Daily Market Reports | Mar 21 2018
This story features CSL LIMITED, and other companies.
For more info SHARE ANALYSIS: CSL
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 5930.00 | + 7.00 | 0.12% |
| S&P ASX 200 | 5936.40 | – 23.00 | – 0.39% |
| S&P500 | 2716.94 | + 4.02 | 0.15% |
| Nasdaq Comp | 7364.30 | + 20.06 | 0.27% |
| DJIA | 24727.27 | + 116.36 | 0.47% |
| S&P500 VIX | 18.20 | – 0.82 | – 4.31% |
| US 10-year yield | 2.88 | + 0.03 | 1.20% |
| USD Index | 90.44 | + 0.55 | 0.61% |
| FTSE100 | 7061.27 | + 18.34 | 0.26% |
| DAX30 | 12307.33 | + 90.31 | 0.74% |
By Greg Peel
No Facebooks Here
Wall Street fell -1.4% on Monday night and the local futures suggested the ASX200 should be down -33 points at the open yesterday morning. The index actually fell -44 points from the open as computer knees jerked.
But I asked the question yesterday morning as to whether a Facebook-led fall in the US, largely concentrated in the Big Tech sector, should resound through an Australian market where tech is a growing sector but Big Tech simply does not exist. The index bounced quickly from its lows and then grafted back to only a -0.4% fall.
The bulk of that was commodity price-driven, and nothing to do with social media. Indeed, our IT sector rose 0.6%. A sharp fall in iron ore along with falls in base metal and oil prices ensured the materials sector was down -1.4% and energy -0.9%.
It was also a weak performance from healthcare (-0.7%), but it appears taking profits in ever-rising CSL ((CSL)) is one of the first moves in any risk-off session.
The minutes of the March RBA meeting were out yesterday, to little fanfare. As Led Zeppelin once admitted, the song remains the same.
The RBA is nevertheless happy that the housing boom has slowed recently, albeit the board still lays awake at night worried about elevated household debt.
Core Logic data for the December quarter showed the average capital city house price rose 1.0% in the quarter and 5.0% over 2017. The standout individual number was Sydney, which saw a -0.1% in the quarter and a 3.8% annual gain.
Compare that to Melbourne, which saw a 2.8% rise for a 10.2% annual gain. Must be the cafes. Those Sydney-siders giving it away and heading interstate have clearly headed south for a quieter life. Hobart prices rose 3.9% in the quarter for a country-leading 13.1% gain in 2017.
Mind you, you could buy a palace in Hobart for the cost of a Sydney parking space.
The news overnight is that Glencore has agreed to buy Rio Tinto’s ((RIO)) stakes in the Hail Creek and Valeria coal projects in Queensland for $1.7bn, having last year acquired half of Rio’s Hunter Valley coal operations. Glencore is the world’s largest producer of thermal coal (electricity) and is looking to diversify further into met coal (steel).
The share prices of both Rio and BHP ((BHP)) were up over 1% in London last night.
The oil price was up 2% overnight so the resource sectors should enjoy somewhat of a reversal today, although iron ore, base metals and gold all closed lower overnight.
Not All Facebooks Here
That oil price jump helped to turn Wall Street around from Monday night’s fall last night. We recall that Monday night was driven, outside of Facebook selling, more by a lack of buyers than major selling across the board. Last night the buyers were back.
The oil price was one impetus, but investors also looked at the tech sector and decided the issue surrounding Facebook does not impact on every part of the FANG & Co family. Facebook shares fell another -3% last night as expectation grow that despite being anti-regulation, the Trump administration needs to have a closer look at social media rules.
Google and Apple were relatively steady, as one might consider them both in the data-for-the-taking category, while Netflix and Amazon found buyers on the dip as they typically do. Netflix is up 65% year to date. And that includes the February swoon.
Outside of the Cambridge Analytica scandal, the EU, which is yet to hear any definitive news about whether it will be included in Trump’s tariff plans and to what extent, is expected to announce a plan to place a “digital tax” on major US tech companies. The Nasdaq still managed a 0.3% gain.
The Saudi Crown Prince met with Donald Trump last night to discuss the kingdom’s bitter enemy, Iran. As long ago as the election campaign, Trump suggested Obama’s lifting of sanctions on Iran were foolish, despite Tehran’s agreement to place nice with nuclear bombs. Trump has said little on the matter since.
Were sanctions to be reinstated, oil exports are the first to go. This would take a major supply source out of the global market at a time the crumbling economy that is Venezuela is also suffering falling production. US shale production is rising to fill the gap, but last night oil traders saw the equation as worth a 2% WTI price gain.
Outside of oil and social media, Wall Street is looking ahead to tonight’s Fed statement and press conference. What is expected? Well one survey of economists last night put a rate hike at 100%, and 83% for another one in June. The US dollar index has jumped 0.6% and the US ten-year yield rose 4 basis points to 2.88%.
Looks like it’s booked in.
Thereafter, it all comes down to the hawkishness or otherwise of the infamous “dot plots”, representing FOMC member expectations of policy ahead, and the new chairman’s inaugural press conference and what he might have to say.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1310.10 | – 6.60 | – 0.50% |
| Silver (oz) | 16.17 | – 0.14 | – 0.86% |
| Copper (lb) | 3.05 | – 0.05 | – 1.47% |
| Aluminium (lb) | 0.93 | – 0.01 | – 0.54% |
| Lead (lb) | 1.06 | – 0.00 | – 0.43% |
| Nickel (lb) | 6.11 | 0.00 | 0.00% |
| Zinc (lb) | 1.46 | – 0.02 | – 1.41% |
| West Texas Crude (Apr) | 63.40 | + 1.27 | 2.04% |
| Brent Crude (May) | 67.35 | + 1.18 | 1.78% |
| Iron Ore (t) | 66.80 | – 0.55 | – 0.82% |
The oil news was enough to overcome the sharp spike in the greenback but not so for commodity prices elsewhere, with iron ore, base metals and gold all lower.
The Aussie is down -0.5% at US$0.7680.
Today
The SPI Overnight closed up 7 points.
Japan is closed today.
The Fed is in the spotlight early tomorrow morning Sydney time.
Local materials sector performance will be impacted today by Newcrest Mining ((NCM)) going ex when the gold price is a little lower.
Myer ((MYR)) will report earnings, or otherwise, as will Nufarm ((NUF)) and Synlait Milk ((SM1)).
The Australian share market over the past thirty days…
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CHARTS
For more info SHARE ANALYSIS: BHP - BHP GROUP LIMITED
For more info SHARE ANALYSIS: CSL - CSL LIMITED
For more info SHARE ANALYSIS: MYR - MYER HOLDINGS LIMITED
For more info SHARE ANALYSIS: NUF - NUFARM LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED
For more info SHARE ANALYSIS: SM1 - SYNLAIT MILK LIMITED