|SPI Overnight (Jun)||5673.00||+ 47.00||0.84%|
|S&P ASX 200||5615.60||+ 118.60||2.16%|
|Nasdaq Comp||9324.59||+ 39.71||0.43%|
|DJIA||24465.16||– 8.96||– 0.04%|
|S&P500 VIX||28.16||– 1.37||– 4.64%|
|US 10-year yield||0.66||– 0.02||– 2.95%|
|USD Index||99.80||– 0.06||– 0.06%|
|FTSE100||5993.28||– 21.97||– 0.37%|
By Greg Peel
Cleared For Take-Off
“We now have over five consecutive weeks…in which the growth rate of new cases in Australia has been less than half a per cent,” said federal health minister Greg Hunt yesterday, praising the response of Australians to restrictions on everyday life.
Comforting words, but colleague Josh Frydenberg had a more specific impact on the local market yesterday, in suggesting “The tourism sector could be one sector in need of further support. That’s what we’ll look at in the context of the economic situation at the time. You’ll continue to see our international borders closed for some time.”
No reopening of international borders ahead, although trans-Tasman travel looms ever closer, but domestic travel is set to fire up again, despite Queensland remaining stubborn. However one unpacks it, the travel industry was top of the pops yesterday.
Throw in schools returning to normal in NSW yesterday, thus releasing parents to return to work, and suggestions not to catch public transport, and Transurban ((TCL)) rose 3.4%.
Put that lot together alone and we saw the consumer discretionary sector jump 2.6% yesterday and industrials 3.0%. And the energy sector rose 2.9%.
Every sector closed in the green, on a range from materials, up 1.3%. to IT, up 3.6%. It was a Buy Everything session, and what’s more, a close of 5615 suggests that the largely sideways range the ASX200 has been trading in since mid-April has been broken to the upside, now that 5600 has been breached.
It’s only just been breached, but with Wall Street closed overnight, our futures are up another 47 points this morning. That just never happens.
So what changed from Friday?
Friday had seen a soggy session, with the index falling -50 points on growing alarm over China’s proposed new laws for Hong Kong. It seems the local market was assuming Wall Street would respond rather badly on Friday night.
It didn’t, which likely explains why our futures were up 65 points on Saturday morning. Yesterday’s trade was not a momentum-driven rally, feeding upon itself. The index opened 90 points higher and there it remained all session, before a little kick towards the close. The additional 47 points suggested this morning is more of a momentum response, on top of the technical breakout trade.
And we also have news of Japan ending its state of emergency, Spain further easing restrictions, and Europeans flocking to beaches over the weekend. The early victims are coming out the other side, we’re coming out the other side, and the US is coming out one way or another.
Never mind Russia and Brazil. Indeed, most of South America.
The turn-on-a-dime swing from fear to exuberance we’ve seen from Friday to Monday only underscores that we are still in a No Idea phase. As we move into June, and the economy begins to stabilise, we should start seeing companies that withdrew guidance due to uncertainty begin to provide some real number estimates ahead of end of financial year, and more so in July, ahead of August result season.
That will be the reality check.
|Spot Metals,Minerals & Energy Futures|
|Gold (oz)||1727.60||– 5.10||– 0.29%|
|Silver (oz)||17.11||– 0.08||– 0.47%|
|West Texas Crude||33.72||+ 0.47||1.41%|
|Brent Crude||35.53||+ 0.40||1.14%|
|Iron Ore (t) futures||96.85||0.00||0.00%|
Yesterday the ABS released preliminary April data for the export/import of goods, but not services. While the trade surplus declined, it was still very solid. Resource exports fell, but remain around historically high levels.
Imports fell, and will likely continue to do so for some time, ANZ Bank economists suggest. Exports, on the other hand, should improve as China’s economy recovers – barring any shenanigans – which implies Australia’s trade surplus should remain solid for a while yet.
Lord knows we need it.
UK markets were closed last night, so no base metals trading. It was a public holiday in Singapore as well, so no iron ore either.
Oil prices continue their march, while the Aussie is slightly higher at US$0.6543.
The SPI Overnight closed up 47 points or 0.8%.
The US will see numbers for consumer confidence and new home sales tonight.
The Australian share market over the past thirty days…
|BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS|
|CLV||Clover Corp||Downgrade to Neutral from Buy||UBS|
|FBU||Fletcher Building||Downgrade to Neutral from Buy||Citi|
|FMG||Fortescue||Upgrade to Hold from Reduce||Morgans|
|Downgrade to Sell from Neutral||Citi|
|SGM||Sims Metal Management||Upgrade to Hold from Lighten||Ord Minnett|
|TNE||Technologyone||Downgrade to Sell from Neutral||UBS|
|TPM||TPG Telecom||Upgrade to Add from Hold||Morgans|
|Upgrade to Accumulate from Hold||Ord Minnett|
|WGN||Wagners Holding||Upgrade to Outperform from Neutral||Credit Suisse|
|WSA||Western Areas||Downgrade to Neutral from Buy||Citi|