Daily Market Reports | Mar 29 2018
This story features AGL ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: AGL
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight (Jun) | 5772.00 | + 7.00 | 0.12% |
| S&P ASX 200 | 5789.50 | – 42.80 | – 0.73% |
| S&P500 | 2605.00 | – 7.62 | – 0.29% |
| Nasdaq Comp | 6949.23 | – 59.58 | – 0.85% |
| DJIA | 23848.42 | – 9.29 | – 0.04% |
| S&P500 VIX | 22.87 | + 0.37 | 1.64% |
| US 10-year yield | 2.78 | – 0.01 | – 0.39% |
| USD Index | 90.09 | + 0.74 | 0.83% |
| FTSE100 | 7044.74 | + 44.60 | 0.64% |
| DAX30 | 11940.71 | – 30.12 | – 0.25% |
By Greg Peel
Risk On, Risk Off
Everything gained by the local market on Tuesday, as Wall Street rebounded on global trade relief, was given back again yesterday following another tumble on Wall Street, mostly driven by a Big Tech sector Australia doesn’t have.
The buying was relatively market-wide on Tuesday and the selling was relatively market-wide yesterday. Notably however, the banks underperformed on Tuesday in managing only a 0.2% gain, but joined in whole-heartedly yesterday with an -0.8% fall. US banks fell overnight as US bond yields retreated.
Bucking the trend yesterday were utilities (+1.4%), and it would be easy to put the argument that lower rates are a positive for the high yield sector, but AGL Energy’s ((AGL)) 2% gain was the overriding factor.
Otherwise, the mixed bag that is industrials largely held its ground.
There were some interesting individual stock stories impacting yesterday.
Global food giant Nestle announced it is planning to move into the Chinese a2 infant formula market with Illuma Atwo. Shares of a2 Milk ((A2M)) fell -7.5% to post the second worst ASX200 performance on the day. Bellamy’s ((BAL)) fell -4.1% and Synlait ((SM1)) fell -3.4%.
US short selling specialist Glaucus issued a report questioning the assets under management of Blue Sky Alternative Investments ((BLA)) and valuing the stock at $2.66. Blue Sky fell -10% before entering a trading halt, last trade $10.40. Glaucus previously targeted sandalwood producer Quintis ((QIN)), which is now in administration.
And Rio Tinto ((RIO)) is out of coal altogether, with the announced sale of its final asset – its 80% stake in the Kestrel underground mine in Queensland. Analysts have been surprised by the prices paid for Rio’s coal assets, forcing a re-rating of coal operations both locally and globally.
But back to the index. It fell -50 points on the opening rotation yesterday before immediately rebounding to be down only -30 points. Here the ASX200 found itself back at 5800. The bad news is this level was unable to be breached, and the index drifted lower once more in the afternoon. This suggests the prior strong support level of 5800 is now resistance.
For the record, the ASX200 first reached 5800 in January 2007. The S&P500 is over 80% higher from that time.
Searching for Stability
Wall Street was up, down and all around last night. The Dow opened up over a hundred points following Tuesday night’s late sell-off. By mid-morning it was down over a hundred. At midday it was up over two hundred and with an hour to go the index was down a hundred once more, before closing flat.
The Nasdaq followed a similar pattern but from a much lower base, resulting in a net -0.9% fall to back up Tuesday night’s -3%. Tech stocks again came under selling pressure, exacerbated by Donald Trump reminding the market of his hatred of Amazon and his intention to rein in the giant. This time Facebook did not lead to the downside, as the company announced a streamlining of its privacy settings.
As tech is 25% of the S&P500, the broad market index fell -0.3%.
US bond yields were again weaker as an auction of seven-year notes was met with indifference. US bank stocks duly fell once more, and they’re the next biggest chunk of the S&P.
The final revision of US December quarter GDP nevertheless provided a positive surprise in rising to 2.9% growth from a previous 2.5% estimate, when 2.6% was forecast. Better than expected consumer spending drove the result, suggesting US retailers enjoyed a solid Christmas.
The US dollar index jumped a sharp 0.8% last night, but not so much on the better US economic news. The yen has been attracting a flight to safety of late as carry trades are withdrawn, but Kim Jong-un’s trip to China and the suggestion of easing regional tensions prompted a drop in Japanese currency last night, driving the greenback higher.
After a volatile month, Wall Street is trying to find its feet. But a lot of the current choppiness can be attributed to the fact the March quarter ends tonight and books are being squared up in either direction.
Tonight brings more US inflation data, and then April will bring March quarter earnings results, beginning with the big banks on Friday the thirteenth.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1325.80 | – 18.70 | – 1.39% |
| Silver (oz) | 16.27 | – 0.23 | – 1.39% |
| Copper (lb) | 3.00 | + 0.01 | 0.17% |
| Aluminium (lb) | 0.91 | – 0.01 | – 0.85% |
| Lead (lb) | 1.10 | + 0.01 | 0.55% |
| Nickel (lb) | 5.94 | + 0.08 | 1.34% |
| Zinc (lb) | 1.50 | + 0.01 | 0.35% |
| West Texas Crude (May) | 64.55 | – 0.31 | – 0.48% |
| Brent Crude (May) | 69.79 | + 0.04 | 0.06% |
| Iron Ore (t) | 63.05 | – 0.45 | – 0.71% |
The big jump in the greenback took its toll on gold.
Base metals managed to hold their ground nonetheless, except for aluminium, which has been suffering of late on realisation China’s winter production cuts did not put as much of a dent in global supply as expected.
The Aussie has managed only a -0.2% fall to US$0.7661 in the face of greenback strength.
Today
The SPI Overnight closed up 7 points. That would take us close to the 5800 mark once more, on the last trading day of the quarter, before a four-day break.
In other words, pretty much anything could transpire today.
The US will see personal income & spending data for February tonight along with the PCE measure of inflation.
Locally we’ll see private sector credit numbers.
Adelaide Brighton ((ABC)) is among those stocks going ex today.
This Report will return on Tuesday morning with a wrap of today’s local trade and two sessions on Wall Street.
Note that Australia goes off summer time this weekend hence from Tuesday morning the NYSE will close at 6am Sydney time, while the SPI Overnight will still close at 7am.
Happy Easter.
Rudi will make his weekly appearance on Sky News Business today, noon-2pm.
The Australian share market over the past thirty days…
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: A2M - A2 MILK COMPANY LIMITED
For more info SHARE ANALYSIS: AGL - AGL ENERGY LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED
For more info SHARE ANALYSIS: SM1 - SYNLAIT MILK LIMITED