The Overnight Report: The Setting Sun

This story features NATIONAL STORAGE REIT, and other companies. For more info SHARE ANALYSIS: NSR

By Greg Peel

Adrift

The ASX200 fell -26 points through the morning yesterday before recovering most of that loss in the afternoon. There was no common theme, rather a mish-mash of sector moves.

There were 1933 new cases of the virus reported in China yesterday – slightly more than the day before, which undermines Beijing’s earlier assertions the pace of infection is slowing. There are over 400 cases in Japan, the majority of which are those trapped on the Diamond Princess plague ship waiting for the inevitable.

The virus has not come at a good time for Japan. Another sales tax hike and the impact of Typhoon Hagibis in the period saw Japan’s GDP shrink by -1.6% in the December quarter to be down -6.3% year on year. A similar sales tax-related fall was recorded in the June quarter of 2014, but at that time Japan managed to avoid recession.

This time it is considered all but inevitable that another contraction will be recorded in the March quarter due to the impact of the virus, particularly on Chinese tourism. This is expected to negate the effect of a US$120bn stimulus package announced by the government in December. The Nikkei fell -1% yesterday.

Meanwhile, the Shanghai index rose 2.3% as Beijing announced another rate cut and injected more money into markets. It was this news that helped the Australian market recover in the afternoon.

Winners among individual stocks yesterday were a mix of earnings reporters and takeover targets.

National Storage REIT ((NSR)) topped the table with a 6.2% gain on a second takeover proposal. Caltex Australia ((CTX)) rose 3.9% after opening its books to the new Canadian bid.

QBE Insurance ((QBE)) rose 4.3% on its earnings report, Abacus Property ((ABP)) 4.2% and Brambles 3.9%.

The good news is no reporting company on the day made the top five losers. The season is, to date, shaping up to be a big improvement on last August’s shocker. Of the 67 stocks covered by FNArena database brokers reporting so far, 37% have beaten forecasts and 19% have missed. See: https://www.fnarena.com/index.php/reporting_season/

We might note nonetheless that Bendigo & Adelaide Bank ((BEN)) is in a trading halt after its result yesterday included a cut in dividend and an announced capital raising.

National Bank ((NAB)) is also raising more capital via a note issue and the banks gave back -0.4% yesterday after last week’s solid run. Telstra was suddenly on the nose so telcos dropped -1.1%, while consumer discretionary (-0.8%) was also a target.

The offset came from energy (+0.7%), with Woodside Petroleum ((WPL)) up 1.5% having fallen by a similar amount on Friday, and the now constant upward plodders consumer staples (+0.3%) and healthcare (+0.3%). The biggest gain (1.1%) was reserved for the smallest sector, IT.

Wall Street was closed overnight so this morning there is no lead to go on until the earnings reports start to drop. Today marks a shift into top gear as the next four days brings the bulk of results.

Commodities

Chinese stimulus is always good news for metals.

Elsewhere there was not much going on with the US absent.

The Aussie is off -0.1% at US$0.6717.

Today

The SPI Overnight closed down -4 points.

The minutes of the February RBA meeting are out today.

BHP Billiton ((BHP)) reports today, along with Boral ((BLD)), Cochlear ((COH)), Coles ((COL)), OZ Minerals ((OZL)) and many more.

For a full list of earnings results due today and assessments of reports to date please refer to the FNArena Corporate Results Monitor (https://www.fnarena.com/index.php/reporting_season/).

The Australian share market over the past thirty days…

For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)

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