|SPI Overnight (Sep)||6270.00||– 6.00||– 0.10%|
|S&P ASX 200||6304.70||+ 35.80||0.57%|
|Nasdaq Comp||8030.04||+ 12.14||0.15%|
|S&P500 VIX||12.50||+ 0.34||2.80%|
|US 10-year yield||2.88||+ 0.04||1.26%|
|USD Index||94.71||– 0.04||– 0.04%|
By Greg Peel
Now that the political turmoil has subsided and like it or not, we have a new prime minster, stock market attention can return to the current issues of global macro influences and the local earnings season.
The domestic-based relief rally was aided yesterday by the news form Washington that a trade deal had been reached with Mexico, if only an understanding at this stage, and that China had stabilised its currency, possibly hinting at a white flag.
Understandably, materials had a strong session, posting a 1.1% gain. Energy (+0.2%) might have joined in but for both Santos ((STO)) and WorleyParsons ((WOR)) going ex and Caltex ((CTX)) posting a disappointing result, subsequently falling -7.9%.
Leading Wall Street on Monday night were industrials and financials, and sure enough yesterday saw our industrials and financials up 0.8% each.
On the other side of the ledger, the initial enthusiasm regarding a possible merger between TPG Telecom ((TPG)) and Vodafone, ie Hutchison Telecom ((HTA)), continues to fade in the vacuum of no new news. Telstra ((TLS)) fell -1.6% to lead the telco sector down -2.6% and Hutchison fell -14%. Hutchison is not in the ASX200 but satellite services company Speedcast International ((SDA)) is, and it helped the telco sector down by falling -37.4% post result.
Another new world high flyer re-enters the atmosphere.
We might call it a case of “just as bloody well” for Appen given the stock had already jumped 30% in a week, rising on the coat tails of strong results and even stronger rallies for the likes of WiseTech and Altium, and the Nasdaq. Anything other than a “beat” may have seen Appen looking more like a Speedcast yesterday.
On that note, milk product company Bellamy’s ((BAL)) rose 8.0% yesterday, and it reports today.
With Wall Street taking a breather last night our futures are down -6 points this morning. Today will be another in which earnings reports provide most of the action, except that there are no particularly big names on today’s calendar.
Note that Telstra goes ex this morning, among others.
Feeling Good Louis
Last night’s monthly survey from the Conference Board showed US consumer confidence has reached its highest level since 2000, clocking in at 133.4 on the index. That’s up from 127.9 last month and exceeding the prior post-GFC high of 130 hit in February.
Great news? Well it surely must be in a consumer-driven economy. But what happened in February? Wall Street saw the first correction in the Trump rally. And what happened in 2000? Don’t ask.
While confidence would be high among the cohort of Americans who thinks Trump walks on water, commentators point to historically low levels of US household debt. This despite a long period of a zero cash rate that must surely have tempted excessive debt accumulation. But if a mortgage is the bulk of most household debt, we note that for some time Americans were able to obtain or refinance a mortgage at 4% or less for thirty years fixed.
Makes you cry. In Australia mortgage rates, for some reason no one ever has explained to me, are set off the overnight cash rate. The only viable reason is “so the banks make lots of money”. Okay, we don’t have a thirty year bond, and no current politician would ever dream of issuing one (deficit), and US house prices completely collapsed in the GFC while ours hiccupped. But it still makes you cry.
Beyond jubilation and fear over the confidence numbers, little else happened on Wall Street last night. It was a hundred degrees outside in New York and trading inside reflected summer lethargy. After a strong run-up the night before, Wall Street stalled.
Small moves up nevertheless meant new new highs for the S&P and Nasdaq.
An interesting piece of trivia for those who like their technicals very technical:
From February to March the Dow fell -10% — technically deemed a “correction”. Last night the Dow surpassed a 10% move back up from that low. This is then, technically, a break out of correction territory, even though 10% back from 10% down doesn’t get you back where you started. At six months, it has taken the Dow the longest time to do this since 1961.
There’s one for your dinner party on the weekend. Knock ‘em dead.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1200.50||– 10.30||– 0.85%|
|Silver (oz)||14.69||– 0.17||– 1.14%|
|Copper (lb)||2.76||+ 0.03||1.12%|
|Aluminium (lb)||0.94||+ 0.01||0.97%|
|Lead (lb)||0.94||– 0.00||– 0.09%|
|Nickel (lb)||6.10||+ 0.07||1.15%|
|Zinc (lb)||1.15||+ 0.00||0.39%|
|Iron Ore (t) futures||67.35||– 0.07||– 0.10%|
Given the UK was closed on Monday night, last night the LME had its first chance to respond to the Mexico trade news. Base metals were mostly higher, but didn’t quite shoot the lights out.
The break-out above 1200 for gold has lost momentum.
Despite the US dollar index dipping a tad last night, the Aussie is down -0.2% at US$0.7336.
The SPI Overnight closed down -6 points this morning.
The June quarter GDP first estimate will be revised tonight. Forecasts are for 4.0%, down from 4.1%.
Result reporters today include Bellamy’s, Cabcharge ((CAB)) and Independence Group ((IGO)), among another dozen or so, while Telstra, Downer EDI ((DOW)), Star Entertainment ((SGR)) and Super Retail ((SUL)) are among those stocks going ex.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|AAD||ARDENT LEISURE||Upgrade to Neutral from Sell||UBS|
|APA||APA||Downgrade to Hold from Add||Morgans|
|APO||APN OUTDOOR||Upgrade to Neutral from Sell||Citi|
|APT||AFTERPAY TOUCH||Upgrade to Add from Hold||Morgans|
|AWC||ALUMINA||Upgrade to Neutral from Sell||UBS|
|BXB||BRAMBLES||Downgrade to Neutral from Outperform||Credit Suisse|
|CGC||COSTA GROUP||Downgrade to Neutral from Outperform||Macquarie|
|Downgrade to Hold from Accumulate||Ord Minnett|
|CMW||CROMWELL PROPERTY||Downgrade to Lighten from Hold||Ord Minnett|
|EBO||EBOS GROUP||Downgrade to Hold from Add||Morgans|
|EPW||ERM POWER||Upgrade to Outperform from Neutral||Macquarie|
|Upgrade to Add from Hold||Morgans|
|HPI||HOTEL PROPERTY INVESTMENTS||Downgrade to Hold from Accumulate||Ord Minnett|
|ING||INGHAMS GROUP||Downgrade to Underweight from Equal-weight||Morgan Stanley|
|ISD||ISENTIA||Downgrade to Neutral from Buy||UBS|
|KPG||KELLY PARTNERS||Upgrade to Add from Hold||Morgans|
|MQG||MACQUARIE GROUP||Downgrade to Neutral from Buy||UBS|
|MYO||MYOB||Downgrade to Neutral from Buy||Citi|
|NEC||NINE ENTERTAINMENT||Upgrade to Buy from Neutral||UBS|
|PTM||PLATINUM||Upgrade to Neutral from Underperform||Credit Suisse|
|QUB||QUBE HOLDINGS||Downgrade to Underperform from Neutral||Credit Suisse|
|RWC||RELIANCE WORLDWIDE||Downgrade to Sell from Hold||Deutsche Bank|
|S32||SOUTH32||Upgrade to Outperform from Neutral||Credit Suisse|
|SGM||SIMS METAL MANAGEMENT||Upgrade to Neutral from Underperform||Credit Suisse|
|Upgrade to Buy from Hold||Ord Minnett|
|Upgrade to Neutral from Sell||UBS|
|SGP||STOCKLAND||Downgrade to Neutral from Outperform||Credit Suisse|
|SIQ||SMARTGROUP||Upgrade to Outperform from Neutral||Credit Suisse|
|SKI||SPARK INFRASTRUCTURE||Downgrade to Neutral from Buy||Citi|
|WEB||WEBJET||Downgrade to Neutral from Outperform||Credit Suisse|
|Downgrade to Hold from Add||Morgans|
|Downgrade to Hold from Buy||Ord Minnett|
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.