Supply Chain Council of European Union | Scceu.org
Procurement

The Monday Report – 10 August 2020

Daily Market Reports | 9:09 AM

By Greg Peel

Material Concern

The futures had suggested down -15 points on Friday morning but the ASX200 immediately fell -40 points, back to the 6000 level, and spent the rest of the day bouncing around to finish roughly where it began.

All sectors bar one closed in the red but the standouts were materials (-1.5%) and healthcare (-1.2%).

Materials had been the star of Thursday’s trade on higher commodity prices which, to a great extent, lend themselves to a lower US dollar. But consternation set in on Friday when Donald Trump announced he intends to ban, on national security risk, TikTok, unless it sells its US business, and now WeChat, owned by Tencent, which is basically China’s Facebook-Google- Amazon all in one.

It’s a tenuous connection but the bottom line is escalating US-China tensions and as we have learned, that is not necessarily good for Australian exports if we deign to choose sides. Rio Tinto’s ((RIO)) CEO up in front of a parliamentary enquiry into why his company destroyed a sacred Aboriginal site didn’t help either.

Overnight, a “positive” US jobs number sparked a bounce for the US dollar which led to a swift reversal in the prices of gold, iron ore, copper and oil but also a merciful one percent drop in the Aussie, providing an offset. It begs the question of how investors might respond to the sector today, and we note the futures were up 0.7% on Saturday morning when the S&P500 closed flat.

For healthcare, the biggest drag has been the Aussie so there should be some relief today, except that ResMed ((RMD)) kept falling on Friday (-3.2%) post-result on broker downgrades. Note that FNArena database brokers have only one Buy on the stock between them.

The one winning sector was consumer discretionary, as heavily shorted travel agents had another run, with Corporate Travel Management ((CTD)) and Flight Centre ((FLT)) each jumping over 6%. This follows a White House decision to now allow US citizens to fly out of the country (it remains a mystery as to where) and a second round of direct government support for US airlines.

Star Entertainment ((SGR)) also seemed to like that news (+4.5%) while News Corp ((NWS)) rose 5.7% post result.

It was -3% odd falls for the top five index losers on the day which included ResMed, Fisher & Paykel Healthcare in sympathy, and money stocks Janus Henderson ((JHG)) and Virgin UK ((VUK)).

All other sectors closed down around the -0.5% mark apart from telcos, which were flat. The RBA made its contribution to general weakness in its quarterly Statement on Monetary Policy in winding back what had earlier been quite an upbeat 2020 forecast under the circumstances to less so given Victoria’s re-lockdown.

As to why the futures were up 42 points on Saturday morning is not immediately clear, with Wall Street doing little (other than a pullback for the Nasdaq) and the local result season ramping up this week.


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

Related posts

Cevian builds stake in CRH as share price falls | Ireland

scceu

Announcement of net asset value of INVL Baltic Real Estate as of 30 April 2020 Vilnius Stock Exchange:INR1L

scceu

All You Wanted to Know About e-Procurement Implementation/Solution Models

scceu