The Monday Report – 24 April 2023

This story features BANK OF QUEENSLAND LIMITED, and other companies.
For more info SHARE ANALYSIS: BOQ
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

World Overnight
SPI Overnight	7333.00	– 8.00	– 0.11%
S&P ASX 200	7330.40	– 31.80	– 0.43%
S&P500	4133.52	+ 3.73	0.09%
Nasdaq Comp	12072.46	+ 12.90	0.11%
DJIA	33808.96	+ 22.34	0.07%
S&P500 VIX	16.77	– 0.40	– 2.33%
US 10-year yield	3.57	+ 0.03	0.71%
USD Index	101.82	+ 0.01	0.01%
FTSE100	7914.13	+ 11.52	0.15%
DAX30	15881.66	+ 85.69	0.54%

By Greg Peel

Holiday Feel

In a quiet session on Friday the ASX200 followed Wall Street down from the open on low volume, but rebounded somewhat in the morning and left it at that, ahead of a long (for some) weekend.

Sector moves were mixed, with the banks (-0.7%) and materials (-1.5%) joining forces to provide the weakness, while energy, healthcare and industrials all rose 0.6% to offer a counter.

After a well-received earnings report, Bank of Queensland ((BOQ)) tumbled back -5.0% after brokers threw cold water and suggested that was as good as it will get. (And it wasn't "good" with management issuing a profit warning the week prior). Morgan Stanley downgraded to Underweight to make three from six Sell ratings in the FNArena database.

BHP Group’s ((BHP)) production report failed to excite and iron ore prices fell on the day, sending BHP shares down -2.6% with peers joining in.

Lynas Rare Earths ((LYC)) rose 4.7% on its production report while, over in energy, Whitehaven Coal ((WHC)) reported and rose 5.9%.

The lithium miners were in favour on Friday but there’s trouble ahead today.

Chile’s government has announced a move that would see local miners, including the world’s number one and second-largest lithium producers, shift to a model with the state holding a controlling interest in all projects through a public company that would partner with private mining firms.

Shares in Chile’s own listed lithium miner SQM fell -19% on the NYSE on Friday night while the global number one, US miner Albemarle, which has been sniffing around Australian-listed miners, fell -10%.

The Aussie ten-year yield finally had a down-day on Friday in falling -4 points to 3.45%, having ticked up the past several sessions.

Real estate gained 0.4%.

Technology was flat, ahead of a big week in global tech land.

That big week had Wall Street stalling on Friday night to play the waiting game.

Our futures were down -8 points on Saturday morning.

The lack of any Wall Street movement provides Australia with an excuse today for that long weekend.

Bring it On

To date, the early stage of the US earnings season has been largely uneventful, as companies have tended to meet already reduced expectations. One particular casualty was Tesla, but on guidance to deliberately lower margins, not earnings.

Yet, Tesla is among many Mega Tech stocks that have run very hard out of the 2022 bear market, and the big wave of earnings hitting this week will include Microsoft, Google, Meta and Amazon.

The following week is the busiest on the calendar, and will include Apple.

A lot rests on whether these companies can live up to valuations as their weighting in the S&P500 is dominant, and thus market-moving. They will set the mood.

Otherwise, Friday night’s was a nothing session.

Sometimes there’s just nothing more to say.

Coca-Cola is the big company reporting tonight, then when the ASX returns on Wednesday, Microsoft and Google will have reported, followed by Meta on Wednesday night and Amazon on Thursday night.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1983.90	– 21.40	– 1.07%
Silver (oz)	25.07	– 0.20	– 0.79%
Copper (lb)	3.99	– 0.01	– 0.31%
Aluminium (lb)	1.18	– 0.01	– 0.68%
Lead (lb)	0.98	+ 0.01	0.97%
Nickel (lb)	10.94	– 0.24	– 2.11%
Zinc (lb)	1.23	– 0.02	– 1.52%
West Texas Crude	77.87	+ 0.58	0.75%
Brent Crude	81.66	+ 0.79	0.98%
Iron Ore (t)	117.21	– 2.10	– 1.76%

Subdued demand and rising inventories in China were blamed for iron ore’s fall on Friday.

US bond yields ticked up slightly and the US dollar remained steady but gold took a tumble, again flip-flopping around US$2000/oz as traders nervously scan the blue sky above.

The Aussie has taken a hit, falling -0.7% to US$0.6697.

The SPI Overnight closed down -8 points on Saturday morning.

The Week Ahead

Aside from earnings reports, Wall Street will be looking ahead to Friday’s night PCE inflation data ahead of the May Fed meeting, although the market has already conceded the Fed a 25 point hike.

Ahead of the PCE will be numbers for new home sales and durable goods orders.

In Australia a May rate hike is less cut and dry, and a lot will depend on Wednesday’s March quarter CPI release, followed by the PPI on Friday.

We’ll also see private sector credit on Friday.

And on Friday, the Bank of Japan holds a policy meeting, China reports April PMIs and the eurozone reports a first estimate of March quarter GDP.

Locally there are plenty more quarterly reports to plough through this week.

Today we’ll see Fortescue Metals ((FMG)) and South32 ((S32)).

Australian and New Zealand markets are closed tomorrow.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AUB	AUB Group	Downgrade to Hold from Accumulate	Ord Minnett
AVH	Avita Medical	Upgrade to Accumulate from Hold	Ord Minnett
BHP	BHP Group	Upgrade to Add from Hold	Morgans
BOQ	Bank of Queensland	Downgrade to Underweight from Equal-weight	Morgan Stanley
CGF	Challenger	Upgrade to Add from Hold	Morgans
CMM	Capricorn Metals	Downgrade to Hold from Buy	Bell Potter
CRN	Coronado Global Resources	Upgrade to Buy from Neutral	UBS
DBI	Dalrymple Bay Infrastructure	Downgrade to Hold from Add	Morgans
DRR	Deterra Royalties	Downgrade to Sell from Neutral	UBS
EVN	Evolution Mining	Downgrade to Lighten from Hold	Ord Minnett
ILU	Iluka Resources	Downgrade to Neutral from Outperform	Macquarie
LFS	Latitude Group	Downgrade to Sell from Neutral	Citi
LNK	Link Administration	Upgrade to Buy from Neutral	Citi
MGR	Mirvac Group	Downgrade to Accumulate from Buy	Ord Minnett
NST	Northern Star Resources	Downgrade to Sell from Neutral	UBS
PPT	Perpetual	Downgrade to Accumulate from Buy	Ord Minnett
RHC	Ramsay Health Care	Downgrade to Underweight from Equal-weight	Morgan Stanley
SBM	St. Barbara	Downgrade to Lighten from Hold	Ord Minnett
SKT	SKY Network Television	Downgrade to Hold from Accumulate	Ord Minnett

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

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