The Overnight Report: Just When You Thought It Was Safe

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World Overnight
SPI Overnight	6848.00	+ 56.00	0.82%
S&P ASX 200	6798.60	+ 19.20	0.28%
S&P500	3859.11	+ 61.77	1.63%
Nasdaq Comp	11199.12	+ 246.50	2.25%
DJIA	31836.74	+ 337.12	1.07%
S&P500 VIX	28.46	– 1.39	– 4.66%
US 10-year yield	4.11	– 0.13	– 2.98%
USD Index	110.87	– 1.13	– 1.01%
FTSE100	7013.48	– 0.51	– 0.01%
DAX30	13052.96	+ 121.51	0.94%

By Greg Peel

Rest versus Resources

The futures suggested up 28 but the ASX200 jumped over 50 points from the open yesterday following strength on Wall Street. Selling hit at midday and the index did not recover to the close.

Perhaps some caution ahead of last night’s budget.

All sectors closed in the green yesterday except for two – energy and materials.

Energy fell -1.6% on slightly lower oil prices but more so on a -12.6% fall in Ampol ((ALD)) after a disappointing quarter. The result surprised given the opposite was true for rival Viva Energy ((VEA)) last week, hence hopes were also up for Ampol.

Materials fell -1.2%, with New Hope Corp ((NHC)) falling -6.2%, Whitehaven Coal ((WHC)) -4.5% and OZ Minerals ((OZL)) -4.3% to all land in the index top five losers.

For other sectors, the driving force was lower bond yields, with the Aussie ten-year falling -7 points to 4.07% and the two-year -5 points to 3.45%.

This was positive for the banks (+1.0%), healthcare (+1.0%), discretionary (+1.3%), communication services (+1.6%) and real estate (+1.7%).

Technology nonetheless was underwhelmed, rising only 0.2%, while industrials managed a 0.3% gain despite an index-topping -13.4% plunge for Reliance Worldwide ((RWC)) on a profit warning.

We have an interesting set-up heading into today’s trade.

Firstly, there appeared to be nothing market-moving in last night’s budget. Perhaps a boost for childcare-related stocks. Maybe caution in energy on potential government intervention, but that risk has been around for a while.

The S&P500 was up for a third session last night, by 1.6%, thanks to a drop in the US ten-year yield. Our futures were up 56 points at the close of the market.

After the close of Wall Street and the SPI, Microsoft and Google reported earnings.

Microsoft (Dow) disappointed on cloud growth and is down -2.6% in the aftermarket. Google posted the slowest quarterly revenue growth since 2013, reflecting falling ad demand, and is down -6.2%.

Also reporting were chipmaker Texas Instruments, which is down -5.2%. The only bright spot was Visa (Dow), which is up 1.4%. Visa noted the US consumer remains resilient.

All things being equal, Google’s move in particular will knock the Nasdaq for six tonight, and impact heavily on the S&P500.

Then there’s reports from Meta and Amazon tonight.

Of course, none of these stocks are replicated in Australia, but that never seems to matter.

And, oh, we get the CPI data today.

Thanks Rishi

The new new UK prime minister has promised “economic stability”. Last night long-end UK bond yields fell back to the levels they were at before the whole Truss mini-budget nightmare began. Had the Tories chosen Rishi Sunak over Liz Truss in the first place, the crisis could have been averted.

The US two-year yield fell slightly last night but the ten-year fell -13 points to 4.11%. The pound rose and the US dollar index fell -1.0%.

The result was a third consecutive positive session on Wall Street, and the first time in the run the Nasdaq has outperformed. The S&P500 last night broke through technical resistance at 3800. The Dow hit a six-week high.

As the earnings reports now roll in in earnest, net earnings growth in the S&P is running at 5.8% – better than hoped, albeit below the 7.0% average of the prior four quarters (as of the close of trade last night).

Report highlights last night included Dow stocks Coca-Cola, which rose 2.4% after successfully passing through higher costs into higher prices (not a good sign for inflation), and Boeing, up 3.2%, while 3M managed a 0.1% gain.

But this is all before the Microsoft and Google reports.

Visa may have lauded a resilient consumer, but the Conference Board’s consumer confidence index has fallen to 102.5 from 107.8 last month – still slightly optimistic (low unemployment) but in complete contrast to Michigan Uni’s bi-monthly index which is at historical lows.

The Case-Shiller 20-city house-price index fell -1.3% in August, its second consecutive monthly decline. Falls have extended since August.

So, back to tonight’s earnings reports.

Snap, Google and Meta all rely on advertising spend. Snap fell -30% and Google -6% on slower advertising. Tonight it’s Meta’s turn.

Meta rallied 6% during last night’s session and is down -4.4% in the aftermarket.

Amazon is all about the consumer, but also about web services and the cloud. Microsoft reported weak cloud numbers.

Amazon rose 0.7% during the session and is down -1.9% in the aftermarket.

To further complicate, both companies report after the bell tonight.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1653.20	+ 3.90	0.24%
Silver (oz)	19.36	+ 0.06	0.31%
Copper (lb)	3.38	– 0.05	– 1.49%
Aluminium (lb)	1.08	+ 0.00	0.19%
Lead (lb)	0.87	– 0.00	– 0.06%
Nickel (lb)	9.69	– 0.24	– 2.45%
Zinc (lb)	1.33	– 0.02	– 1.73%
West Texas Crude	84.94	+ 0.19	0.22%
Brent Crude	92.91	– 0.47	– 0.50%
Iron Ore (t)	94.61	+ 0.10	0.11%

Not a lot to see here – more to-ing and fro-ing in base metals.

The Aussie is back up again – 1.3% to US$0.6392 on the dollar’s fall.

Today

The SPI Overnight closed up 56 points or 0.8%, pre-Microsoft/Google.

September quarter CPI today.

There is a very long list of AGMs and quarterly reporters today, to be pipped only by tomorrow’s list.

Notable among the list of either today are Coles ((COL)), Woolworths ((WOW)), Mirvac ((MGR)) and Whitehaven Coal.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
BEN	Bendigo & Adelaide Bank	Upgrade to Outperform from Neutral	Macquarie
CVN	Carnarvon Energy	Downgrade to Neutral from Outperform	Macquarie
IAG	Insurance Australia Group	Upgrade to Add from Hold	Morgans
		Downgrade to Hold from Buy	Ord Minnett
IDX	Integral Diagnostics	Downgrade to Underperform from Neutral	Credit Suisse
NVX	Novonix	Speculative Buy	Morgans
RBL	Redbubble	Downgrade to Neutral from Buy	UBS
S32	South32	Downgrade to Hold from Buy	Ord Minnett
SDF	Steadfast Group	Upgrade to Buy from Accumulate	Ord Minnett
SGM	Sims	Downgrade to Underperform from Neutral	Macquarie
SUN	Suncorp Group	Upgrade to Buy from Hold	Ord Minnett
TCL	Transurban Group	Upgrade to Buy from Accumulate	Ord Minnett
ZIP	Zip Co	Downgrade to Hold from Accumulate	Ord Minnett

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.)

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