The Monday Report – 19 February 2024

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            [9] => ((RWC))
            [10] => ((WBC))
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This story features INGHAMS GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: ING
The company is included in ASX300 and ALL-ORDS

By Greg Peel

Resourceful

The ASX200 shot up 76 points from the open on Friday on a combination of renewed positive sentiment over the week and a 0.5% gain on Wall Street. It then dipped and finally steadied through the afternoon to close up 52, -22 points shy of the all-time high.

There were fewer earnings reports on Friday than earlier in the week and thus less influence on the action on the day, although Inghams Group ((ING)) once again disappointed with its outlook and the stock fell -12.5%.

Consumer staples fell -0.4%. Sentiment surrounding the discretionary sector has nevertheless been positive, as brokers decide their earlier warnings about a weak consumer in 2024 are proving unfounded. That sector rose 0.8%.

The big winner was materials, not on earnings results and with China still closed. But signs from China’s New Year holiday are that travel has picked back up again as has consumer spending, indicating better signs for the Chinese economy.

It was announced on Friday the government has placed nickel on the critical minerals list, but it was lithium that stole the show. All top five index winners were lithium miners, and expanding into the ASX300 reveals a lot more at the top. Materials rose 1.5%.

Energy rose 1.0% on oil prices climbing ever higher. WTI is close to returning to US$80/bbl.

Healthcare closed flat, absorbing a -14.2% fall for Neuren Pharmaceuticals ((NEU)) after a short seller posted a damning report on the company’s US licensee.

Aside from a -0.2% fall for communication services, with Telstra ((TLS)) slipping again, all other sectors closed higher, despite the Aussie ten-year rising 6 points to 4.19%.

This included a 0.5% gain for real estate, but also 0.6% for financials. Stronger bank moves offset weaker insurance moves, with QBE Insurance ((QBE)) losing -1.7% and Insurance Australia Group ((IAG)) -3.8% after both reported earnings.

There is a suggestion the big premium increases of the last couple of years may have now peaked.

If Wall Street behaves itself this week we should be able to concentrate more specifically on the huge number of result releases due.

In the meantime the S&P500 fell -0.5% on Friday night but our futures were up 8 points on Saturday morning.

What A Downer

The US headline PPI rose 0.3% in January – the biggest gain in five months. The annual rate was 0.9% when 0.6% was forecast. The core rate rose 0.6% to an annual rate of 2.0%, when 1.6% was forecast.

Wall Street initially fell on the news, then stoically rallied back, before capitulating again in the afternoon – not that surprising ahead of a long weekend.

All three major indices closed lower for the week for the first week in six.

The US ten-year yield rose 6 points to 4.30%.

Added to the strong than expected CPI earlier in the week, the strong PPI provides more evidence the Fed is going nowhere in a hurry. With hopes for a March rate cut abandoned, May is now sliding as well, while June firms up as most likely bringing the first cut (unless expectations are pushed out further, of course).

There’ll be plenty more inflation data to come in the interim.

In the meantime, bitcoin is once again charging ever higher, which is worrisome because it only does so when sentiment begins to become a bit stretched. On Friday night crypto exchange Coinbase posted its first quarterly profit in two years and jumped 14%.

The largest US maker of chipmaking machinery, Applied Materials, jumped 9% on its result, signalling some of the largest semiconductor companies are increasing their investments in new production.

Nvidia reports on Wednesday night.

Given 75% of the S&P500’s gain year to date has been driven by five of the Mag7, and 90% by three, Nvidia’s result will be telling.

The Mega Techs were responsible for most of the falls on Friday, except Nvidia – it went up.

Wall Street is closed tonight for Presidents’ Day.

Commodities

Not much to say other than gold rose despite the gain in US yields, and oil prices continue upward.

China is back on board today.

The Aussie is up 0.2% at US$0.6534.

The SPI Overnight closed up 8 points on Saturday morning.

The Week Ahead

By Greg Peel

Strap in. The trickle of local earnings results to date will become a flood from mid-week.

Locally, the minutes of the February RBA meeting are due tomorrow. On Wednesday we’ll see the December quarter wage price index, important to RBA policy.

The major economic release in the US this week will be that of the Fed minutes on Wednesday night.

Note that as the local results season hits top gear, ex-dividends begin to follow on a lag. There are several this week, but it will become a flood heading into March.

Today’s result highlights include a2 Milk ((A2M)), Bendigo & Adelaide Bank ((BEN)), Cochlear ((COH)), Lendlease ((LLC)) and Reliance Worldwide ((RWC)).

Westpac ((WBC)) provides a quarterly update.

FNArena's Corporate Results Monitor: https://fnarena.com/index.php/reporting_season/ (with calendar).

The Australian share market over the past thirty days…

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

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