The Monday Report – 29 April 2024

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            [1] => ((NEM))
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            [3] => ((IGO))
            [4] => ((ORG))
            [5] => ((ALD))
            [6] => ((MGR))
            [7] => ((COL))
            [8] => ((WOW))
            [9] => ((AMC))
            [10] => ((NAB))
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            [12] => ((SQ2))
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            [3] => IGO
            [4] => ORG
            [5] => ALD
            [6] => MGR
            [7] => COL
            [8] => WOW
            [9] => AMC
            [10] => NAB
            [11] => MQG
            [12] => SQ2
            [13] => RIO
            [14] => MP1
            [15] => SDR
            [16] => SGP
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This story features RESMED INC, and other companies.
For more info SHARE ANALYSIS: RMD
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Dummy Spit

The S&P500 had fallen -0.5% on Thursday night, having fallen by almost twice that much earlier in the session, and the local market followed with a typical get-me-out Friday. The ASX200 fell a full -1.4%. It seems when we have these dummy spits, the index has to fall by at least a ton.

Investors could perhaps take some heart in the fact it was a Friday amidst school holidays and/or a cheeky long weekend for those who took it. Indeed, the losses were all booked right from the open.

But if we try to blame a thin market, we need only look at Wall Street’s solid bounce on Friday night – the S&P500 rising 1.0% — and note that our futures rose only 0.3% by Saturday morning.

The Aussie ten-year yield rose 11 points on Friday to 4.52%, while the twos rose 10 points to 4.18%. That’s now only a -17 point difference to the RBA cash rate of 4.35% — less than one rate cut. Hopes for a rate cut in 2024 are becoming increasingly dashed.

The fall on Wall Street was driven by a weaker than expected GDP, and higher than expected inflation component therein. But Friday night’s US PCE data saved the day, along with a couple of earnings results.

All sectors closed meaningfully in the red on Friday, with industrials faring worst (-2.2%) despite not one stock standing out, and the banks, which had been surprisingly strong all week, being crushed (-1.6%).

Healthcare was the least-worst performer (-0.6%), thanks to a quarterly result from ResMed ((RMD)). That stock rose 9.6% on the day, but in the US on Friday night, it rose 18.9%.

Newmont Corp ((NEM)) also reported a quarterly and rose 13.9%, but that didn’t save materials (1.4%). BHP Group ((BHP)) shares dropped -4.6% on news it is keen on acquiring Anglo-American.

Real estate was understandably another big loser (-2.0%) as was communication services (-1.9%). Discretionary fell -1.4% and staples could not manage a decent defensive performance, falling -0.9%.

The other defensive standout of late – utilities – also fell -0.9%.

School is back this week so hopefully we have everyone back on board today to see if we can do any better than a 24 point rebound.

Attention will then turn to Wednesday night’s Fed meeting.

As easy as A-B-C

Shares in Alphabet, the parent company of Google, rose 10.2% on Friday night, having reported earnings in Thursday night’s aftermarket. That’s a pretty big move for a company that has now passed US$2trn in value.

AI and cloud rival Microsoft, which has been outperforming Google this year due to perceived AI superiority, rose 1.8% on its result.

All things being equal, these results should have spurred Wall Street on, wiping out the impact of Meta’s weak result, but it would come down to Friday night’s US March PCE data.

The headline PCE rose 2.7% when 2.6% was forecast. While “hot”, it’s not as hot as feared following the preceding CPI and PPI data.

The core PCE rose 2.8% when 2.7% was expected; unchanged from February, so arguably not hot at all.

The US ten-year yield fell -4 points to 4.70%.

So the road was clear for Wall Street to rally, led by the Mega Techs, and believe it or not, Wall Street posted its best week since November.

It really was just all about the Mega Techs. The S&P500 communication services sector, wherein resides Google, rose 4.7% on Friday night. Technology (Microsoft), rose 1.9%. Another cloud rival – Amazon, which reports tomorrow night – gained 3.4% to send consumer discretionary up 1.3%.

We then have to go all the way down to materials (+0.6%), and after that, the next best was industrials (+0.2%). Five of eleven sectors closed in the red, yet the S&P500 rose 1.0%.

We also note both Tesla and Nvidia were up 14% for the week.

Not exactly the sort of breadth was saw earlier in the year. We still have Amazon tomorrow night and Apple on Thursday night to report, but also a big swathe of other more 'normal' companies during this week.

And there’s the Fed statement and press conference on Wednesday night.

Commodities

Nothing particularly exciting above.

The Aussie is up 0.3% at US$0.6535.

The SPI Overnight closed up 24 points or 0.3% on Saturday morning.

The Week Ahead

The Fed releases its May policy statement on Wednesday night.

The US will also see consumer confidence, job openings, private sector jobs and non-farm payrolls this week.

China will report April PMIs before closing for three days from Wednesday. Japanese and German markets are closed on Friday. Japan is also closed today.

Otherwise, global April manufacturing PMIs are reported from Wednesday.

Locally, we’ll see data for retail sales, private sector credit, building approvals and trade.

The quarterly reporting season rolls on, including production reports from the likes of IGO Ltd ((IGO)) and Origin Energy ((ORG)), plus updates from Ampol ((ALD)), Mirvac Group ((MGR)), Coles Group ((COL)) and Woolworths Group ((WOW)), among others.

Amcor ((AMC)), National Bank ((NAB)), Macquarie Group ((MQG)) and Block ((SQ2)) report earnings.

Rio Tinto ((RIO)) is among companies holding AGMs.

Reporting quarterlies today are Megaport ((MP1)), SiteMinder ((SDR)) and Stockland ((SGP)).

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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