Daily Market Reports | Dec 21 2023
This story features CHALICE MINING LIMITED, and other companies. For more info SHARE ANALYSIS: CHN
| World Overnight | |||
| SPI Overnight | 7478.00 | – 73.00 | – 0.97% |
| S&P ASX 200 | 7537.90 | + 48.80 | 0.65% |
| S&P500 | 4698.35 | – 70.02 | – 1.47% |
| Nasdaq Comp | 14777.94 | – 225.28 | – 1.50% |
| DJIA | 37082.00 | – 475.92 | – 1.27% |
| S&P500 VIX | 13.67 | + 1.14 | 9.10% |
| US 10-year yield | 3.88 | – 0.05 | – 1.15% |
| USD Index | 102.42 | + 0.23 | 0.23% |
| FTSE100 | 7715.68 | + 77.65 | 1.02% |
| DAX30 | 16733.05 | – 11.36 | – 0.07% |
By Greg Peel
Carnival is Over?
I suggested in yesterday’s Overnight Report, with regard the rally on Wall Street, “There appears to be nothing to stop it”. Clearly that was the trigger for last night’s sharp sell-off.
The ASX200 has enjoyed the ride along with the S&P since November, buoyed further by the Fed pivot, with the addition of “encouraging signs” spotted by the RBA. Those signs support the consensus (but not unanimous) view that the RBA is done hiking.
Yesterday the index pushed meaningfully over 7500 for the first time since January, as again all (but one) sectors saw gains. This morning our futures are down -73 points.
Which takes us below 7500 again. But it doesn’t spoil Christmas – we had clearly reached an overbought state, as had Wall Street – and corrections of this nature are healthy. We might see a rush of selling today nonetheless, to lock in those profits before summer holidays.
The local bond market doesn’t know whether its Arthur or Martha right now, being up and down each day this week by around 6-8 points, with yesterday seeing the ten-year down -6. The stock market has not paid much attention to bonds this week, and lower yields today, if that is the case, won’t save anything.
Traders appeared to be confident about Christmas sales yesterday, with staples up 0.9%, discretionary up 0.8% and communication services winning with 1.1%. New iPhone from Santa?
There were again relatively uniform gains among other sectors, with the banks and materials both providing solid support with 0.6% increases.
There was ongoing short-covering in miners of exotics, while at the same time the CEO of Chalice Mining ((CHN)) called for a ban on short-selling. Wouldn’t be the first time such a call is made.
One of the more shorted stocks, lithium miner Sayona Mining ((SYA)), jumped 12.3% yesterday.
On the flipside, property settlements platform Pexa Group ((PXA)) fell -11.8% after updating on its Smoove acquisition in the UK.
So get ready for a pullback today which, I would think, could be larger then the futures are implying, once momentum kicks in.
Like a Stone
And on the tenth day…
Wall Street was higher for most of last night, but began to fade in the afternoon. Then at 2.30pm, whammo. It was as if a bomb went off.
No doubt Wall Street had reached well overbought status in the December rally, which had the Dow up for nine consecutive sessions, reaching and adding to its all-time high, and the S&P500 moving to within sight of its all-time high last night – but one explanation for the sudden reversal last night is the expiry of December options.
The pace of the run-up has caught many on the wrong side of the hedge, and expiry prompted sellers to jump over each other to cover. Once selling began, there was good reason for winners to lock in profits ahead of tonight, which will be travel-day, and the Christmas long weekend.
Tonight will kick off with the November PCE numbers, which will be worth hanging around for before heading for the exit.
Last night has not upset the Santa Rally which, as I have pointed out, strictly refers to the week between Christmas and New Year. Since 1950, the S&P500 has averaged a gain of 1.32% over that period and has closed higher 78.1% of the time.
But then is does rather depend on where the index starts from. The S&P is up over 20% for the year.
In other news, the Conference Board monthly consumer confidence index rose to a five-month high 110 from 101 last month, suggesting the US consumer is not yet done for.
Deck the halls.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2032.50 | – 7.10 | – 0.35% |
| Silver (oz) | 24.13 | + 0.07 | 0.29% |
| Copper (lb) | 3.81 | 0.00 | 0.00% |
| Aluminium (lb) | 0.97 | 0.00 | 0.00% |
| Nickel (lb) | 7.44 | 0.00 | 0.00% |
| Zinc (lb) | 1.12 | 0.00 | 0.00% |
| West Texas Crude | 74.03 | + 0.59 | 0.80% |
| Brent Crude | 79.45 | – 0.02 | – 0.03% |
| Iron Ore (t) | 134.66 | + 1.58 | 1.19% |
I can only hope our LME source sorts out its cyber-attack issues before too long, but the daily commodity price feed will end from tomorrow for two weeks anyway. Sorry about that.
Iron ore looks like it will be awarded “most incorrectly called by analysts” for 2023 as it just keeps hanging in there despite Chinese property woes.
The Red Sea continues to impact on oil prices. The Middle East conflict is shaping up as one of 2024’s biggest risks.
The Aussie is down -0.3% at US$0.6736.
Today
The SPI Overnight closed down -73 points or -1.0%.
Just to rub in the salt, today is our own quarterly derivatives expiry day.
ANZ Bank ((ANZ)) holds its AGM today.
The Australian share market over the past thirty days…
| Index | 20 Dec 2023 | Week To Date | Month To Date (Dec) | Quarter To Date (Oct-Dec) | Year To Date (2023) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7537.90 | 1.28% | 6.36% | 6.94% | 7.09% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ARB | ARB Corp | Downgrade to Hold from Buy | Ord Minnett |
| BOE | Boss Energy | Upgrade to Outperform from Neutral | Macquarie |
| BSL | BlueScope Steel | Downgrade to Neutral from Buy | Citi |
| CAT | Catapult International | Downgrade to Hold from Buy | Bell Potter |
| CVN | Carnarvon Energy | Upgrade to Outperform from Underperform | Macquarie |
| ILU | Iluka Resources | Downgrade to Neutral from Buy | Citi |
| IMD | Imdex | Upgrade to Buy from Neutral | Citi |
| NEU | Neuren Pharmaceuticals | Upgrade to Buy from Hold | Bell Potter |
| PLS | Pilbara Minerals | Downgrade to Sell from Neutral | Citi |
| PPM | Pepper Money | 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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CHARTS
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: CHN - CHALICE MINING LIMITED
For more info SHARE ANALYSIS: PXA - PEXA GROUP LIMITED
For more info SHARE ANALYSIS: SYA - SAYONA MINING LIMITED