The Monday Report – 04 March 2024

Array
(
    [0] => Array
        (
            [0] => ((360))
            [1] => ((CXO))
            [2] => ((SYA))
            [3] => ((LTM))
            [4] => ((AGY))
            [5] => ((SYR))
            [6] => ((NIC))
            [7] => ((NVX))
            [8] => ((ALD))
            [9] => ((CSL))
            [10] => ((REA))
        )

    [1] => Array
        (
            [0] => 360
            [1] => CXO
            [2] => SYA
            [3] => LTM
            [4] => AGY
            [5] => SYR
            [6] => NIC
            [7] => NVX
            [8] => ALD
            [9] => CSL
            [10] => REA
        )

)

This story features LIFE360 INC, and other companies.
For more info SHARE ANALYSIS: 360
The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

By Greg Peel

Short Squeeze

The February result season officially ended on Thursday but one more ASX200 stock decided to sneak its result in on Friday. Life360’s ((360)) result was rather well received, as the stock jumped 38.5%. The technology sector rose 1.9%.

But winning the day was materials (+2.0%) on a surge for an ever wider field of battery mineral producers, as commodity prices – particularly lithium — have clearly turned and headed north again as China restocks post-holiday. These stocks dominate the list of the most heavily shorted on the ASX.

Base metal prices have also been more positive of late so there was quite the spread of winners on Friday, including lithium miners Core Lithium ((CXO)), up 14.3%, Sayona Mining ((SYA)), up 12.5% and Arcadium Lithium ((LTM)), up 10.3%, but also Argosy Minerals ((AGY)), up 23.1% (rare earths), Syrah Resources ((SYR)), up 13.1% (graphite), and Nickel Industries ((NIC)), up 9.2%.

And not forgetting Novonix ((NVX)), which makes battery anode materials and provides technology to manufacturers. Its shares rose 15.9%.

For the wider market, it was all about kicking on from Thursday’s all-time high. New highs have in recent times triggered profit taking, but not this time, thanks to benign US PCE data on Thursday night, and a new high for the Nasdaq.

The banks rose another 0.5%, energy was up 0.9% (despite Ampol ((ALD)) going ex) and staples added 0.5%.

Healthcare bucked the trend in falling -1.5%. CSL ((CSL)) has enjoyed a strong comeback from its earlier GLP-1 scare so perhaps provided some funding for buying elsewhere.

It wasn’t all smooth sailing on Friday. The computers decided to go for broke in the first half hour, shooting the index up 37 points, but 15 minutes later in momentum was right back down again, plateauing at 7700. That would have been your new high-triggered selling, but from midday the only way was up.

Wall Street is also now in blue sky, with all three major indices pushing on through new highs and not showing any signs of being derailed at this point.

Bad news is good on Wall Street, but then so is good news.

Momentum

…is the buzzword on Wall Street right now.

There seems little to stop the upward trend, and even the sceptics are being forced to capitulate – those who have been calling “recession” for two years now, those who call AI hype a repeat of 1999, and those who have assumed higher-for-longer Fed rates can only lead to disaster.

But the US economy appears to have come safely in for a soft landing, Nvidia has dismissed any notion of excess hype around AI, and all signs suggest US corporations are handling high rates without much concern.

Yet still, bad news can be good.

The US manufacturing PMI fell to 47.8 in February from 49.1, when 49.5 was expected.

The final Michigan Uni consumer sentiment survey for February showed a -2.7% fall in sentiment. (Albeit the index is 14.7% higher year on year).

The Fed is closely monitoring the data, and these data suggest that, maybe, there could be a rate cut as early as May after all.

The US ten-year yield fell -7 points to 4.18%.

While the US earnings season is winding down, the results for the bulk of the market have been net positive, with earnings growing more than expected. Improved margins have been the driver.

So everything seems to be nicely aligned, and commentators agree that while Wall Street is becoming exuberant and momentum is driving the ship, there are no signs yet that valuations have become stretched, and sentiment irrational.

Commodities

Evidence that Chinese restocking is underway.

WTI crude hit US$80/bbl intraday.

Gold has suddenly had a boost, with bond yields down and perhaps a bit of a spillover from bitcoin, which rose 20% last week alone.

The US dollar fell on US yields and the Aussie is up 0.5% at US$0.6527.

The SPI Overnight closed up 11 points.

The Week Ahead

With results season now over, this week will be the biggest week in the lagging ex-dividend season.

It’s also GDP week. Lead-in data for the December quarter will be company profits and inventories today, and the current account tomorrow, before the final result on Wednesday.

Australia will also see building approvals, job ads, housing finance and trade numbers (January).

China’s February trade numbers are out this week as well.

The ECB holds a policy meeting.

Global services PMIs are due on Tuesday.

It’s jobs week in the US, now that inflation data are out of the way. Private sector numbers are due on Wednesday and non-farm payrolls on Friday.

REA Group ((REA)) is today’s ex-div biggie but there’s a long list.

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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