| World Overnight | |||
| SPI Overnight (Jun) | 6222.00 | – 18.00 | – 0.29% |
| S&P ASX 200 | 6251.40 | + 0.10 | 0.00% |
| S&P500 | 2905.58 | – 1.83 | – 0.06% |
| Nasdaq Comp | 7976.01 | – 8.15 | – 0.10% |
| DJIA | 26384.77 | – 27.53 | – 0.10% |
| S&P500 VIX | 12.32 | + 0.31 | 2.58% |
| US 10-year yield | 2.55 | – 0.01 | – 0.27% |
| USD Index | 96.93 | – 0.04 | – 0.04% |
| FTSE100 | 7436.87 | – 0.19 | – 0.00% |
| DAX30 | 12020.28 | + 20.35 | 0.17% |
By Greg Peel
As a Tack
Well that was riveting. Is it Easter already? Market flat, volume low, interest negligible.
We left the ASX200 poised last week at the 6250 level, halfway between support and resistance, looking for a trigger to move either way. Clearly it didn’t come yesterday. There was, nevertheless, a bit of movement among the sectors.
Consumer staples appears to be the sector du jour, rising another 1.1% yesterday after a similar move on Friday. Must be all those hot crossed buns. Discretionary on the other hand fell -0.6% as the last Buy rating for Bellamy’s ((BAL)) in the FNArena database turned to Neutral, making three from three “Holds”.
Energy gained 0.5% despite a stable oil price but a fall for AGL Energy ((AGL)) helped utilities down -0.9%. A 6 basis point move up in the US ten-year yield on Friday night may have impacted on the bond proxies. The iron ore price keeps rising but profits are still being taken in materials (-0.4%).
Healthcare (-0.7%) saw further weakness on calls CSL ((CSL)) has run too far. The banks (+0.3%) helped to balance the index, kicking on from Friday, with US banks having rallied on Friday night. Not so last night, so we’ll see what happens today.
Among individual index stocks, wealth management SaaS provider Bravura Solutions ((BVS)) won the day in rising 7.1% on speculation the company may look to sell GBST’s Australian capital market unit to Iress ((IRE)) if Bravura is successful in acquiring GBST ((GBT)).
Actual wealth manager Pendal Group ((PDL)) topped the losers, falling -8.7% after announcing weak quarterly FUM data. Rival Perpetual ((PPT)) announced its numbers on Friday and jumped around 5%, and then fell back -5% yesterday.
Bellamy’s (-5.7%) took the silver.
The futures are down -18 points this morning with Wall Street relatively flat. If it’s not going to go up, well…
False Alarm
US banks drove Wall Street higher on Friday night after JP Morgan (Dow) posted a beat on earnings and jumped 4%, dragging the rest of the sector with it. But last night it was Citigroup’s and Goldman Sachs’ (Dow) turn, leaving Goldman down -2% and Citi flat.
Both managed to beat (lowered) earnings expectations but the beats were considered low quality. Citi matched revenues expectations but Goldman missed. Suffice to say the sector-wide buying on Friday night turned to sector-wide selling last night.
So no great opening gambit from earnings season after all.
On the trade front, the Treasury Secretary suggested a deal was getting closer and further US-China face-to-face meetings would likely not be required. The phone will suffice. A Reuters report suggested Washington is prepared to give ground on Beijing subsidising various industries – initially the US wanted this to stop – given this point was proving a stumbling block.
On the monetary policy front, did you know that if the Fed had done its job properly, the stock market would have been up 5,000 to 10,000 additional points, and GDP would be 4% not 3% with almost no inflation?
The president is clearly referring to the Dow, current estimates for March quarter GDP start with a 2, and again he has called for QE not QT. Mind you, Trump also intends to present Tiger Woods with the highest of US civilian awards, the Medal of Freedom, for winning a golf match.
The Fed is used to criticism, Chicago Fed president Charles Evans responded last night, while suggesting he can see the Fed cash rate being unchanged into the fall of 2020. That would be late September downunder.
But right now the focus is on earnings, and after getting off to a good start on Friday night, last night saw a stall. Bank-wise we still have Bank of America and Morgan Stanley to come, with the first of the FANGs, Netflix, also in the frame tonight.
The focus is also on Our Lady. What a terrible shame.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1287.40 | – 2.40 | – 0.19% |
| Silver (oz) | 14.97 | + 0.02 | 0.13% |
| Copper (lb) | 2.93 | – 0.02 | – 0.69% |
| Aluminium (lb) | 0.84 | + 0.00 | 0.49% |
| Lead (lb) | 0.88 | + 0.00 | 0.47% |
| Nickel (lb) | 5.88 | – 0.00 | – 0.05% |
| Zinc (lb) | 1.36 | – 0.00 | – 0.20% |
| West Texas Crude | 63.57 | – 0.22 | – 0.34% |
| Brent Crude | 71.27 | – 0.21 | – 0.29% |
| Iron Ore (t) futures | 95.80 | 0.00 | 0.00% |
Nothing to see here.
We may note that oil prices have started to drift back a bit on concerns Russia is getting ready to reboot its production levels after the the June OPEC meeting, while US production just keeps ramping up at current prices.
How long will those current prices hold? At the moment it’s all about the supply side.
The Aussie is steady at US$0.7171.
Today
The SPI Overnight closed down -18 points or -0.3%.
The US will release industrial production numbers tonight.
The minutes of the March RBA meeting are out today.
Quarterly earnings numbers will be released today by Cimic ((CIM)) and Blackmores ((BKL)) while Transurban ((TCL)) will update quarterly traffic numbers.
Rio Tinto ((RIO)), Oil Search ((OSH)) and Evolution Mining ((EVN)) post production reports while Iluka Resources ((ILU)) holds its AGM.
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BAL | BELLAMY’S AUSTRALIA | Downgrade to Neutral from Buy | Citi |
| BOQ | BANK OF QUEENSLAND | Downgrade to Lighten from Hold | Ord Minnett |
| BPT | BEACH ENERGY | Downgrade to Neutral from Outperform | Credit Suisse |
| DXS | DEXUS PROPERTY | Upgrade to Hold from Lighten | Ord Minnett |
| MFG | MAGELLAN FINANCIAL GROUP | Downgrade to Neutral from Buy | Citi |
| PDL | PENDAL GROUP | Downgrade to Sell from Neutral | UBS |
| STO | SANTOS | Downgrade to Underperform from Neutral | Credit Suisse |
| WHC | WHITEHAVEN COAL | Upgrade to Outperform from Neutral | Macquarie |
