Australian Market Preview 21 August

A snapshot of overnight moves and a look to the upcoming Australasian session for 21 August.

Market Moves

Market Moves 21 Aug 2020
US markets were broadly higher lower again as worse than expected unemployment data failed to offset continued enthusiasm for tech stocks.
The blue chip-laden Dow Jones Industrial Index rose 0.17%, the benchmark S&P500 lost 0.32%, and the tech-heavy NASDAQ was once again the leader, it closed up 1.06% at another record high.

Risk on assets were mainly in out of favour however. Metals prices on the LME were generally lower by around 1%. Copper managed a 0.06% gain in New York. Iron Ore prices were flat on the Chinese Dalian Exchange, and but 0.73% lower in the Singapore-based $US price.

Looking at precious metals, Spot Gold had a small bounce. It rose 0.61% to US$1943/oz, whilst Silver gained 1.89% to US$27.34/oz.

Energy commodities were down. West Texas Crude lost 0.28% to US$42.82/barrel, Brent fell 0.83%, and Natural was 2.97% lower.

In currency moves, the Australian Dollar improved 0.17% to 0.7200 as the US Dollar Index declined 0.10%.

Risk off bonds rose sharply, with the yields on the US 10 year Treasury Notes falling 3.2bp to 0.652%.

So with many risk on and risk off asset price movements at odds with traditional expectations, where did the ASX200 Share Price Index end up? Well, it had a quiet session, closing at 6082 compared to an overnight session high of 6099 and a low of 6064.

That's a 38 point discount to yesterday's ASX 200 close of 6120, and predictive of approximately a 0.2%-0.3% gain at the open for the S&P ASX200.

AU Companies

Suncorp Group (SUN)
The company reported this morning that it would cut its final dividend to $0.10 from last year's $0.44. This was due to cash earnings falling by 32% to $749m.

CEO Steve Johnston said on the results, “It has been a challenging 12 months for Suncorp"
Companies reporting this morning include:  Healius (HLS), Inghams Group (ING), Mystate (MYS), and Vita Group (VTG).
Broker Moves
ASX ASX Citi raises ASX (ASX) price target from $65 to $68. Retains sell rating.  
Carsales.Com CAR Jefferies raises Carsales.Com (CAR) price target from $20.17 to $23.26. Retains buy rating. Notes FY20 results were in line with expectations. Upgrades EPS estimate for FY21 by 1% and FY22 by 1% on the back of strong earnings growth in South Korea.
Charter Hall Group CHC Citi raises Charter Hall Group (CHC) price target from $11.09 to $13.50. Retains buy rating.  
Medibank Private MPL Citi lowers Medibank Private (MPL) price target from $3.05 to $2.80. Retains neutral rating.  
Origin Energy ORG Citi lowers Origin Energy (ORG) price target from $7.60 to $6.79. Retains buy rating.  
Perpetual PPT Citi raises Perpetual (PPT) price target from $33.60 to $34.10.   
The Star Entertainment Group SGR Citi raises The Star Entertainment Group (SGR) price target from $3.50 to $3.60. Retains buy rating.  
Sonic Healthcare SHL Citi downgrades Sonic Healthcare (SHL) rating from buy to neutral. Raises price target from $34 to $35.50.  
Sonic Healthcare SHL Jefferies raises Sonic Healthcare (SHL) price target from $38 to $40.   
Santos STO Citi lowers Santos (STO) price target from $7.22 to $7.18.   
Wisetech Global WTC Citi raises Wisetech Global (WTC) price target from $18 to $22.20. Retains sell rating.  

Macro Economy

Just the PMI data for us today (see below). Later this evening we'll get similar data for Europe and the US, along with US existing Home Sales.

Below is a summary of the key macroeconomic data releases from the past 24 hours.
Commonwealth Bank of Australia Flash Composite Output Index 21 Aug 2020

Business activity across Australia declined in August as the re-imposition of coronavirus lockdowns in Victoria impacted both the manufacturing and services sectors.

Commonwealth Bank of Australia Flash Composite Output Index fell to 48.8 from 57.8 in July. Readings above 50.0 signal an improvement, whilst readings below 50.0 show deterioration.

Services Business Activity Index fell to 48.11 from 58.2, and the Manufacturing PMI fell to 53.9 from 24.

Commenting on the Commonwealth Bank Flash PMI data, CBA Head of Australian Economics, Gareth Aird said, "The decline in business activity over August is hardly surprising given the lockdown measures in Victoria. With the August composite flash PMI only modestly in contractionary territory it is highly likely that outside of Victoria private output continued to expand over the month".
Conference Board Leading Economic Index 21 Aug 2020

The Conference Board Leading Economic Index increased for the third consecutive month in July, albeit at a slower pace than the sharp increases in the previous two months. At 104.4 versus June's 103, the reading was slightly ahead of expectations and shows only marginal expected growth for the US economy over the near-term.

US-initial-jobless-claims 21 Aug 2020

Weekly jobless claims popped back above 1m to 1.1m versus last week's 971k.