The Overnight Report: In Memoriam

This story features INGHAMS GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: ING

World Overnight
SPI Overnight (Jun)	7135.00	– 31.00	– 0.43%
S&P ASX 200	7161.60	– 17.90	– 0.25%
S&P500	4204.11	+ 3.23	0.08%
Nasdaq Comp	13748.74	+ 12.46	0.09%
DJIA	34529.45	+ 64.81	0.19%
S&P500 VIX	16.76	+ 0.02	0.12%
US 10-year yield	1.58	– 0.03	– 1.80%
USD Index	89.85	– 0.18	– 0.20%
FTSE100	7022.61	+ 2.94	0.04%
DAX30	15421.13	– 98.85	– 0.64%

By Greg Peel

Lock it in

The futures showed a tentative opening gain of 6 points yesterday morning but the ASX200 flew up from the open over 20 points before banging its head on 7200. The index made another attempt to push through but after half an hour gave up.

The round number was a sufficient trigger point to close the books on a record-hitting month by locking in profits.

This was clearly evident in energy (-1.6%), which gave up all of Friday’s gains as oil prices slipped, and in the banks (-0.6%), which have had a good run lately (record highs for CommBank).

The consumer sectors had also performed well in May. They fell -0.3% each. Industrials did well on Friday and fell -0.5% yesterday.

Technology fell -0.9% but there was not much to lock in here for the month.

Materials hung in there (+0.1%) on buying in gold miners as gold hit US$1900/oz again, offsetting selling in the iron ore miners, which had not had a great couple of weeks anyway. (Different story last night).

Bucking the trend was healthcare (+0.5%), which we might put down to what’s going on in Victoria. The healthcare sector loves a good outbreak.

Not so everyone else, which may explain why the futures are down -31 points this morning with no offshore lead. It looks pretty certain the lockdown will be extended, which would upend last week’s strength on the basis of these snap lockdowns having so far been successful in various states.

It does not help that so far the federal government is point blank refusing to help out the Victorian government with business and wage support, despite this being the first major lockdown post-JobKeeper. If the outbreak grows and the lockdown is indeed extended, it will be a pretty red-faced government that will have to do an about-face.

At the individual stock level, the top two index performers were gold miners, while Inghams Group ((ING)) followed up Friday’s jump with another 3.5%. What’s good for chooks is good for cheese it would seem, as Bega Cheese ((BGA)) also rose 3.5%.

On the flip-side, Nuix ((NXL)) announced another guidance downgrade and fell -17.8%, to be around -75% down from its post-IPO high. Macquarie Group ((MQG)) fell -0.3%. Any heads rolled yet?

Profit-taking in banks masked the long-awaited sale of National Bank’s ((NAB)) MLC wealth business to what is now an even odder bunch of fellows at IOOF Holdings ((IFL)). IOOF shares rose 0.8%.

And one might have expected the announced spin-off plan for PEXA by Link Administration ((LNK)) would be a winner, but Link fell -6.8%.

In other news, China’s manufacturing PMI slipped to 51.0 in May from 51.1 while the services PMI rose to 55.2 from 54.9.

It’s a new month – the last of the financial year – and the futures are suggesting we’re not going to pick up where we left off following yesterday’s profit-taking. The 7200 level might be safe for now.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1907.10	+ 3.60	0.19%
Silver (oz)	28.05	+ 0.11	0.39%
Copper (lb)	4.61	0.00	0.00%
Aluminium (lb)	1.08	0.00	0.00%
Lead (lb)	0.99	0.00	0.00%
Nickel (lb)	8.07	0.00	0.00%
Zinc (lb)	1.38	0.00	0.00%
West Texas Crude	66.91	+ 0.59	0.89%
Brent Crude	69.32	+ 0.60	0.87%
Iron Ore (t)	198.75	+ 11.10	5.92%

The UK holiday closed the LME last night so with lack of any base metals to trade, buyers moved in to iron ore instead. It’s the first genuine bounce we’ve seen since Beijing threatened to communise the capitalist market because it’s upset.

Trading was quiet elsewhere with the US missing but the dollar index slipped -0.2% to under 90 again in their absence.

The Aussie is thus up 0.4% to US$0.7735 following Friday’s fall. Wake me up when the Aussie moves through either 76 or 78.

Today

Data released yesterday showed Australian housing credit grew by 0.2% in April to be up 1.3% year on year. Credit demand is accelerating, with three-month average growth running at 3.5%.

Today we see April building approvals.

We’ll also see the March quarter current account ahead of tomorrow’s GDP numbers.

The RBA meets today.

Nothing scheduled on the corporate calendar today.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ALQ	ALS Ltd	Downgrade to Equal-weight from Overweight	Morgan Stanley
		Downgrade to Hold from Add	Morgans
CGC	Costa Group	Upgrade to Outperform from Neutral	Credit Suisse
		Downgrade to Hold from Add	Morgans
CIA	Champion Iron	Upgrade to Neutral from Sell	Citi
FPH	Fisher & Paykel Healthcare	Downgrade to Neutral from Outperform	Credit Suisse
IDX	Integral Diagnostics	Downgrade to Accumulate from Buy	Ord Minnett
MGR	Mirvac	Upgrade to Overweight from Equal-weight	Morgan Stanley
NHC	New Hope Corp	Upgrade to Buy from Neutral	Citi
OZL	Oz Minerals	Upgrade to Buy from Neutral	Citi
UWL	Uniti Group	Downgrade to Hold from Accumulate	Ord Minnett
XRO	Xero	Neutral	Citi

For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.

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.)

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