Daily Market Reports | 8:20 AM
This story features ELDERS LIMITED, and other companies. For more info SHARE ANALYSIS: ELD
Following a narrow-based gain for US equities overnight, the ASX looks poised for a lacklustre opening on Tuesday morning.
| World Overnight | |||
| SPI Overnight | 8249.00 | – 9.00 | – 0.11% |
| S&P ASX 200 | 8249.50 | – 46.50 | – 0.56% |
| S&P500 | 6079.68 | + 28.59 | 0.47% |
| Nasdaq Comp | 20186.02 | + 259.29 | 1.30% |
| DJIA | 43783.28 | – 44.78 | – 0.10% |
| S&P500 VIX | 14.33 | + 0.52 | 3.77% |
| US 10-year yield | 4.40 | – 0.00 | – 0.05% |
| USD Index | 106.57 | – 0.11 | – 0.10% |
| FTSE100 | 8262.05 | – 38.28 | – 0.46% |
| DAX30 | 20313.81 | – 92.11 | – 0.45% |
By Chris Weston, Head of Research, Pepperstone
While poor China retail sales data keeps international investors away from China’s/HK equity, investors have been treated to a monthly rebound in European and UK services PMIs, and an even more impressive US services PMI print (58.5 5 vs 55.8 expected). The result has been market players adding select risk on the day to the portfolio.
Buy what’s working – Head to growth
Investors are drawn to growth, both in an economic sense and within equity factors and sectors, with the NAS100 the major beneficiary of a solid bid in Communication Services, Consumer Discretionary and Tech. US growth equity already had the wind to its back last week, but NAS100 futures put on a show today, and ripped higher through European trade, with volumes building upon the cash equity open.
With poor breath and participation (40% of S&P500 companies are higher), it’s the MAG7 names that have driven the show, albeit Nvidia is -1.9% and taking out index points, with other AI plays finding little buying interest on the day. Alphabet (+4.2%) and certainly Tesla (+5.3%) get the full attention with both stocks flying, where notably Tesla has gained 90% since the US election with shares now pushing US$460.
Materials and energy equity plays find limited buying interest, with the sellers able to push prices lower with increased ease. We see this partly driven by poor sentiment towards Chinese assets, but at this time of year, active managers need to be positioned in what’s working and chasing select equity that can help beat the tracked benchmark.
Bitcoin finding form once again
Crypto also gets the full attention of traders, with increasing activity on the break out of the recent consolidation highs, with the Bitcoin price reaching a high of US$107,819.
The technicals clearly offer an overview that the buyers are back in the driving seat and bossing the show, with sentiment shaped once again by the head spokesman of the movement Michael Saylor who unsurprisingly is capitalising on the inclusion of MicroStrategy into the Nasdaq100 by selling shares and buying an additional US$1.5b worth of Bitcoin the rally through Asia yesterday clearly driven by trader’s front-running this dynamic.
The fact that Trump has spoken out about his desire for a BTC Strategic Reserve offers a further shot in the arm to confidence levels. Although the idea of a Strategic Reserve still feels like a secondary effect to the additional BTC buying from MicroStrategy, and while many in the TradeFi world take a sceptical view that a Strategic Reserve will play out anytime soon, we must remain open-minded to the fact that if anyone is going to get it done it would be Trump.
And should it become a consensus view then we can expect significant upside in the BTC price.
There is little doubt that if the US were to head down this route, then it wouldn’t be the only government to accumulate Bitcoin, and that could be a major kicker for the project in 2025.
US Treasuries commanding attention
US Treasuries are little changed on the day. On an intraday basis, another poor NY Fed manufacturing report (0.2 vs 10 expected) saw US 10-year yields trade down to 4.36%, which initially weighed on the USD and saw gold tick higher.
Out shortly after, the solid services PMIs saw yields reverse higher and push back to 4.40%, which subsequently promoted a better tone in the USD and pushed gold to US$2650/oz.
The US 10yr Treasury sits at the centre of the universe for markets this week, with many looking to see if last week’s impressive sell-off can gain further legs and go on to test 4.50% – a level which if breached – may well start to trouble sentiment in equity markets.
US retail sales is the big event risk in the session ahead, and while the outcome won’t alter the idea that the Fed will cut rates this week, a strong retail print (the market eyes +0.6% m/m on the advanced read and 0.4% m/m on the control group) would push long-end Treasury yields higher.
The lack of change on the day in Treasuries has limited the impetus to buy USDs on the day, where just shy of 107 (on the USD index) we can clearly see hesitation to push the broad USD through the post-election highs. This can be partly explained by the positive flows in EURUSD, which is finding solid buying support below 1.0500 and in a strong consolidation phase, with traders looking to trade EURUSD in a 1.0600 to 1.0500 range.
Turning to Asia, with materials and energy under pressure, and financials lacking a near-term catalyst, the ASX200 should open firmly unchanged and while the ASX tech plays should fire up, it won’t influence the broader index.
On the calendar today:
-Eurozone Dec ZEW
-Eurozone Oct Trade Balance
-UK Oct Unemployment rate
-US Noc Industrial Production
-US Nov retail sales
-Elders ((ELD)) ex-div 18c (70%)
-Orica ((ORI)) AGM
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
Corporate news in Australia:
-IGO Ltd ((IGO)) acquires majority stake in Yeneena copper project
-Australia’s largest IPO of 2024, DigiCo REIT ((DGT)) ($2 bn IPO) has seen its shares drop by -14% to $4.30 in the first two days of trading
-Brookfield is reportedly reconsidering Healthscope investment as debt covenant breach looms in March
-Investors sue Arcadium Lithium’s ((LTM)) board over undervaluation in $6.7bn sale to Rio Tinto ((RIO))
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2669.36 | – 6.44 | – 0.24% |
| Silver (oz) | 31.02 | – 0.01 | – 0.02% |
| Copper (lb) | 4.19 | – 0.01 | – 0.13% |
| Aluminium (lb) | 1.15 | – 0.02 | – 1.99% |
| Nickel (lb) | 7.14 | 0.00 | 0.00% |
| Zinc (lb) | 1.37 | – 0.02 | – 1.30% |
| West Texas Crude | 70.20 | – 1.09 | – 1.53% |
| Brent Crude | 73.81 | – 0.68 | – 0.91% |
| Iron Ore (t) | 105.41 | + 0.10 | 0.09% |
The Australian share market over the past thirty days
| Index | 16 Dec 2024 | Week To Date | Month To Date (Dec) | Quarter To Date (Oct-Dec) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8249.50 | -0.56% | -2.21% | -0.25% | 8.68% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BPT | Beach Energy | Upgrade to Neutral from Sell | Citi |
| HPI | Hotel Property Investments | Downgrade to Hold from Add | Morgans |
| NHC | New Hope | Upgrade to Buy from Neutral | Citi |
| NST | Northern Star Resources | Upgrade to Equal-weight from Underweight | Morgan Stanley |
| PLS | Pilbara Minerals | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| S32 | South32 | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| Downgrade to Neutral from Buy | Citi | ||
| SFR | Sandfire Resources | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| VNT | Ventia Services | Downgrade to Hold from Add | Morgans |
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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CHARTS
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