Daily Market Reports | Oct 05 2023
This story features EVOLUTION MINING LIMITED, and other companies.
For more info SHARE ANALYSIS: EVN
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
| World Overnight | |||
| SPI Overnight | 6943.00 | + 31.00 | 0.45% |
| S&P ASX 200 | 6890.20 | – 53.20 | – 0.77% |
| S&P500 | 4263.75 | + 34.30 | 0.81% |
| Nasdaq Comp | 13236.01 | + 176.54 | 1.35% |
| DJIA | 33129.55 | + 127.17 | 0.39% |
| S&P500 VIX | 18.58 | – 1.20 | – 6.07% |
| US 10-year yield | 4.74 | – 0.07 | – 1.40% |
| USD Index | 106.75 | – 0.28 | – 0.26% |
| FTSE100 | 7412.45 | – 57.71 | – 0.77% |
| DAX30 | 15099.92 | + 14.71 | 0.10% |
By Greg Peel
Banks Break
On Tuesday the banks did not take as much of a hit (-0.6%) as other sectors in the sell-off on the ASX with the RBA remaining on hold. But yesterday’s surge in bond yields, following the US overnight, was too much.
The Aussie two-year jumped 5 points and the ten-year 12 points. The financials sector fell -1.5%. Insurers were also lower, despite being beneficiaries of higher rates.
While communication services and energy each fell -1.1%, thereafter the sector falls trend towards the more modest. Utilities was the only sector in the green, up 0.3%. Energy will not have a good day today. The last two days have been about coal prices. Today it’s all about crude, which fell -5% last night.
Materials fell only -0.3% despite a lower iron ore price, with the slide in the Aussie dollar providing some support, and some tentative buying in gold miners after gold’s rapid plunge.
Buying emerged for the biggies Newcrest Mining ((NCM)) and Evolution Mining ((EVN)) while Ramelius Resources ((RMS)) topped the ASX200 winners with a 4.3% gain and Gold Road Resources ((GOR)) and Silver Lake Resources ((SLR)) also made the top five table.
I can’t help but notice Weebit Nano ((WBT)), which fell -4.8% yesterday, and has appeared on the top five losers’ board just about every day since it was promoted to the ASX200. The stock has lost -60% since its high in June. The company is involved with something to do with memory but I forgot.
Despite now being in the index, not one broker monitored by FNArena daily or otherwise covers the stock.
Yesterday’s follow-on fall from Tuesday clearly was as much about deflated sentiment as fundamentals, and the index is now in a limbo area between breaking down from the March low and last year’s October low some -200 points further down.
We should see at least some short term reprieve today, with Wall Street rebounding on a dip in bond yields and that fall in oil (which is, of course, good for all other sectors, and, if sustained, central bank policy).
The futures are up 31 points this morning.
Relief
It’s always darkest just before the dawn and last night Wall Street received some wonderfully bad news in the form of the ADP private sector jobs report, which showed only 89,000 jobs being added in September when 150,000 were forecast.
The S&P500 stumbled early and was staring into the eyes of the 200-day moving average when US bond yields began to fall back, as they’re supposed to in the face of weak economic data, and a rebound rally commenced.
The ten-year ultimately fell -7 points and the two-year -10 points. The US dollar finally saw a dip. Throw in the -5% fall in oil prices and suddenly there was relief all round, except for the energy sector.
The ADP report is nevertheless a wildly unreliable indicator of what the non-farm payrolls report might look like tomorrow night, and recent date have shown job openings rising and new jobless claims stubbornly low, but hey, we’ll take it.
There was also some other good bad news, with the US services PMI ticking down to 53.6 in September from 54.5 in August. Still in expansion but perhaps showing signs services inflation might cool?
“The Fed could well be done" with raising interest rates, said Richard Clarida last night, global economic advisor at Pimco and former Fed vice chair.
Wall Street was clearly unfussed about the fact US Congress is now effectively frozen post the Speaker’s axing as Republicans take a week off to decide who they might like to take the poison chalice, with 40 days to go to the next government shutdown deadline.
No doubt it will resolve itself – it always does – but what a mess.
The sudden plunge in oil prices came about despite OPEC-Plus agreeing last night to retain production cuts through to the end of the year. This was as expected, and the run-up in oil prices has been so swift as to invoke expectations there must soon be a pullback.
If economic indicators are now starting to weaken, then the question of demand comes into play, irrespective of the Saudis and Russia trying to maintain higher prices. Adding to weakness were data showing a big jump in US gasoline inventories, underscoring falling demand.
The other “big” news last night was that – shock, horror – an analyst has deigned to downgrade Apple to Sector-Weight. This just never happens.
Apple closed up 0.7%.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1820.60 | – 3.00 | – 0.16% |
| Silver (oz) | 20.98 | – 0.18 | – 0.85% |
| Copper (lb) | 3.59 | – 0.03 | – 0.82% |
| Aluminium (lb) | 1.01 | – 0.02 | – 1.83% |
| Nickel (lb) | 8.32 | + 0.01 | 0.14% |
| Zinc (lb) | 1.15 | + 0.01 | 0.73% |
| West Texas Crude | 84.70 | – 4.83 | – 5.39% |
| Brent Crude | 86.23 | – 4.87 | – 5.35% |
| Iron Ore (t) | 118.03 | – 1.82 | – 1.52% |
Metals prices continue to drift with China absent although a -1.5% fall in the iron ore price, with China absent, is unusual.
US bond yields may have come off but as yet there are no signs gold will find some buyers.
The US dollar index fell -0.3% and saved the Aussie from 62c ignominy, rising 0.4% to US$0.6328.
Today
The SPI Overnight closed up 31 points or 0.5%.
We’ll see August trade numbers today.
ARB Corp ((ARB)) goes ex-div.
The Australian share market over the past thirty days…
| Index | 04 Oct 2023 | Week To Date | Month To Date (Oct) | Quarter To Date (Oct-Dec) | Year To Date (2023) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 6890.20 | -2.25% | -2.25% | -2.25% | -2.11% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALQ | ALS Ltd | Downgrade to Sell from Lighten | Ord Minnett |
| ALX | Atlas Arteria | Downgrade to Hold from Add | Morgans |
| SVW | Seven Group | Downgrade to Lighten from Hold | Ord Minnett |
| TAH | Tabcorp Holdings | Upgrade to Accumulate from Hold | Ord Minnett |
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: ARB - ARB CORPORATION LIMITED
For more info SHARE ANALYSIS: EVN - EVOLUTION MINING LIMITED
For more info SHARE ANALYSIS: GOR - GOLD ROAD RESOURCES LIMITED
For more info SHARE ANALYSIS: RMS - RAMELIUS RESOURCES LIMITED
For more info SHARE ANALYSIS: WBT - WEEBIT NANO LIMITED