World Overnight | |||
SPI Overnight (Dec) | 6097.00 | + 12.00 | 0.20% |
S&P ASX 200 | 6102.00 | + 65.60 | 1.09% |
S&P500 | 3446.83 | + 27.38 | 0.80% |
Nasdaq Comp | 11420.98 | + 56.38 | 0.50% |
DJIA | 28425.51 | + 122.05 | 0.43% |
S&P500 VIX | 26.36 | – 1.70 | – 6.06% |
US 10-year yield | 0.77 | – 0.02 | – 2.55% |
USD Index | 93.59 | – 0.05 | – 0.05% |
FTSE100 | 5978.03 | + 31.78 | 0.53% |
DAX30 | 13042.21 | + 113.64 | 0.88% |
By Greg Peel
And on the fourth day…
On the third day, the ASX200 travelled in a straight line upward post budget from open to close. On the fourth day, it simply picked up where it had left off, at least until 2pm when the index was up almost 90 points. Only then did some profit-taking emerge.
The banks enjoyed another strong session (+1.2%) but star of the day was healthcare (+2.6%).
Australia’s biggest company, as far as index weight goes, CSL ((CSL)), has finalised an agreement to supply 51m doses of the University of Queensland’s vaccine candidate and, with government support, secure onshore production and supply for Australia. If, of course, the vaccine is successful. CSL rose 2.4% and in an unrelated matter, we hear Cochlear ((COH)) rose 5.3%.
The IT sector was back to its old self yesterday (+2.7%) led by the usual BNPL suspects. Sezzle ((SZL)), which is not in the index, reported a 21% rise in quarterly sales and gained 3.3%, while Zip Co ((Z1P)) announced a couple of new executive appointments and topped the index with an 8.8% jump. Sector heavyweight Afterpay ((APT)) gained 2.6%.
Investment platform Netwealth ((NWL)), a financial, took the silver in rising 8.3% after reporting quarterly funds under management flows.
Materials (+1.5%) were back in business yesterday, boosted by a big jump in the copper price, and despite pariah Whitehaven Coal ((WHC)) falling another -3.7% to be the biggest index loser on the day.
Energy, utilities, property and industrials took a breather. The industrials sector continues to be weighed down by Transurban ((TCL)), which fell -1.0% yesterday after announcing disappointing traffic stats, with ongoing weakness in North America, Brisbane (in the People’s Democratic Republic of Queensland) and, of course, Melbourne.
By contrast, clear budget beneficiary Downer EDI ((DOW)) gained 3.8% even before getting a big rap from Albo in last night’s reply.
The property sector (-0.4%) is under strain again as the Melbourne average falls ever so slowly, putting the reopening date target in doubt, while just when you thought NSW was a virus-free zone, new clusters have emerged. Keep that border shut Anastacia!
On Wednesday the ASX200 powered through the 6000 level without blinking and yesterday 6100 was similarly reconquered, before late selling sent the index back down to that level.
Can we see day five? The futures are up 12 points this morning, but never underestimate Friday squaring. And note that volumes have been low this week due to school holidays in NSW in particular.
Joe’s Our Man
Investors are now shrugging their shoulders over Biden’s promise to repeal Trump’s tax cuts for high income earners, once seen as death to Wall Street, and are focussing instead on his US$5trn spending plan as a net win for the economy, with energy and climate change management a critical part.
The polls are now increasingly suggesting a “blue sweep” is on the cards, which would see the Democrat’s plans passed through a majority in both houses. This is a far more palatable scenario than a close election which would no doubt end in the ongoing uncertainty of a Trump challenge.
It is also now assumed three weeks is too late to move any agreed upon deal on fiscal stimulus through Congress, particularly given the distraction of the Supreme Court nominee approval process. Last night Nancy Pelosi returned to her long-held position of refusing to agree to a second airline rescue package if it is not included in a comprehensive package.
On that news, Wall Street, which was busily racking up yet another positive session from the open, rapidly dropped back to square, but not for long. No point in worrying about stimulus not being agreed upon in time, better to punt on a Democrat win.
Which does beg the question of how far can Wall Street continue to rally on a fiscal stimulus plan, having, arguably, already fully priced one in? Would an on-the-night Biden victory send the indices to the moon?
No one would have thought this a possibility a few months ago.
Meanwhile, the US reported another 840,000 new weekly jobless claims last week, when 820,000 were forecast. The claims number did plunge rapidly after April but has now clearly plateaued, with every week since seeing a number over 800,000. Over 20 million Americans are on the dole, and that’s before the mass lay-offs really begin.
Most notable about this week’s rally to date is its breadth. Last night the S&P500 rose 0.8% with the Nasdaq only rising 0.5%. That’s a 2020 anomaly. Investors are now more consistently piling into beaten-down virus victims, including the banks, industrials, materials and energy. The Russell small cap index has outperformed every day this week.
Still three weeks to go.
Commodities
Spot Metals,Minerals & Energy Futures | |||
Gold (oz) | 1893.80 | + 6.20 | 0.33% |
Silver (oz) | 23.84 | + 0.11 | 0.46% |
Copper (lb) | 2.99 | – 0.01 | – 0.50% |
Aluminium (lb) | 0.81 | + 0.01 | 1.75% |
Lead (lb) | 0.80 | – 0.00 | – 0.14% |
Nickel (lb) | 6.65 | + 0.04 | 0.56% |
Zinc (lb) | 1.07 | + 0.01 | 0.73% |
West Texas Crude | 41.29 | + 1.30 | 3.25% |
Brent Crude | 43.42 | + 1.33 | 3.16% |
Iron Ore (t) | 123.15 | 0.00 | 0.00% |
Hurricane Delta has now shut down 90% of Gulf oil production, while North Sea production remains impaired by the Norwegian strike. Saudi Arabia is also now talking about postponing plans to increase OPEC production.
Add it all up and oil prices are back on the rise.
Copper came off a bit last night after Wednesday night’s rally.
Having been sold off in a hurry on Australia’s record-breaking deficit announced on Tuesday night, the Aussie continues to drift back up to that starting point, up 0.4% last night to US$0.7166.
Today
The SPI Overnight closed up 12 points.
Apologies, I jumped the gun yesterday in suggesting China was back. It’s back today, and Caixin will release its PMIs.
Locally we’ll see housing finance numbers and the RBA will issue its Financial Stability Review. Should be a cracking read.
Cimic Group ((CIM)) reports quarterly earnings today.
Note that Harvey Norman ((HVN)) goes ex-div.
The Australian share market over the past thirty days…
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
ALL | Aristocrat Leisure | Downgrade to Neutral from Outperform | Macquarie |
ANZ | ANZ Banking Group | Upgrade to Outperform from Neutral | Macquarie |
ARB | ARB Corp | Downgrade to Lighten from Hold | Ord Minnett |
COL | Coles Group | Upgrade to Outperform from Neutral | Credit Suisse |
DOW | Downer Edi | Upgrade to Overweight from Equal-weight | Morgan Stanley |
RWC | Reliance Worldwide | Downgrade to Underweight from Equal-weight | Morgan Stanley |
WBC | Westpac Banking | Upgrade to Outperform from Neutral | Macquarie |
WES | Wesfarmers | Upgrade to Outperform from Neutral | Macquarie |
WHC | Whitehaven Coal | Upgrade to Lighten from Sell | Ord Minnett |