Daily Market Reports | Apr 16 2024
This story features ALUMINA LIMITED, and other companies. For more info SHARE ANALYSIS: AWC
World Overnight | |||
SPI Overnight | 7725.00 | – 63.00 | – 0.81% |
S&P ASX 200 | 7752.50 | – 35.60 | – 0.46% |
S&P500 | 5061.82 | – 61.59 | – 1.20% |
Nasdaq Comp | 15885.02 | – 290.08 | – 1.79% |
DJIA | 37735.11 | – 248.13 | – 0.65% |
S&P500 VIX | 19.23 | + 1.92 | 11.09% |
US 10-year yield | 4.62 | + 0.10 | 2.21% |
USD Index | 106.21 | + 0.17 | 0.16% |
FTSE100 | 7965.53 | – 30.05 | – 0.38% |
DAX30 | 18026.58 | + 96.26 | 0.54% |
By Greg Peel
To No Avail
The ASX200 put up a reasonable fight yesterday, thanks to the resource sectors, in a choppy session which saw the index down around -50 points three times before settling to the close. However, having sold the rumour on Friday night, Wall Street sold the fact last night and our futures are down -63 points this morning.
Energy (+0.4%) and materials (+0.4%) provided the resistance yesterday and staples held fast (flat) while all other sectors saw red. Utilities was the best of the rest (-0.4%).
Technology followed the Nasdaq down (-1.8%) while real estate (-1.0%), healthcare (-1.0%) and communication services (-1.1%) had a tough day, despite Aussie bond yields remaining unmoved. US yields had seen a flight to safety on Friday night.
The banks fell -0.7%.
Mining stocks featured on both the winners’ and losers’ board yesterday.
New US/UK sanctions on Russian imports of aluminium, copper and nickel had Alumina Ltd ((AWC)) up 6.0%, South32 ((S32)) up 4.6%, Nickel Industries ((NIC)) 4.1% and Rio Tinto ((RIO)) 3.6%.
Yet, Gold Road Resources ((GOR)) fell -6.6%, having announced a possible acquisition, De Grey Mining ((DEG)) fell -4.7% and Genesis Minerals ((GMD)) -4.5%. The gold price slipped back on Friday night but surged ahead again last night.
Base metal price rose solidly last night but that is in response to aforementioned sanctions.
For now, it’s simply a case of what will Israel do? Play endless tit-for-tat, and thus evoke the biggest war the Middle East has seen in our lifetimes? Or “take the win”, as Biden told Netanyahu, having successfully defended against the first ever direct Iranian attack on Israel.
It’s a risk-off scenario until that issue is resolved.
Today, China will release its March quarter GDP, along with monthly data. Whether or not that will make any difference.
Sell the Fact
On Friday night an Iranian attack on Israel was imminent, hence Wall Street sold off, and with the attack having come to pass on the weekend, Wall Street sold off again last night. The sticking point is that while the Iranians have declared their retaliation “concluded”, the Israeli defence minister is touting a response.
The day’s economic data were not particularly helpful either.
US retail sales rose 0.7% in March when 0.3% was forecast. Sales rose 0.9% in February. Those numbers are not adjusted for inflation, but still it appears the US consumer remains alive and well.
On Friday night the US ten-year yield fell -6 points in a flight to safety. Last night that yield rose 10 points to 4.62%, in response to the strong sales number.
Wall Street is thus dealing with both geopolitical and domestic (Fed) fears at present. It’s enough to bring about the first pullback of -2% or more since November. The S&P500 is currently down -3.5% from its high.
It’s all very healthy, according to most commentators. Wall Street was overdue a pullback, valuations had become stretched, and a decent drawdown will only provide a more realistic opportunity to buy into a bull market which has not yet ended.
That will nevertheless require March quarter earnings to play ball. Given earnings growth forecasts for the S&P500 have come down from around 10% at the beginning of the year to around 3% today, beating forecast should not be too difficult, it is assumed.
Last night Goldman Sachs reported a beat and its shares rose 2.9% against the tide.
All the Mag7 stocks were sold last night, but much faith is being placed in their earnings reports, which begin next week. Where goes the Mag7 will determine whether or not the bull market is still in train. Analysts are very confident.
Not so much for Tesla, which last night fell -5.6% after announcing layoffs in excess of -10% of its workforce, or more than -14,000 employees. Musk wants to strip down to provide greater efficiency and productivity. Two senior executives also announced their departure.
The turning point for Meta, and others, following the 2022 tech sell-off, driven by Fed rate hikes, came about when the company announced layoffs. Not so for Tesla. Meta laid off the fluff – such as in-house masseuses – not the revenue drivers.
Morgan Stanley and Bank of America report tonight, and there are some Dow names to report through the week.
The flood begins the following week.
Commodities
Spot Metals,Minerals & Energy Futures | |||
Gold (oz) | 2382.00 | + 39.10 | 1.67% |
Silver (oz) | 28.81 | + 0.97 | 3.48% |
Copper (lb) | 4.31 | + 0.07 | 1.69% |
Aluminium (lb) | 1.15 | + 0.03 | 2.71% |
Nickel (lb) | 8.10 | + 0.12 | 1.50% |
Zinc (lb) | 1.25 | – 0.01 | – 0.89% |
West Texas Crude | 85.41 | – 0.25 | – 0.29% |
Brent Crude | 90.35 | – 0.10 | – 0.11% |
Iron Ore (t) | 106.05 | 0.00 | 0.00% |
Base metal prices have responded to sanctions.
Gold appeared to see a sell-the-fact response on Friday night, having run so hard on geopolitical concerns to that point, but last night looked a lot more like a safe haven.
The oils are however not responding, again having already risen on the same concerns.
The other safe haven is the US dollar, hence the Aussie is down another -0.4% at US$0.6444.
Today
The SPI Overnight closed down -63 points or -0.8%.
China reports GDP along with March retail sales, industrial production and fixed asset investment.
The US will see industrial production.
The Fed chair will have a “fireside chat” with his Canadian counterpart.
Rio Tinto and Cooper Energy ((COE)) provide production reports today and Hub24 ((HUB)) a quarterly update.
The Australian share market over the past thirty days…
Index | 15 Apr 2024 | Week To Date | Month To Date (Apr) | Quarter To Date (Apr-Jun) | Year To Date (2024) |
---|---|---|---|---|---|
S&P ASX 200 (ex-div) | 7752.50 | -0.46% | -1.83% | -1.83% | 2.13% |
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
AVH | Avita Medical | Upgrade to Accumulate from Hold | Ord Minnett |
Downgrade to Speculative Hold from Speculative Buy | Bell Potter | ||
EDV | Endeavour Group | Upgrade to Overweight from Equal-weight | Morgan Stanley |
JHX | James Hardie Industries | Downgrade to Neutral from Outperform | Macquarie |
UNI | Universal Store | Downgrade to Neutral from Buy | UBS |
WGX | Westgold Resources | Downgrade to Neutral from Outperform | Macquarie |
WHC | Whitehaven Coal | 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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CHARTS
For more info SHARE ANALYSIS: AWC - ALUMINA LIMITED
For more info SHARE ANALYSIS: DEG - DE GREY MINING LIMITED
For more info SHARE ANALYSIS: GMD - GENESIS MINERALS LIMITED
For more info SHARE ANALYSIS: GOR - GOLD ROAD RESOURCES LIMITED
For more info SHARE ANALYSIS: HUB - HUB24 LIMITED
For more info SHARE ANALYSIS: NIC - NICKEL INDUSTRIES LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED
For more info SHARE ANALYSIS: S32 - SOUTH32 LIMITED