The Monday Report – 17 June 2024

This story features RAMSAY HEALTH CARE LIMITED, and other companies. For more info SHARE ANALYSIS: RHC

World Overnight
SPI Overnight	7749.00	– 8.00	– 0.10%
S&P ASX 200	7724.30	– 25.40	– 0.33%
S&P500	5431.60	– 2.14	– 0.04%
Nasdaq Comp	17688.88	+ 21.32	0.12%
DJIA	38589.16	– 57.94	– 0.15%
S&P500 VIX	12.66	+ 0.72	6.03%
US 10-year yield	4.21	– 0.03	– 0.59%
USD Index	105.22	+ 0.53	0.51%
FTSE100	8146.86	– 16.81	– 0.21%
DAX30	18002.02	– 263.66	– 1.44%

SPI Futures are signalling a rather lacklustre opening ahead for the local bourse in a week that sees seven central banks meet and decide on policy (most are expected to make no changes, including the RBA).

By Chris Weston, Head of Research, Pepperstone

Good morning,

-The main events this week for traders to navigate
-Gold finding better buyers on haven demand
-US equity risk this week US2000 is the better short
-The RBA to leave interest rates on hold

In the week ahead the main scheduled event risks to navigate will be central bank meetings in Australia (rates firmly on hold), the UK (firm hold), Switzerland (a coin toss), Norway (firm hold), China (likely hold), and Chile (likely -25bp cut).

We also see key inflation prints in the UK, Europe (a final revision) and Japan. We also see retail sales in the US, PMIs in Europe, the UK and the US, and China home prices, and property investment.

For those who really want to get deep into the weeds, we hear 16 Fed speeches, 13 ECB speakers, as well as speeches from the SNB, and RBNZ. I wouldn’t be overly concerned with holding exposures over any of the respective dialogues.

US equity hanging in US2000 shorts preferred

Price action and the technical set-up in US equity indices will also be front and centre. If it hadn’t been for the rise and rise of Nvidia, Microsoft and Apple, then the US500 and NAS100 would have attracted far greater rewards for those positioned short.

Market breadth in the S&P500 is clearly deteriorating, and the index is hanging in by a thread, and that is throwing up greater short opportunities in single stock names, but such is the influence these three behemoth names have on both indices.

For those wanting to express a more bearish short-term view, then Europe is where to look, or in the US, the Russell 2000 (US2000) is the vehicle of choice, with the index not getting the same support seen from these mega-cap names, with the small-cap index printing lower highs and lows.

US data this week need to hit the sweet spot, with the bulls wanting to see improvement in retail sales (consensus 0.3%), jobless claims and S&P Global manufacturing and services PMIs (consensus – 51.0 & 53.4 respectively). Weakness in these data points may negatively impact sentiment, and I would also consider expressing this through long NAS100 / short US2000 exposures.

The RBA to leave rates unchanged

The RBA meeting will almost certainly see rates on hold at 4.35% and we should see the statement largely unchanged. AUDUSD may be good for -/+20-30 pips through the meeting but should quickly revert to following other external factors such as equity risk and commodity markets.

The final say.

The markets evolve as always, and it pays to know the market sensitivities and the news flow which could feed the beast.

The risk in markets does seem to be building, and I see an increased conviction to play defence this week, with uncertainty mounting we shall see, and price action is, as always, the true guide on the aggregation of all behaviours and beliefs.

Corporate news in Australia

-Troubled Ramsay Health Care ((RHC)) has found no interest for its French operation and is now looking to divest underperforming assets in France

-Macquarie Capital is looking for offshore buyers for troubled Bapcor ((BAP))

-Fonterra ((FSF)) is preparing for asset sales

-Telix Pharmaceuticals ((TLX)) has binned its plan to list on Nasdaq

-Public debate continues about the future of the tie-in between Chemist Warehouse and Sigma Healthcare ((SIG)) now the ACCC has signalled potential opposition

Also:

On Thursday, the VanEck Bitcoin ETF ((VBTC)) will list on the ASX

On the calendar today:

-ANZ job advertisements

-China Industrial Production May

-China May retail sales

-US Empire Manufacturing

-Market update Auckland International Airport ((AIA))

-Tamboran Resources ((TBN)) investor briefing

Spot Metals,Minerals & Energy Futures
Gold (oz)	2318.90	– 21.50	– 0.92%
Silver (oz)	29.00	– 0.75	– 2.52%
Copper (lb)	4.49	– 0.04	– 0.96%
Aluminium (lb)	1.15	– 0.01	– 0.82%
Nickel (lb)	7.99	– 0.12	– 1.47%
Zinc (lb)	1.29	– 0.00	– 0.24%
West Texas Crude	77.81	– 0.53	– 0.68%
Brent Crude	82.18	– 0.35	– 0.42%
Iron Ore (t)	107.12	+ 0.70	0.66%

The Australian share market over the past thirty days

Index	14 Jun 2024	Week To Date	Month To Date (Jun)	Quarter To Date (Apr-Jun)	Year To Date (2024)
S&P ASX 200 (ex-div)	7724.30	-1.73%	0.29%	-2.19%	1.76%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ABB	Aussie Broadband	Upgrade to Buy from Accumulate	Ord Minnett
NEC	Nine Entertainment	Upgrade to Buy from Accumulate	Ord Minnett
SFR	Sandfire Resources	Upgrade to Neutral from Sell	Citi
TLC	Lottery Corp	Upgrade to Outperform from Neutral	Macquarie
TLX	Telix Pharmaceuticals	Upgrade to Buy from Hold	Bell Potter
WDS	Woodside Energy	Upgrade to Outperform from Neutral	Macquarie

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.)

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