Daily Market Reports | Apr 10 2024
This story features GOODMAN GROUP, and other companies. For more info SHARE ANALYSIS: GMG
| World Overnight | |||
| SPI Overnight | 7889.00 | + 24.00 | 0.31% |
| S&P ASX 200 | 7824.20 | + 35.10 | 0.45% |
| S&P500 | 5209.91 | + 7.52 | 0.14% |
| Nasdaq Comp | 16306.64 | + 52.68 | 0.32% |
| DJIA | 38883.67 | – 9.13 | – 0.02% |
| S&P500 VIX | 14.98 | – 0.21 | – 1.38% |
| US 10-year yield | 4.36 | -0.4 | -0.9% |
| USD Index | 104.11 | – 0.02 | – 0.02% |
| FTSE100 | 7934.79 | – 8.68 | – 0.11% |
| DAX30 | 18076.69 | – 242.28 | – 1.32% |
By Greg Peel
Miner Relief
The materials sector drove the ASX200 higher yesterday (+1.5%) on price rises for all of base metals, lithium, gold and iron ore. Next best performance was in utilities (+1.0%) which currently just keep on keeping on.
Coal prices were also stronger, while the rally in oil has subsided for now, leaving energy down -0.2%.
Bond yields fell back a bit yesterday which appears to have provided relief for affected sectors, with the exception of real estate (-1.0%). There appears to be some trimming going on in sector star Goodman Group ((GMG)).
The banks provided support with a 0.5% gain, while industrials (+0.6%) saw more buying in Qantas Airways ((QAN)) after its announced buyback and frequent flyer overhaul.
Staples regained some ground following Monday’s fall. Brokers declared the sell-off in Elders ((ELD)) on Monday as overdone, so that share price bounced back 7.7%.
Discretionary had a solid session (+0.7%) despite the latest Westpac consumer confidence survey. It showed a -2.4% fall to 82.4, and it’s now been two years since consumers have been optimistic (reading above 100).
That’s the longest run of pessimism since the nineties recession.
The survey showed 40% of respondents still expect another RBA rate hike, or at least are bracing for one, while 24% expect no change ahead.
There’s not a lot of confidence at present in the business world either. NAB’s confidence index rose to +1 from zero in March.
Business conditions fell -1 to +9. There has been little change in the numbers for the last 18 months, with confidence hanging around zero.
Conditions have held up through this cycle, Westpac economists note, as the level of demand remained elevated and strong population growth added to aggregate growth. However, the general trend lower in conditions has been in place since they peaked in mid-2022.
The local market is taking a risk ahead of tonight’s US CPI release, but there’s no denying commodity prices. Strong commodity prices are good for the Australian economy, and stock market, except they are also inflationary.
Prices were solid again last night.
Poised
Wall Street closed flat on Monday night and it’s of no surprise the same was true last night, ahead of tonight’s CPI release. Although all was not as it seems.
Consensus has the CPI rising 0.3% in March to an annual rate of 3.4%, which is a tick up on February, and thus of some concern to a market now hoping for, rather than expecting, Fed rate cuts.
The S&P500 was slipping away heading into the final hour last night, down -0.5% and falling, when the Atlanta Fed president piped up late on the day.
Raphael Bostic is known as a hawk among FOMC members, but given he expects “bumpiness” in the path to the Fed’ 2% inflation target, Bostic suggested last night that were the CPI to meet consensus, he did not see a reason for the Fed to be concerned.
Bostic’s view is only one rate cut this year. But if the economy accelerates, he will be “more patient”. If it stumbles, then he would bring his first cut expectation closer in time. The bottom line is, he did not make any suggestion of a rate hike.
In a last-minute flurry, the S&P500 closed in the green.
As the Nasdaq attests, most of the Mega Techs closed higher last night but not Nvidia.
Nvidia fell -2% as both Google and Intel announced the launch of their new AI chips to rival Nvidia’s dominance. The battle has begun.
Fun fact: It has now been 284 days since the S&P500 saw a -2% pullback – the longest streak in six years.
While Wall Street appears stalled at the moment, it is interesting to note April is the month in which traders typically sell stocks to cover their upcoming tax bills. That downward pressure is for now being absorbed.
A hot inflation number tonight might just be the trigger for something more substantial on the downside. But all agree there are buyers lined up below.
How far Wall Street can pull back will depend upon just how far buyers are prepared to let the market fall. Someone will blink first.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2352.50 | + 15.10 | 0.65% |
| Silver (oz) | 28.11 | + 0.29 | 1.04% |
| Copper (lb) | 4.24 | – 0.01 | – 0.16% |
| Aluminium (lb) | 1.11 | – 0.00 | – 0.08% |
| Nickel (lb) | 8.22 | + 0.21 | 2.58% |
| Zinc (lb) | 1.22 | + 0.02 | 1.53% |
| West Texas Crude | 85.23 | – 1.20 | – 1.39% |
| Brent Crude | 89.46 | – 1.17 | – 1.29% |
| Iron Ore (t) | 104.33 | + 1.65 | 1.61% |
Steel components appear to have been the winners last night, with all of iron ore, nickel (stainless) and zinc (galvanised) rising.
When will the gold bubble pop?
The oils are off a bit as traders wait to see what will happen next in the Middle East. Israeli forces have been pulled out of Gaza, suggesting a move to more targeted attacks from here, but Netanyahu insists an invasion of Rafah will go ahead.
The US has warned Israeli embassies are at risk of a retaliation attack from an Iranian proxy.
The Aussie is up 0.4% at US$0.6629.
Today
The SPI Overnight closed up 24 points or 0.3% on material moves.
The RBNZ meets this morning.
Tonight brings the US CPI and the minutes of the March Fed meeting.
The Australian share market over the past thirty days…
| Index | 09 Apr 2024 | Week To Date | Month To Date (Apr) | Quarter To Date (Apr-Jun) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7824.20 | 0.65% | -0.92% | -0.92% | 3.07% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AFG | Australian Finance Group | Downgrade to Sell from Neutral | Citi |
| ANN | Ansell | Upgrade to Outperform from Neutral | Macquarie |
| BOQ | Bank of Queensland | Downgrade to Reduce from Hold | Morgans |
| CMM | Capricorn Metals | Downgrade to Underperform from Neutral | Macquarie |
| ELD | Elders | Upgrade to Buy from Neutral | Citi |
| Upgrade to Outperform from Neutral | Macquarie | ||
| Upgrade to Add from Hold | Morgans | ||
| LFG | Liberty Financial | Upgrade to Buy from Neutral | Citi |
| MQG | Macquarie Group | Downgrade to Sell from Neutral | Citi |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: ELD - ELDERS LIMITED
For more info SHARE ANALYSIS: GMG - GOODMAN GROUP
For more info SHARE ANALYSIS: QAN - QANTAS AIRWAYS LIMITED