The Monday Report – 07 December 2020

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This story features NUIX LIMITED, and other companies.
For more info SHARE ANALYSIS: NXL
The company is included in ALL-ORDS and ALL-TECH

By Greg Peel

Float On

It was a lacklustre session on the ASX on Friday highlighted only by the debut of Nuix ((NXL)). Macquarie Group ((MQG)) IPO-ed the data analytics company for a 50% first day gain.

This was worth 2.3% for Macquarie and a better day for the financial sector all round (+0.8%) after taking a back seat on Thursday when the resource sectors stole the show.

To that end we note the iron ore price has since leapt 5%.

Financials posted the best performance in what was otherwise a mish-mash of sector moves with little conviction. Materials (+0.4%) and energy (+0.7%) were again in the green and healthcare (-0.4%) was again in the red along with industrials (-0.5%). Moves elsewhere were minimal.

Among individual stock moves, topping the table was, would you believe it, Whitehaven Coal ((WHC)), up 8.1%. Taking the silver was Janus Henderson ((JHG)), up 7.4% on no new news, although the fund manager has been in a buyback frenzy of late and thus was likely its own primary driver.

Janus Henderson has now almost doubled from its March low, but remains well below its all-time high.

Economic news on the day was that of October retail sales, for which the ABS had already posted a preliminary report. The preliminary had sales up 1.6% and the final up 1.4%. This reverses September’s -1.5% fall, but it’s all about Victoria.

Victoria was in lockdown in September, coming out in October, and ANZ Bank economists believe November’s national number should be a cracker as the full force of pent up Victorian demand is unleashed and we all get excited over the American anachronism that is Black Friday.

If 2019 is anything to go by, we’ll find December’s sales – traditionally the biggest month of the year – pulled forward into November, so retailers aren’t really doing themselves any favours.

But boy they’re all in on it now.

For the record, consumer discretionary fell -0.3% on Friday.

We look set for a strong start to the week today, with iron ore no doubt a factor in the futures closing up 42 points on Saturday morning, supported by yet more strength on Wall Street.

Bad News Good

The US added 245,000 new jobs in November – the lowest number since the recovery in jobs began in May. Wall Street had forecast 432,000. The unemployment rate fell to 6.7% from 6.9% but only due to reduced participation, as job seekers gave up.

Come December 31, some 10 million Americans lose job support.

As I had suggested on Friday morning, the likely response to a weak jobs number would be a rally on Wall Street, as it only serves to highlight the desperate need for a stimulus package. No new news on that front.

There has since been news, nonetheless, that of most of California – southern California to be precise, which includes Los Angeles and San Francisco – has gone into a three-week lockdown as cases run out of control. In New Mexico, doctors have warned they are close to having to ration care based on who is likely to survive and who isn’t.

As the president-elect said on Friday, it’s a “dire, dire, dire” situation.

Not for Wall Street though – it’s all great news. The Dow posted most of the day’s gains from the open, post jobs report, and continued to track higher to the close.

Investors are also again bailing out of bonds. The US ten-year yield jumped 5 basis points to 0.97%.

And at 20.1%, the VIX volatility index is right back at what is considered the “neutral” point between fear and complacency.

Much faith is being placed on the vaccine roll-out, which could begin as soon as later this week. Friday was the deadline for states to submit their vaccine distribution plans. It is a state, not federal, responsibility. What could possibly go wrong?

When asked on Friday about what he’d been able to learn from the Trump administration regarding distribution plans, Biden noted that he had heard much about getting it to the hospitals but nothing about getting it out of super-refrigeration (this is the Pfizer vaccine) and into people’s arms, which he noted requires staff and money.

But I’m sure it will all go smoothly.

Commodities

Iron ore is by far the standout but rallies in copper, nickel and the oils, with gold steady, should bode well for our resource sectors again today.

With the US dollar index unchanged since Friday morning, the Aussie is down -0.2% at US$0.7435.

The SPI Overnight closed up 42 points or 0.6%.

The Week Ahead

It’s a quiet week this week for US economic data, with the highlight being October CPI data on Thursday.

China will report November trade numbers today and inflation on Wednesday.

The ECB holds a policy meeting on Thursday.

In Australia we’ll see ANZ job ads today, NAB business confidence tomorrow and Westpac consumer confidence on Wednesday.

The RBA puts out a Bulletin on Thursday.

On Friday S&P/ASX announce the ins and outs from quarterly index rebalancing, to be effective a week later.

Metcash ((MTS)) reports earnings today.

Bank of Queensland ((BOQ)) holds its AGM tomorrow, followed by Westpac ((WBC)) and Pendal Group ((PDL)) on Friday.

Perpetual ((PPT)) hosts an investor day on Wednesday.

The Australian share market over the past thirty days…

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