Plenty to catch up on overnight as the Dow (+0.15%) rallied into the close following a soft start to finish in positive territory. SPI Futures are pointing toward another muted day of trade, up eight points.
Get up to speed on all the latest with Henry Jennings Breakfast Briefing.
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Plenty to catch up on overnight as the Dow (+0.15%) rallied into the close following a soft start to finish in positive territory. SPI Futures are pointing toward another muted day of trade, up eight points.
Get up to speed on all the latest with Henry Jennings Breakfast Briefing.
Why not sign up for a free trial? Get access to expert insights and independent research and become a better investor.
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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 00:55
Morning and welcome to the Marcus Today Breakfast Briefing. My name is Henry Jennings It is Wednesday, the 25th 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 or ideas or insights in this briefing. And if you're listening to a podcast, wherever you are in this wonderful world of ours, you can head on over to marcustoday.com.au. And read the disclaimer there. And of course, you can catch up with all the other goodies we have on our website as well. It's not just about the email after all. All right, well, an interesting night once again, aren't they all interesting in the US because we saw the snap fall that massive cratering yesterday of the snap share price down 43% In the end, after it warned about the deteriorating condition of the US economy, at least for the US economy that they're seeing more in that Henry's Take today. But the Dow Jones closing up there we go up 48 points or point one 5% 31,929 But once again, another volatile session, it had a near 700 Point trading range 650 Down 515 At one stage and closing up 48 But it had a high of 135 points higher. So once again, we're seeing volatility in the US NASDAQ though fared pretty badly as you would expect given that fall in SNAP. Taking all the other social media companies down with it. NASDAQ down 2.35% 271 points 11,264. Closest I guess we have to a social media company here is 360 Live 360.
Henry Jennings 02:48
S&P 500 closed down point eight one so in the middle for digital really down 32 points 3941 vix index up one to 29 3.41% higher we did get some economic numbers out from the US as well yesterday, which were a little bit on the light side House New home sales in April down 16.6% from the March numbers, so that was well short of expectations. And we also saw some declines in Flash PMI showing business expanded at its slowest pace in months in the US. Same applies in the UK as well. So things definitely slowing down in the US. It's best to question that the pace of the slowdown as it is with the pace of the rises. But we did see JP Morgan, of course, sees support for equities. And they're talking about $250 billion worth of inflows into the market from rebalancing but certainly that tech sector under a lot of pressure spy futures for our market, we don't have the snaps the Pinterest the matters, etc. Spy futures were up eight points or point one 1% 7130 Looking across commodities which we have in abundance, we had the Brent crude price up 14 cents to $113.56. Us a barrel WTI as you would expect, given the US economy seems to be slowing somewhat down a little bit down 52 cents to $109.77. Down point four seven of a percent. Brent crude up point one 2%.
Henry Jennings 04:28
Gold had a good rise last night up nearly 1% $17 6018 65.40 So we might see a little bit of interest creeping back into the gold price. And we didn't see the iron ore price under a smidge of pressure. And we'll talk a little bit more about steel production in a minute but the iron ore price down at point 9% or $1.19 $233.10 the Aussie 7108 So slightly above that 71 level. So we are seeing the US dollar come off At the moment, a little bit of money flowing out of the US dollar, and that is enabling the gold price to push ahead and the Aussie dollar to push ahead as well in other commodities last night, we had copper down point eight nickel down 4.3 But that is bouncing around quite a lot at the moment there's some bit of volatility and that nickel price after that short squeeze that we saw Aluminium down 1.9 zinc down point to lead down point seven Tin down 1.1% Last night Cole had a big old King Cole was not a very old soul. Yesterday, we're seeing a 9.5% Fall in the coal price and uranium as well and truly come off the boil as well and other commodities too. We saw wheats down nearly 3% Last night too.
Henry Jennings 05:49
In terms of commodity stocks overseas bhp was up point four 5% Reo up point seven 6% Freeport McMoRan down 2.27% Alcoa down 2.9 tech up point five Anglo down point eight Glencore 1.25 better and valet 1.3% Better Albemarle pretty much unchanged in US trade. Here we have the s&p 500 it drops its wounds at rally is pushing back closing close to its high for the day but still down point eight one of a percent but the damage really done in those NASDAQ stocks just to give you a taste of what was damaged. There we have Apple down 1.9% matter. The artist formerly known as Facebook, down 7.6%. Google down nearly 5% Microsoft was the best performing of the stocks on the NASDAQ tech side of things anyway, in the big tech was down only point four of a percent Amazon was down 3.2% Tesla nearly 6.9% Netflix 3.8 US banks pretty much unchanged and the artist formerly known as square now known as block was down 9%. But it did have a big fall in our market yesterday as well. Twitter down 5.6% To sell those us tech stocks. The behemoths of the tech sector in the social media world. All under serious pressure with that snap share price well and truly snapped and broken down 43% In the US trade. Major stories yesterday coming out of the UK and Europe and the US stocks finished off their session lows bond yields were off and bonds climbing money going into those option traders position for more equity markets selling the important put to call ratio has hit its highest since March 2020. Remember what happened in March 2020? Why don't we in the middle of a pandemic.
Henry Jennings 07:55
Commodity funds make a comeback after years out of favour as institutional investors seek hedges against high inflation that's good for Australia good for commodities and could be good for the Aussie dollar as well. US investors bailing on stocks purchases by US corporate insiders set to top sales for the first month months since March 2020. Lots of things happened in March 2020. JP Morgan sees support for equity markets from a $250 billion rebalancing flow adding 10% to equity values by the end of June. And a record just over 2 trillion US dollars parked at Feds overnight reverse repo facility on Monday, underscoring demand for safe haven assets and some Fed officials are mulling a future rate policy shift considering the policy ability of a rate cut next year. Something that Victor Spetz from a quarry talked about and was laughed at. Earlier this this year, a month or so ago. San Francisco Fed President Daly says Fed could continue hiking rates without causing inflation. Good luck with that daily ECB on course for summer right lift off, but hawks still want option of faster hikes. And China's central bank and banking regulator urges lenders to boost loans following a sharp slowdown in April.
Henry Jennings 09:14
And corporate execs at the World Economic Forum strike gloomy tone. It's time to plan for downtime maybe they're missing the snow, but certainly they're a little bit gloomy at Davos. This time around UK flash composite PMI falls to its lowest level since Feb. 2021. And the UBS and JP Morgan downgrading China and the eurozone business growth slowed in May but stayed resilient.
Henry Jennings 09:38
What to expect today. Well that's a NY se Fang plus index slumped to 4.6% European markets also e stock 50 Down 1.6 footsie down point four CAC down 1.7 And DAX down at 1.8%. So it's gonna be a bit of a struggle today to say the least yesterday was a bit Have a struggle as well. Of course, it's all about tech stocks. And we're seeing a divergence between miners, which are doing relatively well at the moment and banks, which are holding up very well, at the moment, whether that's a flight to quality or a flight to safety remains to be seen, but they're certainly holding up remarkably well. So that's keeping our index looking not too bad at the top line. But underneath as they say that little duck is paddling away, furiously. And there are some serious losses occurring in some stocks, new farm, big casualty, yesterday Sumitomo, sold out a 15.9% stake that they've held for 12 years. So plenty going on. And of course, the Tabcorp D merger yesterday, some people I saw on Facebook discussion groups, not ours, thankfully, because we have educated and informed members, but some of the people on other or less responsible, I guess, groups had some of their members scratching their heads as to why Tabcorp had collapsed and they were looking at stock losses and buying the dip and all this sort of rubbish, but there you go, shows you have to be informed.
Henry Jennings 11:07
Elbow says Drop the trade bans and we will talk this is to China, of course elbow has his first overseas excursion within a day of being sworn in by the Governor General and elbow was in meeting with Japan and India and the US on trade, etc. It was part of the quad global tax deal with 139 countries will not be up and running next year says Matthias Korman, of course, retires and now is the head of the OECD and there was much trumpeting and much fanfare of a new global tax deal, but that is struggling to get up good for tech stocks I guess. And we've had some company specific stuff out this morning Fisher and Paykel has declined to give guidance after net profit fell 28% revenue down 15% gross margins down 59 basis points and 22 and a half cent New Zealand dollar dividend was declared looking at global steel production in April slid 5.1% That was according to the World steel Association's latest monthly report China saw a 5.2% reduction in steel production which let's face it, if the global is 5.1 and China is 5.2 You know where the global steel production is made. And that is in China. 92 point 8 million tonnes of steel produced. The rest of the world accounted for around 70 odd million tonnes. And today the RBNZ which is the Reserve Bank of New Zealand is set to raise rates by around half a percent. We have 10 year yields in the US 2.75 So they've come off a long, long way. wasn't that long ago they were over 3% Australia that pushing up to 3.51. Germany point nine 6%. I think that Australian rates actually wrong I think it should be 3.31. So let's not get too worried about that. They certainly were 3.31 Last night when I did the end of day report.
Henry Jennings 13:07
Local energy prices set to rise wholesale gas prices have doubled. We are getting tomorrow. I think we are getting news from the regulator as far as energy prices go. It looks like the coalition held off that report during the election cycle as they were keen to trumpet energy price declines. I think that's all coming to a bit of an end. And B G H has increased its Virtus bid to $8.15. After buying a large parcel on the market and undertake overrules. If you pay more than the bid on the market, you have to increase that for everyone. So they're now paying $8.15 there.
Henry Jennings 13:45
Question of the day today this goes to I guess snap. What is your go to economic indicator? What is your canary in the coal mine? To show where the economy is in the US they're taking a long bow and drawing some major conclusions from the snap, especially the commentary coming out of snap in terms of the deterioration in the US economy and the outlook that advertisers especially small business on their platform. So what is your go to economic indicator what to you is that weird signal the canary in the coal mine? That suggests to you where the economy is going maybe the price of cappuccinos in Perth or the price of cappuccinos elsewhere in the country or house prices or whatever it is. Love to hear your thoughts and comments on that.
Henry Jennings 14:33
But that's it for me today. Thanks very much for listening. You can head on over as usual, to the Facebook discussion group. We'd love to have your thoughts, ideas and insights there. It's always a great group three and a half 1000 Plus members, helping each other members helping members is our motto. And of course, there are three other wonderful streams of consciousness in the markets today. world there is the morning meeting podcast, which is the fly on the wall look at what we're talking about in our morning meeting the On The Desk podcast, where the two Even Melbourne talk about things that are pressing on their minds at the moment all things financial and my On The Couch podcast, which looks at fund managers and CEOs and things that I find interesting and hope that you will find interesting as well. And last night, I recorded a On The Couch session with the CEO of ASX listed uranium company live from Zurich where the CEO was travelling across Europe and into the US and Canada. So a really interesting look at uranium, what's happening in the uranium market that things driving the uranium market, and of course, some stock specific stuff on his particular company in that project in South Australia and the Northern Territory and elsewhere. So that's really interesting. I'll be editing that today and releasing that in the next few days. So I strongly recommend if you've got an interest in uranium, have a listen to that.
Henry Jennings 15:52
So that's it for me today. Thanks very much for listening and may the trading Gods be with you.