Article / 19 June 2017 at 0:38 GMT

Today's Trade: ASX200 shrugs off softness on Wall St with early surge

Trading Desk / Saxo Capital Markets
Australia
  • US energy stocks rose on Friday as the price of oil edged higher 
  • Gold rose on Friday, as the weaker USD helped it recover some lost ground
  • US retailers worry that Amazon will do to them what it did to bookstores
  • Iron ore logged some decent gains on Friday, up 0.9% to $US55.75 a tonne
By Saxo Capital Markets Australia

Overnight and early trading
  • The S&P/ASX200 headed higher at the start of trading. It was up 0.52% to 5,804.20
    at 1035 AEST (0035 GMT).  
  • Retail shares have taken a tumble; shares in supermarket giant Woolworths were down 3.47% to  just $A25.34 at 1025 AEST (0010 GMT). Shares in Harvey Norman and Wesfarmers have also tumbled.
  • Shares in retailers fell during a heavy day of trading after Amazon.com said it would buy Whole Foods Market, WFM, potentially squeezing their competitors. Grocers were already under pressure after Kroger, the biggest supermarket chain in the U.S. by sales, warned of disappointing earnings a day earlier.


nnn
 Despite gains made on the back of the weaker US dollar, gold is nevertheless under selling pressure. Photo: Shutterstock

  • Retailers from traditional grocers to big-box operators tumbled Friday on fears that Amazon would do to them what it did to bookstores, analysts and fund managers said.The giant internet retailer’s stock rose $23.54, or 2.4%, to $987.71 Friday, while Whole Foods shares jumped 9.62, or 29%, to 42.68.
  • Rival grocers Supervalu and Kroger both tumbled, capping a brutal week for the industry. Kroger shares sank 19% Thursday after it said increasing competition would hurt earnings for the year. That competition isn’t letting up: This past week, German grocery chain Lidl opened its first stores in the U.S. Big-box operators such as Wal-Mart Stores and Target fell roughly 5% on Friday.
  • Food and staples companies in the S&P 500 shed 5.5% during the week, the group’s worst weekly decline in nearly two years.
  • Technology stocks also slipped, extending losses for a sector that has been under pressure lately.
  • The tech-heavy Nasdaq Composite fell 13.74 points, or 0.2%, to 6151.76 Friday, notching a 0.9% weekly loss.
  • Meanwhile, the Dow Jones Industrial Average closed at a record, rising 24.38 points, or 0.1%, to 21384.28.
  • The S&P 500 added 0.69 points, or less than 0.1%, to 2433.15. Whole Foods was the best-performing stock of the day in the broad index, while Kroger and Costco Wholesale led declines.
  • It was the largest-volume day of 2017 for stock trading on major U.S. exchanges.
  • Tech remains the best-performing S&P 500 sector in the index in 2017, up 17% year to date. But some recent sessions have been rough for the group. Declines in stocks including Apple and Google parent Alphabet have dragged the sector down 3.4% over the past two weeks—its biggest such decline since Brexit.
  • Among the tech companies that fell in the past week: Snap , one of the most-anticipated initial public offerings in recent years. The parent of disappearing-message app Snapchat closed down at its $17 IPO price on Thursday and rose 54 cents, or 3.2%, to 17.54 Friday, losing 3% for the week.
  • Medical-robotics maker Myomo ended its first week of trading up 5.45, or 61%, at 14.45. Myomo was the first company to list on a major U.S. exchange through a provision of federal law known as Reg A+, which was designed to help fund small-business growth.
  • Despite the recent wobble in some of this year’s best-performing stocks, both U.S. and global equities had their biggest weekly inflows this year in the week ended June 14, according to EPFR Global data.
  • Energy stocks rose Friday as the price of oil rose slightly. US-traded crude added 0.6%, to $44.74/barrel Friday, but prices have fallen more than 11% over the past four weeks on oversupply concerns.
  • The yield on the 10-year Treasury note eased to 2.157% Friday from 2.160% Thursday. Earlier in the week, yields dropped following weaker-than-expected inflation data, then retraced some of that decline after Federal Reserve officials decided to raise interest rates at Wednesday’s meeting and signaled further increases. Yields fall as prices rise.
Source: Bloomberg, TradingFloor.com

Local markets
  • Bank of New York Australia ADR Index +0.7%, NAB US ADR +0.85%, ANZ US ADR +0.33%, BHP Billiton ADR +0.5% to A$22.76 equivalent, 1% discount to last Sydney close, Rio Tinto ADR -0.1% to A$51.56 equivalent, ~14% discount to last Sydney close
  • Gold prices inched higher on Friday, as a weaker dollar helped the precious metal recover some lost ground after the Federal Reserve raised interest rates. Gold for August delivery rose 0.2% to $1,256.50 a troy ounce on Comex, rallying on bargain hunting after hitting three-week lows on Thursday. Meanwhile, investors are pulling out of precious metal funds as data suggests the Fed could raise U.S. rates again this year, hurting the attractiveness of gold, which doesn’t pay interest. The SPDR Gold Trust holdings dropped 1.5% in past two days - biggest drop this year. Goldies lost 0.33% on Friday in Toronto. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Oil prices inched up Friday, but still fell hard for the week, holding near their lowest levels of the year because of the lingering glut. Light, sweet crude for July delivery settled up 28 cents, or 0.6%, at $44.74/barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, gained 45 cents, or 1%, to $47.37/b on ICE Futures Europe. That wasn’t enough to overcome large losses from earlier this week, leaving U.S. prices down 2.4% and global prices down 1.6% over the last five sessions. Both are no on fourth-week losing streaks, the longest for U.S. oil since December 2015 and for global oil since November.
  • Oil fell more than 5% in each of the past two weeks, and hit seven-month lows earlier this week. U.S. companies are drilling and producing more, and the weekly rig count from Baker Hughes Inc. reported an increase for the 22nd-straight week. That has hampered efforts led by Opec to get global inventories back to their five-year average. Production cuts, which started in January, haven’t yet had much success on that front, resulting in the output caps being extended until March. But some analysts have said that even then, supplies may still be above OPEC’s goal. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY
  • Iron ore logged some decent gains on Friday, up 0.9% to $US55.75 a tonne. Higher premiums on mainstream cargoes were reported from the seaborne iron ore market on Friday amid a pick-up in demand, according to Metal Bulletin. Both mills and traders were heard to have made more enquiries for higher-ranked 62 per cent Fe Australian fines as well as lumps this week. Premiums of $0.20-$0.50 per tonne were necessary to secure July-laycan joint shipments of Pilbara Blend fines and lumps against indices as the week drew to an end, sources told MB. This compares with earlier this week when such cargoes largely fetched no premiums. Entire Capesize shipments of fines were likely to fetch premiums of up to $US0.50 per tonne, while half-Capesize cargoes of lumps were expected to draw premiums of $US0.30-0.50 per tonne, they added. However, lower-ranked 62% Fe fines continued to be priced negatively. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Zinc and most other metals advanced on the London Metal Exchange as a supply deficit reinforces case for higher prices, and as pressures from falling oil prices abate. Zinc rallied 0.9% to settle at $2,527/ton, rising for a third day after International Lead and Zinc Study Group said market was in 92,400-ton deficit in April. Copper climbed less than 0.1% to settle at $5,663/ton however lost 2.4% this week, the biggest loss in six weeks. Aluminum dropped 0.3%, posting the biggest weekly loss in two months with a 2.1% weekly decline. Tin rose 0.7%, nickel added 1% & lead was up 0.9%. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
  • ANZ Bank (ANZ): Said seeking ~A$5b for Wealth unit: AFR
  • Arrium (ARI): Liberty, SIMEC said to raise bid for Arrium assets: AFR.
  • BHP Billiton (BHP): Tyro Chairman seen driving deeper shakeup at biggest miner, Names Ken MacKenzie as chairman amid activist challenges.
  • Computershare (CPU): Set to sell stake in Karvy Computershare: ET.
  • Cromwell Property (CMW): Plans Singapore-listed REIT: AFR.
  • Downer EDI (DOW): Said to plan new proposal for Spotless bid: Australian.
  • Fairfax Media (FXJ): May receive formal bids from U.S. private equity firms before end of month: AFR.
  • Lend lease (LLC): Scheduled to host business update call on intl operations; NOTE: Co. got ~42% rev. outside Australia in FY16: Bloomberg data.
  • Suncorp (SUN): Australian insurance giant considers buying more corporate debt  Wesfarmers (WES), Woolworths (WOW), Metcash (MTS): Amazon to buy Whole Foods in $13.7bn bet on groceries.
Broker upgrades, downgrades
  • Amcor (AMC): Raised to equal-weight at Morgan Stanley, price target $A15.35
  • FlexiGroup (FXL): Cut to neutral at Credit Suisse, PT $A1.85.
  • GUD Holdings (GUD): Cut to sell at Morningstar.
  • Mineral Resources (MIN): Raised to hold at Morningstar.
  • Southern Cross Media Group (SXL): Raised to outperform at Credit Suisse.
XAUUSD under pressure

Gold (XAUUSD) formed a double top at 1,296 earlier this month, and it had two negative weekly closes and last week, it closed below 1,255 which corresponds to 50% retracement between May low 1214.44 and Jun high 1,296.

Last week’s rate hike from the Fed seems to put selling pressure on gold, although a temporary retracement is possible up to the next resistance level 1,264.50.

XAUUSD trend
1






















 
AUDUSD approaching key resistance level


Three consecutive weekly gains indicate upside momentum remain strong and now AUDUSD is approaching the key resistance area at the 0.77 handle, where a valid downtrend (from 2016) exists. We still favour selling into any rallies near 0.77 handle if the rally extends.

AUDUSD trend
























Create your own charts with SaxoTrader; click here to learn more. 

– Edited by Robert Ryan

For more on forex, click here.

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets.




 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail