01 September 2017 Spring Day Trading Pre Market

Good Morning Fellow Traders

The Australian sharemarket emerged from August reporting season deflated by a mildly disappointing month of profit results, and undermined by heavy losses in big names like Telstra and Commonwealth Bank.

Thursday's solid gain of 45 points, or 0.8 per cent, in the S&P/ASX 200 index to 5715 managed to trim the month's losses to only 6 points. Telstra's 10.5 per cent share price plunge over the month, more or less what it lost on the day it announced a hefty cut to its dividend, and CBA's 9.5 per cent fall amid ramping regulatory pressure around its money laundering compliance failures dragged on the bourse. Those losses were offset by strong monthly gains from the major miners BHP, Rio Tinto and Newcrest Mining, while Wesfarmers also buoyed the market.

Morgan Stanley equity strategists branded results season overall "a subdued affair". Aggregate growth in earnings per share for the top 200 "is on track to sink to circa 5 per cent with no meaningful growth pick-up expected in outer years," they said.
It wasn't all gloom, with energy stocks the best performing segment of the sharemarket over the month, adding 5 per cent after a litany of well received earnings results following a tough period for the sector. That outperformance was slightly tarnished on Thursday, as oil and gas stocks were the only corner of the market to slide.

"One of the themes that led into this results season was that was that the retail environment was very shaky and that discounting was a big part of that," Pengana Capital fund manager Ed Prendergast said. "That's been borne out definitely," Mr Prendergast said, although "there were odd retailers like Adairs that did well in that environment anyway".

"Also, there was the sense overall that the housing construction cycle is probably at the peak right now, and that was borne out by quite a few companies in their results commentary. It was a little bit state-specific obviously; West Australian companies are saying the complete opposite because their cycle has gone the other way."

The contrasting fortunes of the sector were on display on Thursday, as accessories and clothing retailer Oroton Group surged 8.2 per cent after providing an upbeat assessment of trading over the past two months and confirmed that underlying earnings would come in at the top end of its guidance for its July 31 financial year.

In contrast, Harvey Norman plunged 7.5 per cent after revealing annual earnings that disappointed investors.
Citi analysts maintained their sell rating on the stock "ahead of a moderating housing cycle and the upcoming entry of Amazon".

The Aussie dollar slipped below US79¢ on Thursday despite data which showed business spending on new equipment plant and machinery rose for a second straight quarter, with a bigger-than-anticipated upgrade in future spending plans. The currency, which had threatened to break above US80¢ this week, might have ignored this "impressive" lift in capex plans, but "the RBA won't," TD Securities currency strategist Annette Beacher said, pointing to the upbeat message the data sent about the trajectory of the local economy.

U.S. stocks closed higher on Thursday as investors reacted to economic data and took cautious hope from Washington’s latest promises for long-awaited details of a tax reform plan.
The S&P 500 has been building momentum this week, notching five days of gains for the first time in three months as investors showed confidence a day after the benchmark closed above its 50-day moving average. This was a technical level that acted as resistance in the past week.

“People are coming back from vacation and noticing the market is near its all-time highs still, that a hurricane and all the North Korea bluster didn’t impact it,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
“There’s no doubt that the market is still in an uptrend. We’ve been throwing all sorts of bricks into the wall of worry and it’s still reaching for the sky.”

The Dow Jones Industrial Average .DJI rose 55.67 points, or 0.25 percent, to end at 21,948.1, the S&P 500 .SPX gained 14.06 points, or 0.57 percent, to 2,471.65 and the Nasdaq Composite .IXIC added 60.35 points, or 0.95 percent, to 6,428.66.
For the month, the S&P edged up 0.05 percent while the Dow gained 0.28 percent and Nasdaq rose 1.27 percent.

U.S. Treasury Secretary Steven Mnuchin said on Thursday that President Donald Trump’s administration has a detailed plan on tax reform and is on track to implement it by year-end. On Wednesday Trump reiterated his call for a U.S. corporate tax rate cut to 15 percent from 35 percent.
“Even if investors aren’t taking him at his word they expect him to do all he can. This is a market that has heard tax reform so often. It wants to see if they can deliver,” Quincy Krosby, chief market strategist at Prudential Financial in Newark, NJ.

Investors were also focused on economic indicators such as Wednesday’s gross domestic product data. Information released Thursday showed annual inflation advanced at its slowest pace in more than 1-1/2 years, diminishing expectations of an interest rate increase in December. And U.S. consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3 percent last month compared with forecasts of 0.4 percent.

The data “reinforced the belief that the bull market is still intact,” according to Robert W. Baird’s Antonelli.
Also investors awaited the monthly jobs report on Friday to gauge the strength of the labor market and look for clues on the Federal Reserve’s next move on interest rates.

Ten of the 11 major S&P sectors were higher, with the health index’s .SPXHC 1.5 percent rise leading the advancers.
UnitedHealth’s (UNH.N) 1.5 percent gain provided the biggest boost to the Dow. The Nasdaq biotech index .NBI rose 2.8 percent, with the biggest boosts coming from Gilead (GILD.O), Celgene (CELG.O) and Biogen (BIIB.O), all of which rose more than 3 percent.
Dollar General (DG.N) fell 5.4 percent after reporting a slide in second-quarter margins. Campbell Soup (CPB.N) slid 8.1 percent, the biggest percentage loser on the S&P, after the company warned that sales for fiscal 2018 could fall.

The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 117 new highs and 21 new lows.
About 6.2 billion shares changed hands on U.S. exchanges on Thursday compared with the 5.8 billion average for the last 20 sessions.

Source: Netwealth Morning Business Roundup

Eggs and fruity pancakes for a Spring brekky with some arty coffee.







Happy Trading - a new month, a new season!