Daily Market Reports | Oct 26 2020
This story features COOPER ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: COE
World Overnight | |||
SPI Overnight (Dec) | 6179.00 | + 18.00 | 0.29% |
S&P ASX 200 | 6167.00 | – 6.80 | – 0.11% |
S&P500 | 3465.39 | + 11.90 | 0.34% |
Nasdaq Comp | 11548.28 | + 42.28 | 0.37% |
DJIA | 28335.57 | – 28.09 | – 0.10% |
S&P500 VIX | 27.55 | – 0.56 | – 1.99% |
US 10-year yield | 0.84 | – 0.01 | – 0.83% |
USD Index | 92.77 | – 0.17 | – 0.18% |
FTSE100 | 5860.28 | + 74.63 | 1.29% |
DAX30 | 12645.75 | + 102.69 | 0.82% |
By Greg Peel
Biden its time
It was a predictably quiet day for the ASX200 on Friday as investors concentrated on the presidential debate and the day’s quarterly reports from individual companies. A 0.5% gain for the banks went a long way to offsetting weakness in most other sectors.
Energy was nonetheless the strongest performer (+1.1%) helped by a 4.4% gain for Cooper Energy ((COE)) and 3.9% for Santos ((STO)).
BlueScope Steel ((BSL)) shot the lights out with its update after upgrading guidance, sending its shares up a chart-topping 10.9%. The materials sector nonetheless fell -1.0% to be the worst performer on the day, with gold miners providing three of the top five index loser positions.
Iluka Resources ((ILU)) appeared at the top of the losers’ board with a -48.3% dip, but fear not, it was simply reflective of the spin-off of Deterra Royalties ((DRR)). Combined, the value of the two was a slight gain on the day and thus did not impact on the sector.
There was hopeful news from both Qantas ((QAN)) and Webjet ((WEB)). Qantas is hopeful the airline will return to 50% capacity by Christmas, assuming the NSW-Queensland border is opened by then as is the aim of the National Cabinet, which met on Friday. Webjet said it saw pent-up demand for travel services and products increasing. Qantas rose 2.7% and Webjet 3.6%.
Moves in other sectors were all less than -0.5%.
There was disappointing news yesterday when Captain Dan decided to postpone his planned significant easing of restrictions in Melbourne due to a disturbing cluster in the north of the city. Given the amount of flack he’s already copped, I hope he has bodyguards.
Recent strength in the local market has to some extent been driven by anticipation of a Melbourne reopening, so there may be a negative response this morning. The futures closed up 18 points on Saturday morning, ahead of yesterday’s announcement.
We’ve also had news this morning Joe Biden’s top aide has tested positive, but that the man himself has tested negative. We’ll have to wait until tonight to see how Wall Street feels about that one. It’s not such a surprise, given the US case-count in general continued to set new daily records over the weekend.
As for the debate, it scored a “non-event”.
Atlas Shrugged
Wall Street also declared it a non-event, given there was nothing new and Trump largely behaved himself. Wall Street opened higher.
It then fell mid-session as stimulus hopes faded.
There cannot be a stimulus package delivered before the election for three insurmountable reasons: (1) time has run out to technically get a bill through; (2) McConnell will not commit to putting a bill up to the Senate regardless; and (3) there’s still no agreement between the Democrats and the White House.
If there is one remaining stumbling block it is Pelosi’s instance the package include relief money for state and local governments. Trump refuses to give anything to Democrat states.
Interesting election tactics.
Most on Wall Street had already given up on the idea of a pre-election package, hence US stock markets have been largely treading water and not crumbling as they might. There will be a stimulus package sometime after the election, and it will be big. Wall Street recovered in the afternoon to post a modest gain.
The question then is what does Wall Street do between now and then?
First earnings season has to continue to play out, and Friday night saw Intel’s share price down -11% to ensure apparent underperformance for the Dow. Barbie was popping to corks in contrast, with toymaker Mattel jumping 10% on its result.
No doubt parents were happy to find anything to shut the kids up during lockdowns.
We’ll have to wait to see if there’s any response to the Biden camp covid news over weekend. We recall that it was Trump’s top aide who first tested positive before he did (although it appears he was not actually tested initially, as no one will say when he last tested negative). If Biden goes down, it could be a stumbling block, but then he’s the one keeping the lower profile as we head into the final week.
Otherwise there likely won’t be much to drive Wall Street this week beyond earnings results. Thereafter it will be a matter of how quickly a result is known. The longer it takes, the greater risk for Wall Street in the near term.
Commodities
Spot Metals,Minerals & Energy Futures | |||
Gold (oz) | 1901.30 | – 4.30 | – 0.23% |
Silver (oz) | 24.58 | – 0.11 | – 0.45% |
Copper (lb) | 3.11 | + 0.00 | 0.14% |
Aluminium (lb) | 0.83 | – 0.00 | – 0.40% |
Lead (lb) | 0.81 | + 0.00 | 0.52% |
Nickel (lb) | 7.10 | – 0.01 | – 0.08% |
Zinc (lb) | 1.15 | – 0.00 | – 0.03% |
West Texas Crude | 39.85 | – 0.83 | – 2.04% |
Brent Crude | 41.77 | – 0.72 | – 1.69% |
Iron Ore (t) | 115.55 | – 4.20 | – 3.51% |
Iron ore had been grafting its way higher last week, but that has come to nought.
A ceasefire among warring factions in Libya has allowed oil exports to resume. Given its situation, Libya is exempted from OPEC production cuts.
Gold seems quite cemented around the US$1900/oz level for now.
The Aussie is up 0.4% at US$0.7144 despite the postponement of Melbourne’s lockdown.
The SPI Overnight closed up 18 points on Saturday morning.
The Week Ahead
The US reports September quarter GDP on Thursday night, but it’s a bit of a moot point. The number should be in the realms of 30%-plus, but unless it’s wildly different there won’t be any response from a Wall Street focused on the December quarter and 2021.
Wall Street also sees numbers this week for new and pending home sales and house prices, the Chicago Fed national activity index and the Richmond Fed index, durable goods, consumer confidence, personal income & spending and PEC inflation.
The eurozone will report its GDP on Friday. The ECB will hold a policy meeting on Thursday, as will the Bank of Japan.
Australia will see the September quarter CPI on Wednesday, followed by the PPI on Friday with monthly private sector credit.
The AGM season ramps up in earnest this week while quarterly reports and updates keep rolling in.
ANZ Bank ((ANZ)) kicks off bank earnings season on Thursday.
Today’s AGM highlight is Adairs ((ADH)).
The Australian share market over the past thirty days…
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
ALX | Atlas Arteria | Upgrade to Add from Hold | Morgans |
API | Aus Pharmaceutical Ind | Upgrade to Buy from Neutral | Citi |
CCL | Coca-Cola Amatil | Upgrade to Accumulate from Hold | Ord Minnett |
COL | Coles Group | Downgrade to Neutral from Outperform | Macquarie |
JHG | Janus Henderson Group | Downgrade to Equal-weight from Overweight | Morgan Stanley |
LOV | Lovisa | Upgrade to Outperform from Neutral | Macquarie |
MP1 | Megaport | Upgrade to Buy from Neutral | UBS |
MTS | Metcash | Upgrade to Outperform from Neutral | Macquarie |
SGP | Stockland | Downgrade to Neutral from Outperform | Macquarie |
SGR | Star Entertainment | Downgrade to Neutral from Buy | Citi |
Downgrade to Hold from Accumulate | Ord Minnett | ||
SYD | Sydney Airport | Downgrade to Lighten from Hold | Ord Minnett |
WOW | Woolworths | Upgrade to Buy from Neutral | Citi |
XRO | Xero | Downgrade to Neutral from Outperform | Credit Suisse |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: ADH - ADAIRS LIMITED
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: BSL - BLUESCOPE STEEL LIMITED
For more info SHARE ANALYSIS: COE - COOPER ENERGY LIMITED
For more info SHARE ANALYSIS: DRR - DETERRA ROYALTIES LIMITED
For more info SHARE ANALYSIS: ILU - ILUKA RESOURCES LIMITED
For more info SHARE ANALYSIS: QAN - QANTAS AIRWAYS LIMITED
For more info SHARE ANALYSIS: STO - SANTOS LIMITED
For more info SHARE ANALYSIS: WEB - WEBJET LIMITED