Saturday, October 1 2022

Daily market reports | Sep 02, 2021

This story features WESFARMERS LIMITED and other companies. For more information SHARE ANALYSIS: WES

World overnight
SPI at night (June) 7454.00 – 5:00 p.m. – 0.23%
S&P ASX 200 7527.10 – 7.80 – 0.10%
S & P500 4524.09 + 1.41 0.03%
Nasdaq Comp 15309.38 + 50.15 0.33%
DJIA 35312.53 – 48.20 – 0.14%
S & P500 VIX 16.11 – 0.37 – 2.25%
10-year US yield 1.30 – 0.00 – 0.15%
USD Index 92.50 – 0.17 – 0.18%
FTSE100 7149.84 + 30.14 0.42%
DAX30 15824.29 – 10.80 – 0.07%

By Greg Peel

Bravo for the economy

Yesterday morning, futures suggested a drop of -33 for the ASX200, erasing the facade of the last day of August and resetting for the new month. But twenty minutes after the opening bell, the index was down -72.

Momentum algos likely, but when the sale stopped, buyers did not rush. Not before the GDP release at 11:30 am.

The Australian economy grew 0.7% in the June quarter compared to the March quarter, breaking expectations by 0.4%. Year over year, GDP grew 9.6%, but it experienced an equally impressive -7.0% drop last year in the darkness of covid.

Economists point out that there was a bit of a bias in a segment called public inventories, the growth of which can be at least partially attributed to a warehouse full of unwanted AZ vaccines, but most of the pace can be attributed to better growth. than expected in income and production.

Household spending rose 1.1%, including a 1.3% increase in spending on services and a 0.9% increase in spending on goods. Business investment rose 2.3%, including a solid 2.4% increase in spending on machinery and equipment. The household savings rate fell from 11.6% to 9.7%.

Take advantage of it while you can, as the June quarter saw a few days of lockdowns anywhere and Sydney didn’t go into lockdown until the end of June. Economists are currently forecasting a contraction of around -2.6% in the stuck September quarter, and unless the national plan works and the economy reopens on achieved vaccination targets, the December quarter could risk marking a “technical recession”.

With the result, no matter how long, the Aussie is up 0.7% to US $ 0.7369 and the 10-year Aussie rate has jumped 9 basis points to 1.24% yesterday.

This sent the banks up 0.9%, mainly to save what could have been a weak session otherwise. Banks were helped by energy (1.3%), looking the other side of Ida, and telcos (+ 0.8%). Public services are goods scratched in the green but all other closed sectors in the red.

Consumer Staples stood out (-1.5%) but Wesfarmers ((WES)) came out excluding dividends. Healthcare (-0.8%) had to contend with the Aussie’s rise and materials (-0.8%) dropped their gains from Tuesday, with a possible move to banks now that they’re next on the dividend list.

Consumer discretionary was the other big loser (-1.2%), possibly on fears that the big spending in the June quarter reflected lower sales.

The index’s winners and losers tables showed a plethora of stocks being readjusted after the results. Alumina Ltd ((AWC)) nonetheless rose 4.5% on continued strength in aluminum prices.

After another largely zero session on Wall Street, our futures are down -17 points this morning. But it’s a very big day for ex-divs, rising to an index of -34 handicap points since the open.

Play defense

Wall Street faltered early last night when the August ADP Private Sector Employment Report was released. It showed 374,000 jobs added when 600,000 were planned.

Commentators were quick to point out that covid-related disruption recently wreaked havoc on ADP’s investigations, so big revisions to the original numbers were made the following month. Thus, while some economists last night raised their forecasts for the number of non-agricultural workers tomorrow night, others were not.

Friday is the main game (although this number, too, can often be revised considerably).

As a result, on Friday and the following Labor Day long weekend, Wall Street largely stalled at the S & P500 level, but in silent rotation to a defensive stance. One of the reasons September is historically the weakest month is that Labor Day ends the summer vacation and triggers the return-to-work period, during which investors often return to watch the market and say to yourself “why is it so high?” “

Consumer Staples, Utilities, Real Estate and Big Techs dominated buying last night, to the detriment of cyclicals. Hence the familiar spread of the Nasdaq to Dow. Banks, manufacturers, materials and energy were the biggest losers.

With the weakening now firmly in the framework, this particular number of non-farm payrolls will be critical. But the Fed will have to take into account the fact that the last of the government unemployment benefits linked to Covid ends in September, which should lead to an increase in new hires. The demand is clearly there, and now that the lowest paid workers will no longer receive more money a week for not working, they will have little choice.

The October jobs report will be revealing.


Spot metals, minerals and energy futures
Gold (oz) 1814.60 + 0.50 0.03%
Silver (oz) 24.12 +0.24 1.01%
Copper (lb) 4.19 – 0.10 – 2.31%
Aluminum (lb) 1.22 – 0.00 – 0.29%
Lead (lb) 1.10 + 0.01 0.75%
Nickel (lb) 8.76 – 0.11 – 1.21%
Zinc (lb) 1.35 – 0.01 – 0.60%
west texas crude 68.59 + 0.09 0.13%
Brent raw 71.30 – 0.33 – 0.46%
Iron ore 143.55 – 9.05 – 5.93%

Last night’s global manufacturing PMI figures showed expansion in the United States but a slowdown in Europe and Asia, including China (reported Tuesday).

This was attributed to the end of the recent copper race.

I also set the price of iron on fire yesterday by suggesting it was consolidating in the US $ 150-160 / t range. China’s slump into manufacturing contraction, mirroring Beijing’s environmental crackdowns, was bad enough, but the government is now expected to scale back its efforts even further in the December quarter.

The president wants clear skis for the February Winter Olympics.

The Aussie, as reported, is up 0.7% to US $ 0.7369.


SPI Overnight closed down -17 points or -0.2%.

Today we will see the July housing finance numbers and a final read on the trade numbers.

These -34 ex-div points mentioned above represent a long list that includes BHP Group ((BHP)), CSL ((CSL)), nib Holdings ((NHF)), Perpetual ((PPT)) and Woolworths ((WOW)).

The Australian equity market over the past 30 days …

ABC AdBri Upgrade to add from hold Morgan
ALU Altium Upgrade to buy from neutral Citi
Downgrade to Neutral from Outperform Swiss credit
Downgrade to underperform neutral Macquarie
ANZ ANZ Bank Downgrade pending from accumulate Ord minnett
ASG Autosports Group Upgrade to outperform neutral Macquarie
BUB Bubs Australia Upgrade to Neutral from Sell Citi
BWX BWX Downgrade to Neutral from Buy Citi
EOS Electro-optical systems Downgrade to Neutral from Buy Citi
JHC Japara Health Downgrade pending from accumulate Ord minnett
LDV Lovisa Holdings Downgrade to Neutral from Outperform Macquarie
MCR Mincor Resources Downgrade to Neutral from Outperform Macquarie
MYX Mayne Pharmacy Upgrade to buy from neutral Citi
NAB National Bank of Australia Upgrade to accumulate from holdback Ord minnett
NXT NextDC Downgrade to accumulate from Buy Ord minnett
PAN Panoramic resources Downgrade to Neutral from Outperform Macquarie
THROUGH Paradigm Biopharmaceutical Upgrade to hold from discount Morgan
RHP Rhipe Downgrade pending from accumulate Ord minnett
SFR Sandfire Resources Upgrade to add from hold Morgan
SKI Spark infrastructure Downgrade to Neutral from Outperform Swiss credit
SSG Razor shop Downgrade to Suspend from Buy Ord minnett
WE S Wesfarmers Downgrade to Neutral from Outperform Macquarie

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