The Overnight Report: Not Guaranteed

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By Greg Peel

Predictable

It was the lack of a debt ceiling deal that took the ASX200 down last week, following Wall Street, so it was always a given any sign of a deal would likely bring us back up again. The index shot up 100 points from the open yesterday, before settling back to a more realistic gain.

We’re now sitting tenuously back above 7200, but the slightest hint of a lack of numbers in Congress could derail Wall Street once more, and if the deal is voted down, well…

The banks had been the hardest hit during the no-deal sell-off so it was no surprise they rallied 1.2% yesterday. Materials has also suffered, aided by weak data out of China, but a decent bump in the iron ore price yesterday helped that sector up 1.1%.

Energy also performed well (+0.7%) despite a drag from coal miners, as thermal coal prices continue to recede.

Would you believe there was not one lithium miner on either side of the ASX200 top five table yesterday? Leo Lithium ((LLL))) made up for it nonetheless, in the ASX300, in jumping 17% on a big investment from China.

Also in the ASX300 is Appen, which jumped 10.6% following its investor day on Friday. It looks like tech investors are now piling into AI exclusively and selling off other tech stocks to do so. BrainChip Holdings ((BRN)) rose another 4.6% yesterday while Megaport ((MP1)), which starred on Friday, fell -3.8%. The technology sector fell -0.4%, despite the Nasdaq having gained 2.2% on Friday night.

If we discount a flat close for communication services, the only other loser on the day was consumer discretionary, which despite having been in the wars last week as well, fell -0.6%, thanks to a -16% plunge for IDP Education ((IEL)), following Canada’s decision to accept expedited study permit applications from IDP’s competitors.

On the flipside, real estate actually topped the percentages with a 1.9% gain, led by the biggies but with some help from Charter Hall Social Infrastructure REIT ((CQE)), which took a rare silver in the index with a 4.5% jump. Aussie bond yields slipped only slightly.

Healthcare also had a better day (+0.9%) while staples, industrials and utilities all did their bit to help.

We are now beholden to US Congress and while Biden said last night he can never be “confident” where Congress is concerned, he is “feeling good” about the deal.

Our futures are down -13 points this morning, which would take the index perilously close to 7200.

Commodities

With the US and UK both closed, there was never going to be a lot of action last night, and indeed no base metals trading in London.

Iron ore nevertheless had a pop, but the price move is exaggerated by a rollover to the new trading month.

The Aussie is up 0.3% at US$0.6543.

Today

The SPI Overnight closed down -13 points or -0.2%.

Wall Street should in theory be stalled tonight ahead of Wednesday night’s vote in the House, but before the bill can go to the house it has to be passed by the Rules Committee, which is currently stacked with far right Republicans as a concession to provide for McCarthy to be elected speaker.

So even a vote is not guaranteed at this point.

The US will also see data for monthly consumer confidence and house prices.

Locally, we’ll see building approvals.

Aroa Biosurgery ((ARX)) reports earnings.

Challenger ((CGF)) and Qantas Airways ((QAN)) host investor days while Wesfarmers ((WES)) holds a strategy briefing.

The Australian share market over the past thirty days…

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