| World Overnight | |||
| SPI Overnight (Dec) | 6719.00 | + 2.00 | 0.03% |
| S&P ASX 200 | 6706.90 | – 23.10 | – 0.34% |
| S&P500 | 3132.52 | – 3.44 | – 0.11% |
| Nasdaq Comp | 8616.18 | – 5.64 | – 0.07% |
| DJIA | 27881.72 | – 27.88 | – 0.10% |
| S&P500 VIX | 16.01 | + 0.15 | 0.95% |
| US 10-year yield | 1.83 | + 0.00 | 0.22% |
| USD Index | 97.43 | – 0.21 | – 0.22% |
| FTSE100 | 7213.76 | – 20.14 | – 0.28% |
| DAX30 | 13070.72 | – 34.89 | – 0.27% |
By Greg Peel
Posturing
It was a very low volume day on the ASX yesterday, probably because having alighted from trains and buses in the morning, many Sydney-based market participants were unable to find their offices. Those who did found themselves back out on the footpath anyway as smoke alarms triggered evacuation orders.
It might also have something to do with the fact there’s little point in doing anything ahead of this weekend, other than square up. There was nothing much of note to drive the ASX200 higher yesterday, so it sold off instead, erasing Monday’s gains.
It was pretty much a “sell everything”, with no one sector particularly standing out, with the exception of materials. That sector rose 0.5% against the tide on the jump in the iron ore price, which was attributed to talk of more stimulus in China.
Maybe one way to back-door some stimulus is to sign the goddamn deal.
The biggest fall on the day was in industrials (-0.9%), aided by a -2.6% drop for a Sydney Airport ((SYD)) that planes couldn’t find.
The energy sector was Monday’s star but yesterday profits were taken (-0.8%).
The only other move of note was consumer discretionary (-0.7%), with retailers preparing for probably the worst Christmas in years.
That said, businesses decided last month conditions had improved a little, as suggested by NAB’s monthly survey. NAB’s condition index rose to 4.2 from 4.0 in October. But how are things looking from here? The confidence index fell to 0.1 from 2.0.
No wonder Australia’s CEOs are calling for urgent action from the government to boost growth.
In other news, Philip Lowe spoke yesterday, but not about monetary policy. The RBA governor spoke to the theme of digital payment systems and the central bank’s plans to explore some of the issues (think BNPL for example), next year.
One of the RBA’s main issues for next year will be the housing market. Data yesterday showed average house prices rose 2.4% in the September quarter when 1.5% had been forecast, taking the year on year decline to -3.7% when -4.6% was forecast. All the action was provided in the quarter by Sydney (+4.0%) and Melbourne (+3.7%).
And the RBA is expected to cut in February.
Another dull day lies ahead. The futures are up 2 this morning.
White Noise
The Democrat-led House signed off on a revised version of the USMCA trade deal, aka Nafta 2.0, last night. Wall Street shrugged.
Only one trade deal matters, but for now, that trade deal doesn’t actually much matter. All that matters is whether these December 15 tariffs go ahead or not. If a deal cannot be signed between now and Sunday, then the hope is at the very least the tariffs are delayed to allow further talks to progress.
To that end, comments flowed out from all corners of the White House last night throughout the session, ranging from “unlikely” the tariffs would go ahead to “still on the table”. US stock indices ebbed and flowed in concert. The Dow covered a 145 point range on the day before traders just gave up.
One CNBC reporter summed up the situation by pointing out that no one at the White House was prepared to commit to expectation of either outcome as the president could change his mind at any moment.
Just to complicate matters, it was revealed last night that a bill is being worked on in Congress that would ban government purchases of Chinese-made buses and train carriages. This can only slow progress, one presumes, but will it affect the tariff decision?
Feel free to hold up your “Nobody Knows” cards at this point.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1464.80 | + 4.90 | 0.34% |
| Silver (oz) | 16.67 | + 0.11 | 0.66% |
| Copper (lb) | 2.73 | + 0.01 | 0.19% |
| Aluminium (lb) | 0.79 | – 0.01 | – 0.64% |
| Lead (lb) | 0.86 | + 0.01 | 0.99% |
| Nickel (lb) | 6.01 | + 0.02 | 0.37% |
| Zinc (lb) | 1.01 | – 0.00 | – 0.39% |
| West Texas Crude | 59.38 | + 0.38 | 0.64% |
| Brent Crude | 64.36 | + 0.17 | 0.26% |
| Iron Ore (t) futures | 93.15 | – 1.20 | – 1.27% |
As one might imagine, commodity markets are also in limbo.
Iron ore saw a bit of give-back nonetheless.
The Aussie is drifting away, down -0.2% to US$0.6817 despite the US dollar index also falling -0.2%.
Today
Then suddenly, nothing happened. The SPI Overnight closed up 2 points.
The Fed decision is out early tomorrow morning, but of the three big events this week, this is the least likely to be market-moving. No one expects any policy change.
Boris still appears to be a shoe-in, but then so were Remain, Hillary and Shorten. We may get a result from Blighty by Friday’s session downunder.
And then there’s the tariffs.
Meanwhile, Westpac publishes its last consumer confidence survey before Christmas today.
There’s nothing of note on the corporate calendar today.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BLD | BORAL | Downgrade to Lighten from Hold | Ord Minnett |
| CTX | CALTEX AUSTRALIA | Downgrade to Neutral from Buy | Citi |
| MTS | METCASH | Upgrade to Accumulate from Hold | Ord Minnett |
| NST | NORTHERN STAR | Upgrade to Buy from Neutral | UBS |
| NVX | NOVONIX | Upgrade to Speculative Buy from Hold | Morgans |
| SYD | SYDNEY AIRPORT | Downgrade to Lighten from Hold | Ord Minnett |
| WSA | WESTERN AREAS | Upgrade to Neutral from Sell | UBS |
