The Dow had its best session in almost three weeks finishing up 618 points (+1.98%). Positive sentiment in China was the main driver overnight as Beijing plans tax relief of over $21bn. SPI Futures are up 19 points (+0.27%). Catch up with Henry’s Breakfast Briefing.
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Henry Jennings 00:00
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Henry Jennings 00:58
Good morning and welcome to the Marcus Today Breakfast Briefing. My name is Henry Jennings It is Tuesday, the 24th 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 thoughts, ideas or insights in this briefing. If you need to, you can always pause the slideshow here and read the disclaimer in full. And if you're listening on the worldwide web, wherever you are in this wonderful world of ours, on this beautiful day, then you can head on over to marcustoday.com.au and read the disclaimer there. Plus, of course, you can check out all the other goodies available on the website. All right. Well, we had a much better night on the US markets last night. But before we all get too carried away, we are seeing us futures under a bit of pressure. first thing this morning, we did see snap come out with some comments and numbers in terms of after hours announcement. And as a result, they've certainly snapped the sentiment around social media stocks with big losses across the board snap a 20% plus loss talking about a deterioration of macro conditions. But let's face it, who uses snap anyway? All right. But for the record books, the Dow Jones closed up 618 points or nearly 2% 1.98% 31,880. It had a high of a Boeing 707. And we had a low of 134 points. And obviously closing towards its highs what caused the rally.
Henry Jennings 02:32
In the US we saw the NASDAQ up 181 or 1.59% 11,535. And the s&p 500 As usual, as we say in the middle for a little 1.86 Higher 72 points 3974. What caused all this breakout of optimism, a number of things JP Morgan saw their CEO Jamie Dimon with some pretty positive comments about the US economy. And we also saw President Biden toying with the idea of reducing or even abandoning of the tariffs that they put that Donald Trump put on Chinese imports, which would certainly go some way to alleviating the inflation rates in the US. So that was taken as a positive our market is showing 19 points to the good point two 7% 7172. So pretty cautious still our market compared to the US but they're bouncing hard. But as I say those snap numbers after hours have whacked the likes of metta, Google, etc. On the back of reduced advertising revenues for social media companies. It may be this is confined to snap. But it may be that it is a sign that the US economy is slowing and slowing quite quickly. So we will treat all things with caution and probably focus on the downside of the Dow futures in our timezone as opposed to the upside in the results from the US markets last night. vix index falling one point 3.23% to 28. Here we have all this high worries and concerns about recession inflation, interest rates, etc. war in Ukraine and yet the vix index is pretty pathetic, really at 28. But there we go. Some complacency still, in hedging the exposure through the CBOE options pricing.
Henry Jennings 04:26
Commodities though were better. And that of course bodes well for our market today. Brent crude up 87 cents 213 42 It's hard to see inflation coming under any kind of control around the world really when you've got all the prices at $110 a barrel so that was at point seven 7% WTI lagging 110.29 up only one cent and the gold price better point three 1% $5.70 1847 At the iron ore price pretty steady at 134 29 and the Aussie dollar creeping higher 70.98 We are seeing money coming out of the US dollar safe haven and into equities again. So that is why we're seeing the US dollar come under a little bit of pressure and the Aussie dollar pushing a little bit higher and that gold price perking up somewhat.
Henry Jennings 05:23
And other commodities we had copper at 1.3% nickel down 1.3% Aluminium point for zinc up 2.1 lead up 1.6 Tin pretty much unchanged looking across at mining stocks. BHP in ADR terms that's American Depository Receipts 2.1% Better Rio at 1.7% Freeport McMoRan at 5.6 altcar at 4.2. Tech down 1% Anglo up 3.7 Glencore up 3.1. Valet up 2.8 Or sorry, 2.9 My eyes are not great Albemarle up 2.8% as well. So some strength and commodity stocks in place should help our markets today. We did see that yesterday with those iron ore stocks in Australia doing well.
Henry Jennings 06:14
The s&p 500 There you can see closing pretty much towards its highs. But as I say after hours, we did see those numbers from snap. I think it was around 24% Down 24% Down after hours on the back of comments from the CEO. So still question who uses snap? But anyway, it looks like people are cutting back on advertising or snap it may just be that they're pushing it across the Tiktok and Instagram which doesn't seem to be seeing any sign of adverts falling as my Instagram feed when I look at it, which is not very often is full of adverts. But anyway, in the US tech stocks, we saw apple up 4% mete out 1.39% All these social media companies you can forget those rises that we saw last night really, Google was up 2.3 And Microsoft up 3.2 But as I say after hours, that snap number really has dented the prices of those Tesla was up 1.6 But the US banks were the highlight of the US market last night on those comments from Jamie Dimon and the outlook from JP Morgan. JP Morgan was up 6.2% Citigroup looks like Buffett may have picked that one like a nose up 6.1% Goldman's up 3.2 Bank of America at 5.9 Wells Fargo 5.2 block the artist formerly known as square unchanged, so confined to those big US banks but JP Morgan having a really good night Twitter down 1.1% And Walmart recovering 2.8% Higher.
Henry Jennings 07:47
Here we go with the major stories. Well we've got the Dow up over 600 s&p pulls away from bear market territory at flirted with that down 20%. But it wasn't to be maybe they took a backs and had a lie down. And we have seen the US market rally but we are seeing us futures under pressure in our time. As we see those snap numbers. China plans tax relief of over 21 billion to lift the economy and the US has unveiled a 13 nation economic pact to assert Asian leadership's and the RBNZ. That's the reserve bank in New Zealand scene racing to neutral with second straight half point hike and Biden bit of a slip of the tongue for President Biden in Taiwan, as he pledged to defend Taiwan militarily. If China were to invade now, that is not official US policy, and did freak a few people out. And officials were quick to walk his slight misstep back and reiterate the One China policy that they have. And Biden was referring that they would help Taiwan with weapons as opposed to troops on the ground. He also said that he's considering lifting some tariffs on Chinese imports, you do get a feeling there is a bit of a cooling of relations or a bit of a pullback in relations with China at the moment. And we are seeing as a side some talk about lifting those tariffs. We're also seeing that stimulus from China. And we also interestingly saw President Premier Li last night congratulate Anthony Albanese on his election victory, so maybe maybe some semblance of normality is returning slightly towards us and Australian politics with China.
Henry Jennings 09:34
Lagarde says that the ECB likely to be in a position to exit to negative rates by the end of quarter three. This I still find extraordinary. You have the the German inflation rate at 7.1% at the moment, and the ECB is just thinking about exiting negative rates. Thinking about it, it's not actually done it Its thinking about it. And she has signalled a preference for a 25 basis point rate hike in July a 25 basis point that doesn't sound like a rate hike to me and German economic sentiment unexpectedly improved in May. South Korean exports rose 24% In the first 20 days of May, and Beijing has seen record numbers of new COVID cases for its current outbreak, which is reviving locked down fears into perspective, though it's under 100 cases.
Henry Jennings 10:28
What to expect today? Well, JPMorgan Chase lifted its forecast for interest income and affirmed its profitability target at its investor conference, as I said earlier, JPMorgan was up 6.2% On the back of that. So Jamie Dimon has injected a little bit of optimism into the US narrative at the moment and the latest M L IV pulse survey, which asked 1009 respondents in the US what they think about the s&p 500 And they say that it's likely to keep falling this year before bottoming at around 3500 According to the median projection of those 1009 respondents so aren't we seeing a little bit of peak negativity happening in the US stock 51.1 1.4% footsie at 1.7 CACs at 1.2 DAX at 1.4 overseas and 10 year yields in the US 2.85 Now there's no need to worry about recessions rather than inflation Australia 3.3 to Germany back above that one cent level 1.01. And interestingly, as I said earlier, that Chinese Premier Li Keqiang has congratulated Alberto for his election victory, so maybe we are seeing a little bit of normalisation occurring there.
Henry Jennings 11:49
In the newspapers today it has been set by Janus Henderson that Australian dividend payments this is a massive number reached $97.9 billion, which is a record high in the last year. And more interestingly $1 in every $2 was from mining companies $97.9 billion back to investors in the last year. And Vekic Van Eck Australia is going to list an ETF been tracking the price of carbon across four global emission trading schemes on the ASX it will be called the Vanek global carbon credits ETF Good luck with that, and Sumitomo has sold its new farm at stake at $5.38. And Citigroup put through the block trade last night after hours. And Suncorp is meeting with ama which is the Crash Repair business to discuss is futures There are stores that it had been in discussions with it, because Suncorp has a 25 year plus service agreement with a M A. And we have today C g f which is challenger holds its investment day. It reaffirms normalised normalised NP not nonprofit before net profit before tax is expected to be the upper end of 430. The 480 vs FactSet, which is the consensus expectations around 470 3.8. And back Corp could be in the running for buying a J car, which is up for sale at the moment, probably have to buy them bits and put it together themselves but anyway, we'll see.
Henry Jennings 13:25
Question of the day today, should we care about us social media companies selling off? That's obviously taken the wind out of some of the bulls sales in the US after hours with that massive falling snap, and also taking some of the other social media companies with it. And snap talking about the deterioration of macro conditions in the last recent times. So that is a worry because a lot of small businesses apparently advertise on SNAP. Maybe that's something they do in the US. But certainly it is a concern. But is that a sign that we are seeing a slowdown in small business and a pullback in those advertising budgets on social media? Or is it maybe it's just the fact that social media advertising doesn't work as well as it was supposed to? Who knows interesting hear your thoughts on that one? That's it for me today. Thanks very much for listening. You can head on over to the markets today Facebook discussion group as usual. We'd love to have your thoughts ideas and insights over there. It's a great group members helping members is the motto there. And if you're listening to this on a podcast and you want to hear more markets today, wonderfulness, you can head to the market strategy podcast, which is a fly on the wall, morning meeting, podcast or On The Desk podcast with the team in Melbourne, discussing some of the things that are preying on their financial minds at the moment on my On The Couch podcast where I talk to some of the CEOs and some of the fund managers in the business which I think would interest you. And this week I'm hoping to sit down with the CEO of a uranium company and talking uranium talking their projects and seeing how things are going for them. Last week I interview James Hawkins from L one capital the Catalyst Fund, which he runs very successfully around there, so certainly worth a listen there.
Henry Jennings 15:06
That's it for me today. Thanks very much for listening. And may the trading Gods be with you.