Daily Market Reports | Jul 14 2023
| World Overnight | |||
| SPI Overnight | 7243.00 | + 39.00 | 0.54% |
| S&P ASX 200 | 7246.90 | + 111.20 | 1.56% |
| S&P500 | 4510.04 | + 37.88 | 0.85% |
| Nasdaq Comp | 14138.57 | + 219.61 | 1.58% |
| DJIA | 34395.14 | + 47.71 | 0.14% |
| S&P500 VIX | 13.61 | + 0.07 | 0.52% |
| US 10-year yield | 3.76 | – 0.10 | – 2.59% |
| USD Index | 99.77 | – 0.78 | – 0.78% |
| FTSE100 | 7440.21 | + 24.10 | 0.32% |
| DAX30 | 16141.03 | + 118.03 | 0.74% |
By Greg Peel
Great Expectations
The ASX200 shot up through 7200 from the open yesterday, had a think about it, and then continued gradually higher during the session. There were two primary drivers of strength – US inflation and Chinese trade data.
The lower than expected US CPI had Wall Street surging once more, and Wall Street surged again last night on lower than expected PPI numbers. Our futures are up another 39 points this morning. Seems we’re making a habit of the mini-crashes and rapid comebacks.
The positive US data have provided hope the trend will carry over the Pacific, and that our June quarter CPI data, due on July 26, will show something similar. Maybe even enough for the RBA to pause again in August, albeit Wall Street still expects the Fed to hike again on July 26.
By today, we may learn who will be calling the shots at the RBA.
Aussie bond yields fell again yesterday, with the tens down -8 points and the twos down -11, bringing both numbers back toward 4.0%. While in isolation this would lead to a weaker Aussie dollar, all is relative, and a plunging US dollar now has the Aussie almost back at US69c.
Star of the day, among a whole galaxy, was real estate (+3.2%). Talk about comebacks. Discretionary came in at 2.2%, suggesting fears of a consumer recession may be overblown.
The banks put on 1.1%.
China’s exports fell -12.4% year on year in June against expectations of -9.5%, and imports fell -6.8% against -4.0%. While normally Australia would look aghast at falling Chinese imports, its now a bad-news-is-good scenario as the weakest numbers in three years imply Beijing just has to get serious about stimulus.
To that end, materials rose 2.1% yesterday and energy 1.1%. Commodities prices have surged overnight.
Having ignored the Nasdaq on Wednesday, yesterday technology swung to a 2.3% gain. It was a bit of a Buy Everything affair, but the defensives again lagged. Communication services rose 0.8%, healthcare 0.9% and utilities 0.7%. Staples nonetheless managed 1.2%.
Having been slammed last week, the local market has regained positive sentiment. The futures suggest we should kick on again today.
Just a Crawl
The US headline PPI rose 0.1% in June. No, that’s not monthly, that’s year on year, down from 1.1% in May. The core PPI fell to 2.6% from 2.8%.
Once again Wall Street cheered. The S&P500 hit a new 52-week high, above 4500. Another 6.5% would take the S&P to a new all-time high.
The numbers provide further evidence the inflation beast is quickly being tamed, though the Fed is yet to be satisfied. Wall Street still expects another rate hike this month, but as for September, the view is another hike is now less likely.
The US ten-year yield fell another -10 points last night and the two-year -13 points. The US dollar index was once again slammed, down -0.8% to under 100.
The only fly in the ointment was a fall in weekly jobless claims, after a rise the week before suggested the US labour market may finally be showing signs of cooling. The weaker than expected non-farm payrolls number backed up those signs, but realistically jobless clams remain low and job additions are still solid.
The Fed wants to tame the labour market, in order to be satisfied inflation can be kept under control.
Wall Street’s happy for now, and happy that the past two sessions have shown more reasonable breadth. The Nasdaq surges on, still being led by the Magnificent Seven, but other sectors are picking up as well as investors concede the rally may have further to run, and go looking for those stocks left behind so far.
The next crunch will come when the big banks begin reporting June quarter earnings from tonight. There are not high hopes for earnings numbers, but then it matters only whether low hopes can be exceeded.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1960.00 | + 2.70 | 0.14% |
| Silver (oz) | 24.84 | + 0.73 | 3.03% |
| Copper (lb) | 3.89 | + 0.13 | 3.46% |
| Aluminium (lb) | 1.00 | + 0.04 | 4.30% |
| Nickel (lb) | 9.62 | + 0.34 | 3.62% |
| Zinc (lb) | 1.09 | + 0.03 | 2.76% |
| West Texas Crude | 76.89 | + 1.14 | 1.50% |
| Brent Crude | 81.52 | + 1.34 | 1.67% |
| Iron Ore (t) | 110.95 | + 0.34 | 0.31% |
Well, there’s a table we haven’t seen for a while.
The plunging US dollar, and rising hopes of some real Chinese stimulus, have kicked in.
Brent oil is now back over US$80/bbl, which is all well and good, but inflationary.
The Aussie is up yet another 1.5% at US$0.6890.
Today
The SPI Overnight closed up 39 points or 0.5%.
New Zealand is closed today.
The US will see consumer sentiment, and bank earnings.
The Australian share market over the past thirty days…
| Index | 13 Jul 2023 | Week To Date | Month To Date (Jul) | Quarter To Date (Jul-Sep) | Year To Date (2023) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7246.90 | 2.91% | 0.61% | 0.61% | 2.96% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| IDX | Integral Diagnostics | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| MP1 | Megaport | Downgrade to Neutral from Buy | Citi |
| TCL | Transurban Group | Upgrade to Buy from Neutral | Citi |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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