The Monday Report – 25 March 2024

This story features GOODMAN GROUP, and other companies. For more info SHARE ANALYSIS: GMG

World Overnight
SPI Overnight	7829.00	+ 7.00	0.09%
S&P ASX 200	7770.60	– 11.40	– 0.15%
S&P500	5234.18	– 7.35	– 0.14%
Nasdaq Comp	16428.82	+ 26.98	0.16%
DJIA	39475.90	– 305.47	– 0.77%
S&P500 VIX	13.06	+ 0.14	1.08%
US 10-year yield	4.22	– 0.05	– 1.24%
USD Index	104.43	+ 0.40	0.38%
FTSE100	7930.92	+ 48.37	0.61%
DAX30	18205.94	+ 26.69	0.15%

By Greg Peel

Not With a Bang

The ASX200 opened with selling on Friday, to be down -44 points in the early afternoon, before somewhat of a Claret Run took it back to a close of down -11.

Real estate won the day with a 1.4% gain, driven by a -6 point fall in the ten-year yield, and buying in Goodman Group ((GMG)).

Healthcare was next best (+1.3%) thanks to buying in CSL ((CSL)) and ResMed ((RMD)) and an earnings guidance upgrade from Fisher & Paykel Healthcare ((FPH)) that was worth 7.7%.

Offsetting were energy (-1.3%) on lower oil prices and materials (-0.9%) on lower iron ore prices and falls in lithium and gold miners.

Genesis Minerals ((GMD)) revealed its new five-year plan and its shares fell -6.3%.

Discretionary (-0.6%) and communication services (-0.5%) were both lower and the banks gave a little bit back (-0.2%) after Thursday’s solid run.

The index finished up 1.3% for the week.

It does not look like we’ll have an exciting start to this week either as we head towards Easter, given Wall Street was flat on Friday night and our futures were up 7 points on Saturday morning.

Ahead we have the February CPI due on Wednesday and retail sales on Thursday which will play into RBA thinking.

Reversal

The prior couple of sessions on Wall Street were all about a broadening of investor interest, as Big Tech took a breather and the rest of the market surged ahead. The Dow had been an outperformer and so too the Russell small cap.

That all reversed on Friday as buyers moved back into tech, led by Nvidia (+3%).

The Dow had a weak session (-0.8%), led down by a -7% fall in Nike following its earnings result, which largely reflects weakness in the Chinese economy.

Athleisure wear company Lululemon fared worse, falling -16% after its result. The lockdown winner had been enjoying ongoing popularity, able to charge premium prices in a competitive market. But tastes change, and Lululemon surprised to the downside.

It has been difficult to read anything specific into the US retail sector and the state of the US consumer in the earnings season to date, with some companies performing well and others not. There has been no trend to hang one’s hat on.

The Russell small cap fell back -1.3% having otherwise posted a strong week.

The S&P500 closed down -0.1% but put on 2.3% for the week. The Dow managed 2.0% and the Nasdaq, with a kick from Friday, closed up 2.9%.

The gains came even as the market is beginning to think the Fed might only cut twice this year, rather than three times, which is a long way down from the six cuts forecast earlier in the year.

The trade-off is the stronger than feared economy. As long as the economy is sound and earnings are growing, Wall Street can live with higher rates for a bit longer.

Investment house Vanguard surprised last week in suggesting the Fed is not going to cut at all this year. Sycamore Tree Capital said last week there’s a “good chance” the Fed doesn’t cut in 2024.

Yet still a pullback of more than -2% remains elusive, which has some worried, although it is not yet the longest streak in history Wall Street has run without a pullback.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	2164.50	– 16.40	– 0.75%
Silver (oz)	24.63	– 0.06	– 0.24%
Copper (lb)	3.99	– 0.05	– 1.27%
Aluminium (lb)	1.04	+ 0.00	0.13%
Nickel (lb)	7.72	– 0.17	– 2.16%
Zinc (lb)	1.12	– 0.02	– 1.86%
West Texas Crude	80.63	– 0.26	– 0.32%
Brent Crude	85.43	– 0.18	– 0.21%
Iron Ore (t)	108.56	– 1.57	– 1.43%

It’s not looking good for our resource sectors again today, with metals prices showing signs on Friday that some have run pretty hard of late.

Gold in particular is down -US$16 when the US ten-year yield fell -5 points on Friday night and the US dollar rose 0.4%.

Copper is another that had been enjoying a breakout.

The Aussie has fallen another -0.8%, having come down rapidly from its foray over US66c, to US$0.6518.

The SPI Overnight closed up 7 points.

The Week Ahead

The big release in the US this week will be February PCE inflation, on the Friday. But the Friday is Good, so Wall Street will have to wait until the following Monday to respond and we’ll have to wait until the Tuesday.

We will nonetheless see our own February CPI on Wednesday and retail sales on Thursday. Westpac will release its March consumer confidence survey next week and we’ll also see private sector credit.

The US will also see consumer confidence, along with new home sales and durable goods orders, and another revision of December quarter GDP.

China will release March PMIs on Friday.

There are a handful of earnings reports due locally this week – mostly small miners but Premier Investments ((PMV)) is among them.

There is a trickle of remaining ex-divs except for Wednesday, which brings quarterly ex-divs for mostly all REITs and other related funds on the same day.

All Western markets are closed on Friday, and again on Monday, bar the US.

The Australian share market over the past thirty days…

Index	22 Mar 2024	Week To Date	Month To Date (Mar)	Quarter To Date (Jan-Mar)	Year To Date (2024)
S&P ASX 200 (ex-div)	7770.60	1.31%	0.93%	2.37%	2.37%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ARU	Arafura Rare Earths	Downgrade to Hold from Buy	Bell Potter
BAP	Bapcor	Upgrade to Equal-weight from Underweight	Morgan Stanley
BKW	Brickworks	Downgrade to Hold from Buy	Bell Potter
EVN	Evolution Mining	Upgrade to Overweight from Equal-weight	Morgan Stanley
SIG	Sigma Healthcare	Downgrade to Hold from Add	Morgans
		Downgrade to Sell from Hold	Shaw and Partners
WEB	Webjet	Downgrade to Neutral from Outperform	Macquarie
WOW	Woolworths Group	Upgrade to Outperform from Neutral	Macquarie

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

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