Australian Market Preview 30 June

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

Markets rebound, US data continues to impress.



Investors will no doubt breathe a sigh of relief today as US markets rebounded 1.2% for the tech-heavy Nasdaq, 1.5% for the benchmark S&P500, and as much as 2.3% on the Dow Jones Industrial Index. The so-called 'fear gauge', the volatility index (VIX), fell 8.5%.

US investors cheered a better than expected report on New Home Sales which spiked at a record rate of 44.3% in May, well ahead of expectations for a 15% jump.

The major indices were also helped by a 14% surge in Boeing shares as US air-safety regulators resumed flight test of its grounded 737 Max airplanes.

Another positive driver for the local stock market today will be the continued strength in metals prices. All of the major base metals saw gains on the LME overnight with Zinc, Aluminium and Nickel each logging 0.9% gains.

Iron ore fared worse, down 2.2% as rising inventories of steel and poor weather conditions for construction contributed to subdued demand last week.

Gold continued to edge higher, with spot gold now trading at US$1784.60 an ounce. Crude managed only a small rebound from large falls Friday, up 0.2%, natural gas rose 1.5%.

The ASX200 Share Price Index was 67 points higher, closing the evening session at 5874. That's a 62 point premium to yesterday's ASX 200 close of 5815. This implies that the ASX 200 could open roughly 1-1.2% higher at the open.

Fisher & Paykel Healthcare Corp (FPH) is likely to retain the spotlight after its full year results presentation yesterday showed an increase in net profit of 37%. As yesterday's best performing ASX200 stock (+6.9%), it is likely to attract analysts upgrades on an improved outlook, and MD Lewis Gradon's comments that demand for their respiratory humidifier products was 'unprecedented'.

Also watch out for Regional Express (REX). The regional airline gained 6.9% Monday on the back of the board announcing plans to raise A$30 million to recommence its domestic operations.

Yesterday's worst performing ASX 200 stock was Jumbo Interactive (-13.2%). Its shares were dumped after it announced it would extend its reseller agreement with Tabcorp (TAH) until 2030. However, investors didn’t like the size of the upfront service fee to be paid to Tabcorp under the deal. Jumbo warned it was seeing lower jackpots on the back of covid-19, but reaffirmed earnings guidance for FY2020.

Financing and leasing specialist Eclipx Group (ECX) was also hit hard, falling over 10% as they provided a trading update. Whilst the company noted existing business was intact, new business was down as much as 30%.

Also, as it is June 30, expect some potentially large blocks of trades to go through as fund managers square up their books for the financial year. Fund managers have a habit of selling out of favour or beaten down stocks in order to avoid having to report these in their holdings at year end.

Macro Economy


China's factory activity will be in the spotlight today as the market looks to the release of the country's Purchasing Manager's Index (PMI). The index should show that China's manufacturing sector likely grew in June, but at a slower pace than in May.

Markets are expecting a reading of 50.4 compared to May's 50.6. A reading above 50 indicates an expansion in activity.