| World Overnight | |||
| SPI Overnight (Mar) | 6766.00 | – 33.00 | – 0.49% |
| S&P ASX 200 | 6856.90 | + 35.70 | 0.52% |
| S&P500 | 3909.88 | – 1.35 | – 0.03% |
| Nasdaq Comp | 13972.53 | – 35.16 | – 0.25% |
| DJIA | 31437.80 | + 61.97 | 0.20% |
| S&P500 VIX | 21.99 | + 0.36 | 1.66% |
| US 10-year yield | 1.13 | – 0.02 | – 2.07% |
| USD Index | 90.43 | – 0.01 | – 0.01% |
| FTSE100 | 6524.36 | – 7.20 | – 0.11% |
| DAX30 | 13932.97 | – 78.83 | – 0.56% |
By Greg Peel
Earnings kicking in
I suggested yesterday that after Monday’s unexpected sell-off we might see the ASX200 perform better than the 8 point gain the futures had indicated. Early afternoon the index was up almost 50 points.
It slipped back a bit to the close, but still every sector bar one closed in the green.
Consumer discretionary fell -0.4% against the tide after Crown Resorts ((CWN)) came back on the boards and fell -3.3%. It was not a case of rival Star Entertainment ((SCG)) benefitting from Crown’s woes – it fell -2.8%.
Star sector of the day was technology, rising a standout 3.1%. The rise and rise of BNPL is getting to the point of domination in market-cap terms in the sector, crowding out the rest. Zip Co ((Z1P)) jumped another 12.2% to win the day, because the CEO is in the US touting the company’s dual listing. Afterpay ((APT)) gained 4.2% for fun.
Otherwise we are beginning to see earnings results come to the fore in the day’s proceedings.
Commonwealth Bank ((CBA)) was the centre of attention, but couldn’t satisfy investors with a doubling of its previously APRA-constrained dividend. It fell -1.5%.
Financials co-component Insurance Australia Group ((IAG)) rose 4.5% on its result, while Tuesday’s biggest loser, Challenger ((CGF)), rebounded 4.7% after brokers downplayed the seemingly weak result.
Megaport ((MP1)) was the results winner on the day, rising 7.3%. The loser was Cimic ((CIM)), down -17.1%.
In economic news, the Westpac consumer confidence index is up 1.9 this month from January to 109.1, remembering that 100 is the line between optimism and pessimism. The increase likely reflects the end of the Christmas/New Year lockdowns in Sydney.
Wall Street has closed mixed, with the S&P500 down minimally, but our futures are showing down -33 this morning. Not sure why we’re having these distinct ups and downs at the moment.
There are several big name companies reporting today, so we’ll see how the micro plays out against the macro.
The Inflation Debate
There are those on Wall Street convinced that the combination of unprecedented monetary and fiscal stimulus and the vaccine rollout will inevitably lead to inflation, and perhaps alarmingly so. This is evident in the recent run-up in US bond yields.
Then there’s Jay Powell. The Fed chair is not at all concerned about inflation, as the central bank focuses on getting Americans back to work. He conceded last night that household savings have been growing during the pandemic, ready to be unleashed, but he did not see a rush of consumer spending as being either large or sustained.
The US headline CPI rose 0.3% in January to mark the fastest pace in five months. But it was all about the rebounding oil price, and indeed annual inflation remained flat at 1.4%, compared to 2.3% pre-pandemic.
Core inflation, which is more relevant to Fed policy, was unchanged. So far, Powell is winning the argument. But Biden’s new package is yet to come.
The US stock market wasn’t sure what to make of it all, chopping around last night with little sense of direction. The Dow traded between 136 points up and -154 points down before closing at a new all-time high.
The Nasdaq was out of sorts given collective small falls in the big FANG names. Why so? Well it seems the Reddit crowd have found a new target.
Tilray jumped 45% last night, and suddenly cannabis stocks were being bought up left right and centre. Tilray has signed a deal in Europe, but the underlying theme is one of a Biden administration being more amenable to medical marijuana than the prior administration.
Not sure what the short position story is in the so-called “pot stocks” but it is roundly agreed they are all trading at silly valuations. Here we go again? The falls in FANG names may reflect another short squeeze trade, but if so, only a very mild one at this stage.
In other news, Twitter posted its earnings result and jumped 12%, but now has lost its most prolific user.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1841.60 | + 6.40 | 0.35% |
| Silver (oz) | 26.96 | – 0.27 | – 0.99% |
| Copper (lb) | 3.73 | + 0.08 | 2.30% |
| Aluminium (lb) | 0.93 | + 0.00 | 0.46% |
| Lead (lb) | 0.95 | + 0.01 | 1.52% |
| Nickel (lb) | 8.44 | + 0.12 | 1.46% |
| Zinc (lb) | 1.23 | + 0.01 | 1.21% |
| West Texas Crude | 58.53 | + 0.13 | 0.22% |
| Brent Crude | 61.30 | + 0.14 | 0.23% |
| Iron Ore (t) | 165.95 | + 2.50 | 1.53% |
This morning’s table looks a lot like yesterday’s, with all commodities continuing to push higher except for silver, which we recall had been another Reddit target after the GameStop game stopped.
But this time the Aussie is down -0.3% to US$0.7719, even with the US dollar flat.
Today
The SPI Overnight closed down -33 points or -0.5%.
There’s little on the economic calendar today, but it is the biggest day for earnings reports so far this season. Of course, it still pales in comparison with what we’ll see over the next 2.5 weeks.
Among today’s reporters are AGL Energy ((AGL)), although the bad news is already out there, AMP ((AMP)), Newcrest Mining ((NCM)), Transurban ((TCL)) and Telstra ((TLS)).
Graincorp ((GNC)) will hold its AGM.
The Australian share market over the past thirty days…
