|SPI Overnight (Dec)||6773.00||+ 8.00||0.12%|
|S&P ASX 200||6772.50||+ 48.40||0.72%|
|S&P500||3087.01||– 6.07||– 0.20%|
|Nasdaq Comp||8464.28||– 11.04||– 0.13%|
|S&P500 VIX||12.69||+ 0.62||5.14%|
|US 10-year yield||1.94||+ 0.01||0.52%|
|USD Index||98.20||– 0.15||– 0.15%|
|FTSE100||7328.54||– 30.84||– 0.42%|
|DAX30||13198.37||– 30.19||– 0.23%|
By Greg Peel
In the Blood
President Trump said over the weekend that while the trade talks were “going nicely”, recent reports of a planned tariff roll-back were not accurate. He also said that China needs a deal more than the US and that if he didn’t like the deal proposed, he won’t sign it. The Dow futures were down -88 points in Australian trading time yesterday.
The iron price had fallen below US$80/t and Iran had announced the discovery of a massive new oil field overnight. In Hong Kong, protests turned violent once more and the Hang Seng index fell -2.3%. In Australia, a weekend of horrific bushfires was followed by warnings that today will by comparison be “catastrophic”.
The Australian ten-year yield rallied 8 basis points to 1.28% yesterday.
It’s beginning to look a lot like July – a month in which the ASX200 rallied hard on little more than momentum to hit a new all-time high, only to correct -7% in August.
There were some positive drivers yesterday, not the least among them a 3.5% rally for CSL ((CSL)) after UBS upgraded the stock to Buy. The rating is not so significant – UBS joins all of Credit Suisse, Morgan Stanley, Macquarie and Ord Minnett (JP Morgan) on Buy or equivalent ratings among FNArena database brokers. More significant was the target price increase to $295 from $265, when most targets are hovering around $250.
CSL lifted all healthcare boats to send the sector up a standout 2.8%.
It appears that now that all the bad news is out there with regard bank earnings, dividends and capital raisings, it’s time to get back into that sector (albeit Commonwealth Bank ((CBA)) will provide its update today). Financials rallied 0.4% net of the aforementioned dividends. Suncorp ((SUN)) rallied 1.3% on rumours it may sell its banking arm to the RACQ, leaving an insurance arm that might just be hit with a few claims fairly shortly.
Elders ((ELD)) is one agri-stock that appears to be riding out the drought, rising 4.8% yesterday on its earnings result.
All of the above are clear reasons as to why the local market put in a strong show yesterday, despite modest gains on Wall Street. But somewhat perplexing are the bond proxies.
As I outlined yesterday, bond proxy and high yield-paying stocks in the index had fallen and risen over three trading sessions on the ups and downs of US bond yields, which in turn have impacted on local bond yields. Last week a 10 basis point jump in the Aussie ten-year sent investors fleeing from those sectors. Yesterday the ten-year rose another 8 basis points.
Utilities rose 0.8%, telcos 0.5%, industrials 1.1% and staples 1.0%.
Okay, I give up.
Thankfully, in terms of reality, the only sector to close in the red yesterday was materials, down -0.4% on that iron ore price fall.
The S&P500 has fallen -0.2% overnight but our futures are up 8 points this morning. Looks like 6875 is back in the market’s sight. The Christmas trees are already up in Woolies.
On Trump’s weekend comments, noted above, the Dow fell over a hundred points from the open last night and pretty much stayed there all morning. Then at midday, Boeing announced it should have its 737 Maxes ready for return to service in January. Boeing shares jumped 4.6%, or an equivalent of around a hundred Dow points.
There was also news most recent Dow component Walgreens Boots might be the target of a leveraged buyout. That stock rose 5.1%.
And that about sums up the session. Take out Boeing in particular and the Dow was down -100 odd on trade deal uncertainty, as corroborated by a -0.2% fall for the S&P.
US banks and the bond market were close for Veterans Day.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1456.20||– 2.60||– 0.18%|
|Silver (oz)||16.84||+ 0.07||0.42%|
|Copper (lb)||2.66||– 0.02||– 0.63%|
|Aluminium (lb)||0.81||– 0.01||– 1.44%|
|Lead (lb)||0.95||– 0.01||– 0.72%|
|Nickel (lb)||7.11||– 0.13||– 1.85%|
|Zinc (lb)||1.15||+ 0.01||0.53%|
|West Texas Crude||56.88||– 0.36||– 0.63%|
|Brent Crude||62.20||– 0.31||– 0.50%|
|Iron Ore (t) futures||78.45||– 1.45||– 1.81%|
News of Iran’s oil discovery appears to have had no impact on oil prices. Last night’s minor falls in oil prices were attributed to uncertainty regarding OPEC-plus production cuts. Saudi Arabia is said to be keen on further cuts being agreed upon at next month’s meeting (not surprising, with the Aramco listing now progressing), but last night Oman’s oil minister suggested further cuts were unlikely.
Falls in metal and iron ore prices reflect trade deal uncertainty.
Whoever was buying up Aussie stocks yesterday, it does not look like it was the Yanks. The Aussie is down -0.4% at US$0.6853.
The SPI Overnight closed up 8 points.
The NAB business confidence survey is out today.
Commonwealth Bank will round off the bank results season with a quarterly update.
Westpac ((WBC)) goes ex.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|AMC||AMCOR||Upgrade to Outperform from Neutral||Credit Suisse|
|APT||AFTERPAY TOUCH||Upgrade to Buy from Neutral||Citi|
|BLD||BORAL||Downgrade to Neutral from Buy||Citi|
|Downgrade to Neutral from Buy||UBS|
|CSL||CSL||Upgrade to Buy from Neutral||UBS|
|CSR||CSR||Downgrade to Neutral from Outperform||Macquarie|
|DOW||DOWNER EDI||Downgrade to Neutral from Buy||UBS|
|FLT||FLIGHT CENTRE||Downgrade to Neutral from Buy||Citi|
|PDL||PENDAL GROUP||Upgrade to Add from Hold||Morgans|
|Downgrade to Neutral from Outperform||Macquarie|
|Downgrade to Sell from Neutral||UBS|
|REA||REA GROUP||Downgrade to Underperform from Neutral||Credit Suisse|
|Downgrade to Neutral from Outperform||Macquarie|
|Z1P||ZIP CO||Upgrade to Buy from Sell||UBS|