| World Overnight | |||
| SPI Overnight (Dec) | 6715.00 | – 14.00 | – 0.21% |
| S&P ASX 200 | 6730.00 | + 23.00 | 0.34% |
| S&P500 | 3135.96 | – 9.95 | – 0.32% |
| Nasdaq Comp | 8621.83 | – 34.70 | – 0.40% |
| DJIA | 27909.60 | – 105.46 | – 0.38% |
| S&P500 VIX | 15.64 | + 2.02 | 14.83% |
| US 10-year yield | 1.83 | – 0.01 | – 0.71% |
| USD Index | 97.64 | – 0.06 | – 0.06% |
| FTSE100 | 7233.90 | – 5.76 | – 0.08% |
| DAX30 | 13105.61 | – 60.97 | – 0.46% |
By Greg Peel
Settling Down
After a wild week of index-based selling and buying last week on trade news volatility, the local market settled down to a more “normal” session yesterday with a greater foucus on fundamentals. Volumes were below average, likely as investors prepare for this week’s major events.
Wall Street had posted solid gains on Friday night on a very strong US jobs report and on a trade deal being “close”. The ASX200 rallied 34 points in the first 15 minutes. But then someone pointed out that while the US labour market might be strong, the Australian labour market is not, and on the trade front, that the villagers are getting pretty tired of having to jump out of bed when the sheep are quite safe.
At midday the index was up 6 points.
But from there the buyers regrouped and led the market to a positive close featuring mixed ups and downs among sectors. Individual stock moves were influential.
The resource sectors were the winners on the day, with energy rising 1.6% on the OPEC production cut and materials putting in a solid 1.2% on a bit of a rise in iron ore and copper and despite a big drop in the gold price.
Funds to buy resources were sourced from taking profits in healthcare (-0.8%).
Utilities (+1.0%) and telcos (+0.5%) made the day otherwise looked defensive but then a -0.5% drop for staples seemed otherwise. Given discretionary also fell (-0.2%) we might say investors are not expecting a particularly happy Christmas.
The fall in staples did nevertheless include a -3.9% drop for a2 Milk ((A2M)) after the CEO of 18 months either jumped or was pushed, however one might interpret it.
Otherwise it was a day for profit warnings.
Salary packager McMillan Shakespeare ((MMS)) kicked off the profit warnings with its trading update, citing challenging conditions. It fell -7.5%. Residential aged care provider Estia Health ((EHE)) pointed to lower occupancy and competition for its earnings downgrade and fell -7.1%. Caltex rival Viva Energy ((VEA)) also blamed competition, and volatile oil prices, for its downgrade, and fell -6.6%.
Moves to the upside were unremarkable. Beach Energy ((BPT)) led out the sector rally with a 5.2% gain.
Wall Street drifted off last night and this morning our futures are down -14. Ahead of the Fed, the UK election and the tariff deadline it could be a quiet few days before something actually happens.
Biding Time
President Trump and the majority House Democrats reached a tentative agreement on the US-Mexico-Canada trade deal (Nafta 2.0) last night.
I know…I didn’t realise that one was still ongoing either. Doesn’t get much oxygen for obvious reasons.
Otherwise, the euphoria of Friday’s jobs-led rally gave way to a bit of a hangover last night on Wall Street as investors there, too, await the week’s developments. All the major indices closed lower, but no one was much concerned.
There were no economic data releases of note last night and all-up is was a nothing-to-see-here session.
More attention was being paid to the Golden Globe nominations, which Netflix completely dominated. And it was not just Netflix. Across television and movies, streaming services shared the spoils, with traditional production houses mostly MIA.
Toto, I don’t don’t think we’re in Kansas anymore.
In other news, a Tesla on autopilot managed to crash into two other cars, one of them being a cop.
Don’t blame me officer.
Driverless vehicles? Not in my life time. The technology might get there but the insurance implications will keep us behind the wheel for decades to come.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1459.90 | + 0.20 | 0.01% |
| Silver (oz) | 16.56 | – 0.01 | – 0.06% |
| Copper (lb) | 2.73 | + 0.03 | 1.00% |
| Aluminium (lb) | 0.80 | – 0.00 | – 0.49% |
| Lead (lb) | 0.85 | – 0.00 | – 0.38% |
| Nickel (lb) | 5.99 | – 0.09 | – 1.50% |
| Zinc (lb) | 1.02 | – 0.01 | – 0.49% |
| West Texas Crude | 59.00 | – 0.20 | – 0.34% |
| Brent Crude | 64.19 | – 0.18 | – 0.28% |
| Iron Ore (t) futures | 94.35 | + 4.95 | 5.54% |
Friday night’s Chinese copper data were reinforced by China’s import/export numbers for November released on the weekend. Copper imports have exceeded expectations, suggesting demand for copper in China is greater than anyone believed given a slowdown in the economy.
Copper thus stood out on an otherwise weak day on the LME.
Iron ore was the star of the show yesterday nonetheless. According to CBA economists, the 5.5% jump is attributable to demand optimism after China’s leaders vowed to maintain growth and pursue domestic reforms in 2020.
The Aussie is a tad weaker at US$0.6832.
Today
The SPI Overnight closed down -14 points or -0.2%. No one seems that excited about iron ore.
China releases inflation data today while locally the NAB business confidence survey is due.
Philip Lowe will deliver a speech today.
Bank of Queensland ((BOQ)) holds its AGM and IOOF ((IFL)) hosts an investor day.
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 |
| CSL | CSL | Downgrade to Hold from Accumulate | Ord Minnett |
| CTX | CALTEX AUSTRALIA | Downgrade to Neutral from Buy | Citi |
| DXS | DEXUS PROPERTY | Upgrade to Outperform from Neutral | Credit Suisse |
| MTS | METCASH | Upgrade to Accumulate from Hold | Ord Minnett |
| NST | NORTHERN STAR | Upgrade to Buy from Neutral | UBS |
| SYD | SYDNEY AIRPORT | Downgrade to Lighten from Hold | Ord Minnett |
| TLS | TELSTRA CORP | Upgrade to Buy from Neutral | UBS |
| WSA | WESTERN AREAS | Upgrade to Neutral from Sell | UBS |
