Daily Market Reports | Dec 20 2023
This story features ORIGIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: ORG
| World Overnight | |||
| SPI Overnight | 7538.00 | + 35.00 | 0.47% |
| S&P ASX 200 | 7489.10 | + 62.70 | 0.84% |
| S&P500 | 4768.37 | + 27.81 | 0.59% |
| Nasdaq Comp | 15003.22 | + 98.03 | 0.66% |
| DJIA | 37557.92 | + 251.90 | 0.68% |
| S&P500 VIX | 12.53 | – 0.03 | – 0.24% |
| US 10-year yield | 3.92 | – 0.03 | – 0.81% |
| USD Index | 102.19 | – 0.37 | – 0.36% |
| FTSE100 | 7638.03 | + 23.55 | 0.31% |
| DAX30 | 16744.41 | + 93.86 | 0.56% |
By Greg Peel
Encouraging Signs
Well if there was going to be any profit-taking and squaring up before the Christmas break, it was only on Monday. Yesterday the only way was up for the ASX200. The session started slowly but the pace picked up through the morning.
Buoying the market was the revelation on the RBA minutes that the board has considered another rate hike this month, but ultimately decided against it, noting:
“…there was sufficient value in waiting for further data to assess how the balance of risks was evolving and how best to balance these risks when setting policy. They noted that there had been encouraging signs of progress towards the Board’s objectives and that this needed to continue.” [My emphasis]
Who doesn’t love an encouraging sign? But we’re not out of the woods just yet:
“Members also discussed the importance of preventing inflation expectations from drifting away from the inflation target and committed to monitoring this closely. At the time of the meeting, they agreed that inflation expectations remained consistent with the inflation target.”
So once again:
“Members agreed that whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend on how the incoming data alter the economic outlook and the evolving assessment of risks.”
While the above statement is a carry-over from November, those “encouraging signs” are new. But the bond market wasn’t so encouraged that the RBA did consider a rate hike. The ten-year yield rose 5 points to 4.11%.
The equity-bond relationship has flipped so far this week. On Monday bond yields fell and so did stocks. Yesterday they rose and so did stocks.
It was a pretty uniform “buy everything” session among sectors yesterday. The one stand-out was utilities (+1.8%). Origin Energy ((ORG)) rose 3.2% after increasing its stake in Octopus in the UK by 3% to 23%.
Otherwise, sector moves in the vicinity of 1% were consistent, the exception being staples (+0.5%).
It doesn’t appear that the mood will change today either. The futures are up 35 points this morning.
Bank that, and the ASX200 will be approaching an all-time high.
More of the Same
The Dow is already at an all-time high – the fifth in a row last night to be precise. The S&P500 is now within 1% of its own all-time high.
There appears to be nothing to stop it.
Nor was there anything specific to drive Wall Street higher again last night, as was the case on Monday night. The one exception is the energy sector. Energy led the charge last night with a 1.2% gain, as oil prices continue to rise on the Red Sea issue.
Tankers are going the long way round, and whether or not they will re-route back through the Red Sea once coalition naval support arrives is unclear. Will the support represent protection, or provocation?
The Mag7 posted a mixed performance last night while the Russell small cap added another 1.9%, taking its Lazarus run to over 12%.
Momentum and FOMO remain the orders of the day but Wall Street will be hoping that Friday night’s November PCE inflation data will play along.
The market continues to price in six Fed rate cuts next year, yet every commentator agrees this is a bit over the top. Four maybe, but that’s good enough.
And that’s about all one can say.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2039.60 | + 13.10 | 0.65% |
| Silver (oz) | 24.06 | + 0.28 | 1.18% |
| Copper (lb) | 3.81 | 0.00 | 0.00% |
| Aluminium (lb) | 0.97 | 0.00 | 0.00% |
| Nickel (lb) | 7.44 | 0.00 | 0.00% |
| Zinc (lb) | 1.12 | 0.00 | 0.00% |
| West Texas Crude | 73.44 | + 0.79 | 1.09% |
| Brent Crude | 79.47 | + 1.30 | 1.66% |
| Iron Ore (t) | 133.08 | – 0.08 | – 0.06% |
Our LME source has still not been able to fully recover from its cyber-attack as yet.
With US bond yields and the dollar index down modestly again last night, gold is clawing its way back.
Brent crude is at risk of returning to US$80/bbl.
The Aussie is up 0.8% at US$0.6759.
Today
The SPI Overnight closed up 35 points or 0.5%.
The US will see monthly consumer confidence tonight along with existing home sales.
Incitec Pivot ((IPL)) holds its AGM today.
The Australian share market over the past thirty days…
| Index | 19 Dec 2023 | Week To Date | Month To Date (Dec) | Quarter To Date (Oct-Dec) | Year To Date (2023) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7489.10 | 0.62% | 5.67% | 6.25% | 6.40% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BOE | Boss Energy | Upgrade to Outperform from Neutral | Macquarie |
| BSL | BlueScope Steel | Downgrade to Neutral from Buy | Citi |
| CAT | Catapult International | Downgrade to Hold from Buy | Bell Potter |
| CVN | Carnarvon Energy | Upgrade to Outperform from Underperform | Macquarie |
| IMD | Imdex | Upgrade to Buy from Neutral | Citi |
| NEU | Neuren Pharmaceuticals | Upgrade to Buy from Hold | Bell Potter |
| PLS | Pilbara Minerals | Downgrade to Sell from Neutral | Citi |
| PPM | Pepper Money | Upgrade to Buy from Neutral | Citi |
| SIG | Sigma Healthcare | Downgrade to Hold from Buy | Shaw and Partners |
| TRS | Reject Shop | Upgrade to Add from Hold | Morgans |
| VHT | Volpara Health Technologies | Downgrade to Hold from Buy | Bell Potter |
| Downgrade to Hold from Add | Morgans | ||
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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