Australian Market Preview 22 September

 

US markets stumbled again as concerns over renewed lockdown measures in Europe and the UK rattled investors' already tested nerves. Fears that any round of new lockdowns could scuttle the fledgling global economic recovery come on the back of resurgent Covid-19 infections in a number of European countries, and as cases remain stubbornly high in a number of other key economies around the world.

In the US, the blue chip-laden Dow Jones Industrial Index fell 1.84%, the benchmark S&P500 was down 1.16%, whilst the tech-heavy NASDAQ edged 0.13% lower. This was on the back of far deeper falls in Europe as the German DAX lost 4.37%, and UK and French markets were down over 3%.

Metals prices on the LME couldn’t ignore the clear risk-off leads from stocks. Zinc, Copper and Nickel were hardest hit, each with 2-3% losses, whilst other metals on the complex were around 1% lower. Copper also saw a 2.31% loss in New York.

Iron Ore prices lost further ground last week's correction. The January contract on the Chinese Dalian Exchange is currently 4.54% lower in early Shanghai trading, whilst the Singapore-based US$ denominated September contract is down 2.06% to US$123.87/t.

Looking at precious metals, they were certainly no place to hide either. Spot Gold tumbled 1.87% to US$1912.80/oz, whilst Silver lost a massive 7.51% to US$24.75/oz.

Energy commodities were also sharply lower. West Texas Crude fell 2.21% to US$39.31/barrel, Brent plunged 4.03% to US$41.96/barrel, and Natural Gas slid a whopping 9.88%.

In currency moves, the Australian Dollar fared only a little better than its risk-on counterparts. It retreated 0.94% to 0.7224 as the US Dollar Index rebounded 0.79%.

As one would expect, risk-off bonds were pretty much the only winner last night. They rose as the yield on the US 10 year Treasury Notes fell 2.8bp to 0.668%.

So, with a clear risk-off move in overseas asset prices Monday evening, where did the ASX200 Share Price Index end up? Well, it had a correspondingly nasty session, closing at 5754 compared to an overnight session high of 5817 and a low of 5704.

That's a 68.6 point discount to yesterday's ASX 200 close of 5864.5, and predictive of approximately a 1.2% fall at the open for the S&P ASX200. 

 

Carsales.Com (CAR) $0.25fully franked
Kelly Partners Group (KPG) $0.133 fully franked
Monash Absolute (MA1) $0.01 fully franked
PSC Insurance (PSI) $0.055 fully franked
 

Harvey Norman	HVN	Goldman Sachs raises Harvey Norman (HVN) price target from $4.70 to $5.00. Retains buy rating.
Harvey Norman	HVN	Jefferies raises Harvey Norman (HVN) price target from $5.40 to $5.50. Retains buy rating.
JB Hi-Fi	JBH	Goldman Sachs raises JB Hi-Fi (JBH) price target from $45.50 to $48.30. Retains neutral rating.
JB Hi-Fi	JBH	Jefferies raises JB Hi-Fi (JBH) price target from $45.00 to $46.00. Retains hold rating.
Magellan Financial Group	MFG	Citi lowers Magellan Financial Group (MFG) price target from $67.00 to $60.00. Retains neutral rating.

 

RBA Deputy Governor Guy Debelle will deliver a speech titled "The Australian Economy and Monetary Policy" at the Australian Industry Group conference at 10.30am EST.

Later this evening, markets will focus on US Federal Reserve Chairman Jerome Powell's testimony on the CARES Act before the House Financial Services Committee in Washington DC.