Suisse |
CWY | CLEANAWAY WASTE MANAGEMENT | Upgrade to Neutral from Underperform | Credit Suisse |
IGO | INDEPENDENCE GROUP | Upgrade to Neutral from Sell | Citi |
NCM | NEWCREST MINING | Upgrade to Neutral from Underperform | Credit Suisse |
SGR | STAR ENTERTAINMENT | Upgrade to Add from Hold | Morgans |
Downgrade to Underperform from Neutral | Credit Suisse | ||
WBC | WESTPAC BANKING | Downgrade to Neutral from Buy | Citi |