Marcus Today Market Updates

Breakfast Briefing – Thu 19 May

May 19, 2022 Marcus Today
Marcus Today Market Updates
Breakfast Briefing – Thu 19 May
Show Notes Transcript

US stocks fell sharply overnight with the Dow (-3.57%) and S&P (-4.04%) posting their worst single-session declines in approximately two years. Results from major US retailers and Fed speak on interest rates and inflation were the catalysts for the sell-off. SPI Futures are down 126 points (-1.76%). Catch up with Henry’s Breakfast Briefing.

  • ASX 200 SPI Futures down 126
  • Dow Jones down 1165 points (3.6%)
  • Nasdaq down 566 (4.7%)
  • S&P 500 down 165 points (4.0%)
  • VIX up 18.6% to 31.
  • Base metals ease slightly. Gold off 0.2%
  • Oil falls 2.5% Iron ore down 1.3%
  • Jobs data here at 11.30am. 3.8% headline rate.

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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  00:56

Good morning, and welcome to the markets today Breakfast Briefing. My name is Henry Jennings It is Thursday the 19th of May. And as usual, of course with all the information insights 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're listening to this on a podcast, wherever you are in this wonderful world of ours, you can head on over to marcustoday.com.au website and read the disclaimer in full there. Also, you can look at all our other wonderful stuff that we have, of course on our website. 

 

Henry Jennings  01:35

All right, well, a nasty night on the US is putting it mildly. I guess we saw the Dow Jones down 1165 points to 31,490. That was down 3.57%. But it got worse for the NASDAQ which was down 4.73% 566 points 11,418. And just when you thought the s&p 500 was going to hold of that 4000 level and kick on in fact to 4100 the s&p 500 dropped 165 points in the middle for digital as usual down 4.04%. And the vix index, as you would expect as all this negativity came back into the market was up five points to 31 18.62%. Better so so much for me, saying yesterday that the volatility was easing, and we would see that vix index back down towards 20 to 23. Which price it would be a buy back here at 31. And of course, our SPI futures coming under pressure overnight down 126 points, or 1.76% 7047. So the rally definitely looks to have been snuffed out especially on Wall Street. And what triggered that last night was a bunch of things really, we had some results from some of the big mall retailers in Walmart and Target disappointing and then warning of cost pressures. Also Jerome Powell was out and about again spruiking rate rises. And Janet Yellen said that she was worried about global stagflation, a heady cocktail, but not a nice recipe for optimism. And we saw that Dow Jones down 3.57% SPI the worst fall in two years. So lots of headlines screaming that.

 

Henry Jennings  03:33

On the commodities though, somewhat more sanguine, at least on the face of it, Brent crude was down two and a half percent $2.82 to 109 elevens are still pretty high. WTI actually now slight premium 109 59 US dollars a barrel down $2.81 or 2.5% Gold is $3 and I think everyone was looking at Gold really with all the stuff that was happening on Wall Street, and that was down point one six of a percent. The iron ore price also eased down 1.26% or $1.66 under 130 US dollars a dryer metric tonne and the Aussie dollar which was looking relatively firm and nice yesterday, not so nice today. 6954 So back under that 70 cent level, in terms of other base metals, we had copper down 1.47% nickel down 1% aluminium down 1.2% zinc down 2.03 lead down 2.2 Tin that down 3.5 

 

Henry Jennings  04:36

And in mining stocks overseas, BHP and Rio both took a bit of a hit bhp down 2.6 and Rio down 3.3%. Freeport Macron down 6.1. Alcoa down 4.6 tech up 4.4 up, Anglo down 2.4 Glencore unchanged valet down 3.04% Albemarle in the lithium space down 1.36% here you can see the s&p 500 It was one way traffic from the start 4.04% down 165 points some of the losers in the US last night. We had the likes of Apple down 5.6% meta down 5.1% Google down 3.9 for Microsoft down 4.5 Amazon down 7.2 Tesla, down 6.8 Sorry, Kathy, JP Morgan 1.7% down Citigroup, after that nice bounce on the back of Buffett buying in, didn't last very long down 3.4% and other banks in the US similar amount block managed to lose 3.2%. So it could have been worse for block Twitter down 3.8 Walmart down 6.8% as well. So not a great night on the US by any stretch of the imagination. But whether that was the cathartic cleanout remains to be seen. But certainly the rally well and truly over and there wasn't too much evidence of any dip by you can see by that chart, that there wasn't any periods of stability really it was just playing one way traffic for most of the day. 

 

Henry Jennings  06:15

Major stories overnight federal chair Powell reasserts commitment to bringing inflation down and we've got a whatever it takes moment, I guess, from Jerome Powell, but pushes back against the 75 basis point rate hike. I'm not sure what he said that was new, that really upset the market. I think the target and the Walmart results will probably the major factor in the market sell off last night. The Chicago Feds Evans is back in front loading rate hikes and a modestly restrictive stance to help tighten financial conditions. And the Minneapolis Feds Kashkari says he doesn't know if the Fed will have to induce a recession to bring inflation under control and boulard. Jeez, these guys out and about at the moment Bilad expects above trend economic growth for at least the next 18 months. So some fairly mixed messaging coming out of the US central bank with their state heads at the moment, and Central Bank's hunt for new sorry, Central Bank's hunt for neutral rates. As they weigh up balance between growth and inflation and UK inflation accelerates so a new 40 year high in April, Japanese q1 GDP has shrunk by less than expected as the Ukrainian war and inflation picture clouds the outlook and the manufacturers mood in Japan slips to a 15 month low. And the China is experiencing COVID flare ups in other cities. And peace talks between Russia and Ukraine stall as Moscow accuses Western powers of wanting to use Ukraine to their strategic advantage.

 

Henry Jennings  07:56

What to expect today in our market? Well, obviously, it's not going to be pretty 126 points down in the SPI was certainly open easier to say the least. But where it goes from there remains to be seen. We do have the jobs number today coming out as a tipping headline rate of 3.8%, which will be the lowest since 1974. That will certainly help the coalition in terms of their election prospects. And we're already seeing the race tightening somewhat. The odds at the moment we've got labour dollar 52 where the coalition's come back into $2.65, it was out to $4.14. So a little bit of money creeping in to banking the coalition and those jobs numbers today certainly help their case for managing the economy. Yet Janet Yellen has warned of a global stagflation risk of this again adding to the wonderful narrative that's coming out of the US at the moment by all those fed heads in terms of where the market and where the economy is going. 

 

Henry Jennings  08:54

We saw the 10 year yield in the US come down last night 2.89% Australia 3.45 Germany back up to 1.02%. And in Europe stock 50 index was down 1.4 footsie down 1.1 CACs down 1.3 And we're getting a slew of profit results this morning. There's a few that are out early nufarm profits for six months at the end of March up by 61.1% after accounting for material items, while revenues jumped by 30 to 2.2 billion. We also got aristocrat out this morning revenue up 23.1% profits up 29.6 dividend 26 cents and Australian agricultural company operating profit 49.9 versus 24.4. They did see lower sales but higher prices as they move their brands to the premium level. Meat sales price per kilo was up 21% And they are restocking the herd after it had been rundown which accounts for lower sales premium brands for a see now account for 83% of sales. 

 

Henry Jennings  10:06

Also, today, we've got Webjet underlying EBIT, da loss of 15 million for the year $103 million turnaround compared to fy 21. And total transaction value and revenue for 12 months to the end of March, we're up 262% and 466%. And hum, which has a vote on whether to sell its consumer finance business to latitude and one director is urging shareholders to vote against the sale. So bit happening on the corporate front today, we do have some economics as well. And of course, we do have that horrible stuff in store for us. Four days of rallies, although cautious, are all going to be snuffed out in the blink of an eye today with a very, very soft opening. We'll see where it goes from there. 

 

Henry Jennings  10:54

Question that day today is volatility and opportunity, or is it a turn off for you all this volatility we are seeing in the Dow, we had a 1400 point trading range for the US market yesterday. At one stage it was down 186 was its best and worst was down 1261. That is a lot 1261. So is this volatility giving you opportunities, either to day trade or even short term trades? Or is it a complete turnoff? And you just feel like going away and playing golf for the next few months. Love to hear from you on that one. 

 

Henry Jennings  11:33

All right. Well, that's it for me today. Thanks very much. Listen, you can head on over to the Facebook discussion group. We'd love to have your thoughts, ideas and insights, as usual, over there. And of course, there are three other podcasts. If you're listening to this on a podcast, you can listen to the Marcus Strategy podcast, which is a morning meeting which should be interesting today. And then On The Desk podcast where the team talk about things financial and things that are interesting them at the moment. And my On The Couch podcast and this week. I talked to James Hawkins from one Catalyst Fund, which is a very good chat with him, so I'll just have that. But that's it for me today. Thanks very much for listening. And of course, may the trading Gods be with you.