Marcus Today Market Updates

Breakfast Briefing – Wed 18 May

May 18, 2022 Marcus Today
Marcus Today Market Updates
Breakfast Briefing – Wed 18 May
Show Notes Transcript

US stocks rallied overnight the Dow Jones, NASDAQ and S&P 500 all finished in positive territory following strong retail sales. SPI Futures pointing to another day of gains up 70 points (+0.98%). Catch up on the latest with Henry’s Breakfast Briefing.

  • ASX 200 SPI Futures up 70 points
  • Dow up 431 points (1.3%)
  • Nasdaq up 322 (2.8%) S&P 500 up 81 points (2.0%)
  • Base metals stronger. Iron ore down 0.7%
  • Gold up 0.3%. Oil down 2%
  • Twiggy back in charge at FMG


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*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.

SPEAKERS

Henry Jennings

 

Henry Jennings  00:00

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Henry Jennings  00:57

Good morning, and welcome to the markets today Breakfast Briefing. My name is Henry Jennings It is Wednesday the 18th of May. And as usual, with all the information contained in this briefing, it is general advice only. So please do your own research. Contact your own financial advisor regarding any of the thoughts, ideas or insights in this briefing. And if you need to, you can pause the slideshow here and read the disclaimer in full. And if you're listening on the worldwide web on a train or tram, or just wandering around the park with your dog, you know who you are. Then you can also head on over to the Facebook group or the markets today www.au website for all our goodies there. And of course you can read the disclaimer there as well. 

 

Henry Jennings  01:38

All right, well, a much better night in the US markets. We did see some stronger than expected US retail sales. Also some US industrial production as well was at 1.1% in April. So there are some fears dissipating at the moment that the US is heading towards a recession. Of course inflation is still well and truly out there. But the the worry was that it was going to slow so dramatically with the Fed tightening that would push the US into recession. But certainly all the numbers at the moment coming out economically are showing that the US is weathering the inflation storm quite well and retail sales up point 9% In April showing that it hasn't yet put off customers that inflationary inputs that are coming through the system as a result of all this bullishness. 

 

Henry Jennings  02:25

The Dow Jones closed at 431 points 1.34% 32 655. The NASDAQ up 2.76% 320 Do 11,985 and the s&p 500 in the middle for digital as usual 2.02% 81 points 4089. Our Spy futures rocking and rolling on the back of this up and nearly 1% 70 points 7181. So it does look as if we have seen at the bottom at least for the time being and we should get a pretty good day to day maybe one of the things that will hold us back slightly or actually may even give us a bit of a tailwind is the election. The of course that's on Saturday and that may be holding us back a little bit with the uncertainty labour still ahead slightly but it is coming down to a far closer to horse race with preferences going to be the key to that vix index in the US fell 5% Down 1.2 26 as you would expect and as the market rises, we should see some of those hedges being unwound in the US market and that will lead to lower vix it probably get down to around 22 before people start stepping back in and buying that insurance.

 

Henry Jennings  03:42

As far as commodities go last night. Well not a bad night all around the old price though down 2.02% $2 3111 111.93 But still at massively high. Elevated levels but coming off the boil slightly WTI West Texas Intermediate now slightly above Brent down $1 at 112 spot for zero down 1.58% The gold price slightly better at $4 94.27% but nothing really very exciting. There the iron ore price again nothing very exciting they're down point 7% or 92 cents to 131 58 but we did see copper at point nine 4% the CNBC headline this morning the strap as they call it coming across the bottom was had was screaming copper hits the highest price since May the sick now it's only May the 18th so it's hardly a massive thing but copper up point 9% nickel down point six aluminium at 1.9 zinc up 1.4 lead up point one Tin up 1% Roughly so some better news in commodities and commodity stocks also bouncing back strongly Freeport up 7.1 Alcoa up 5.2 tech Corp down 1.4 Anglo up 4.5 Glencore up 4.5 Vale at 1.7 and Albemarle up 5.7. With BHP and Rio having a strong session in the US, BHP back on track this and talk about accelerating the Hanson potash project. Because of the world's shortage and fertiliser. There's certainly tapping into that theme. At the moment. BHP was up 3.3% and Rio up 3.6% In ADR term. So we're expecting a pretty good day to day but $1 70.28% in the s&p 500. As you can see the index for change actually closing on its highs. We haven't seen that for a little while. Usually it tends to whip off at the end but accelerating into the close, which is a pretty bullish sign so may well be seeing that US rally, certainly continuing in the next few days. So that's a pretty good sign there. 

 

Henry Jennings  06:01

In other US stocks last night, Apple was up two and a half percent Metro at 1.3. Google at 1.8. Microsoft up to Amazon up 4.1 Tesla up 5.1 Netflix 2.2 US banks very strong Citi Group, up 7.6% Of course we saw Warren Buffett taking a bit of a stake in Citigroup up 7.6% Goldman up 3.1 Bank of America up 3.4 Wells Fargo up 3.6 and block the artist formerly known as square up 6.4%. So the market looking pretty good over there even Twitter managed a two and a half percent rise last night carmakers also doing well forward, up 3.7% In the US, here are the overseas headlines that US stocks rally Treasury curve flattens on the Fed. 

 

Henry Jennings  06:51

And the Bank of America monthly funds survey shows the highest cash levels since 911, as hawkish central bank seen as biggest tail risk. So we've got massively high cash levels. Everybody scared out of their pants and the US market rallying there could be a bit of FOMO happening here. And we could see this rally extend in the US and Buffett of course smartest man in investing world at the moment use the market sell off as an opportunity to boost positions in stocks. And that was certainly the case in Citigroup which was up six points 7.6% Last night, JP Morgan's Cole Novick says US and European stock markets overpricing high out recession risks and debt and right markets. So there's certainly some scope for a sustained bounce in the US and European stock markets. If we do see those fears of recession start to eat slightly. 

 

Henry Jennings  07:43

Shanghai also adding to the positive picture achieves key reopening milestones of three consecutive days of no COVID cases outside the quarantine zones. Interestingly, they tested 14 million people in Tong Tianjin the other day and found 28 cases of COVID 14 million people tested 28 cases. Chinese tech stocks have rallied on latest speculation Beijing will dial back regulatory crackdown JP Morgan has upgraded not two months ago JP Morgan said that Chinese Tech was an investable. Now they're saying they're a bi world on JP Morgan and former chief Bernanke says fed slow response to inflation was a mistake. I think we all know that it's easy with hindsight. And the RBA consider the case for 40 basis point rate hike and his main meeting. 

 

Henry Jennings  08:30

The Bank of England's Bailey he's the head of the Bank of England says unable to stop UK inflation hitting 10% This year expresses concern about food prices. Basically, the UK is a bit of a basket case at the moment. Polls suggest the ECB to hike rates by massive point two 5% in July and exit negative rate policy and September negative rate policy. We've got inflation in Germany at 7.1%. And we are seeing the ECB just either think about raising rates above than minus number. And the UN is pursuing a deal with Russia Turkey and other nations to allow Ukrainian food exports to the world market in a bid to avert potential food soldiers. And Saudi Arabian Energy Minister says there's not enough refining capacity to meet surging fuel demands. 

 

Henry Jennings  09:19

What to expect today in our market. Well, obviously the spy futures showing a good day. And we are going to see a bit of a bounce in those resource stocks continuing. I suspect the banks also will be strong. So we've got the two pillars that hold our market up doing well today. And I guess we'll also see across the board, but we do have wage price index for the first quarter and the leading index for April at 1030. So there's a couple of economic numbers out to date and a strong wage rise number.

 

Henry Jennings  09:48

Some economists suggesting could force the RBA to go harder to 40 basis points which obviously they did consider at their last meeting in May. But those Yuto US retail sales growing at point 9%. Last month that was better than expected. So that is good news for the US economy. The CBA Commonwealth Bank is forecast that the wage price index, which is the one that's out today, accelerated by between point 8% between January and March and 2.5% over the year. So those are the numbers to look out for. Twiggy is back. Did he ever really leave he just got sidetracked by being the green Twiggy. Between he is back he has put himself back in charge of forest views iron ore business and the Ramsey deal is still around. Still knocking around is not dead yet. We did see one institution pull out of the property side of things last week. And of course Yesterday we saw brambles and CVC was CVC pulled out of their tools with brambles because of the volatility in the market. But you'd have to think that if we see the US market continue higher and our market continue higher, maybe CVC pulled out a little too early, but we'll see but Ramsey deals still around and charter Hall is looking at the property portfolio property portfolio seems to be the jewel in the crown someone taking that portfolio and then leasing it back to Ramsey. They are very high quality hospital and medical assets.

 

Henry Jennings  11:15

Over in the European market stocks. 50 was up one and a half footsie up point seven CACs up 1.3 DAX up 1.6 We saw the 10 year yields in the US back creeping up towards 3% Again 2.99%. Australia Bank down to 3.4 and Germany creeping up a little bit 1.04%. So we are seeing money coming back out of the safe haven of the bond market at the moment. And going back into equities, the bathtub of money sloshing back towards equities, and that is forcing yields to push higher. The dollar has retaken that 70 cent level. And the New York Fang plus Index rose three and a half percent last night. And young investors have put $1.2 billion into the calm SEC pocket app, which is quite a lot of money really and square will allow all its retailers to take after pay in the US and Australia. 

 

Henry Jennings  12:13

The question of the day today simple one. Have we seen the bottom four now? Have we seen the bottom in the US markets? Have we seen the bottom in our market? Of course we do have the election looming over our head. And it's going to be close and it's going to be down in Preferences. But once we get that out of the way, do we have some clear sky for a market rally to take into account the very oversold positions that we have in our market at the moment. 

 

Henry Jennings  12:37

That's it for me today. Thanks very much for listening. You can head on over to the Facebook discussion group we'd love to have your thoughts, ideas and insights as usual there it's a great group three and a half 1000 members members helping members is the motto there if you're listening on a podcast wherever you are, if you're out walking the dog or on the tram you can listening to the Marcus Strategy podcast which is our morning meeting fly on the wall podcast, the On The Desk podcast from the team in Melbourne talking all things financial, and some of the things that are challenging their minds at the moment in investment markets Am I On The Couch podcast which this week I released the podcast with James Hawkins from L one Catalyst Fund which is a very interesting podcast and I urge you to have a listen to that. He's a very smart guy, very smart investor. And very good conversation with him. But that's it for me today. 

 

Henry Jennings  13:27

Thanks very much for listening. Don't forget on Friday night at 530 Be there be square same time same bat channel. We do have the Ask the analyst our first one for a little while 530 You can register online or on the website. For that you get your chance to ask me any questions you like. And I'm also on the call today with Foshee for the clock be there. Thanks very much for listening. Have a great day.