The Overnight Report: Fruity

This story features VIVA ENERGY GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: VEA

World Overnight
SPI Overnight	7190.00	– 21.00	– 0.29%
S&P ASX 200	7206.90	+ 14.60	0.20%
S&P500	4461.90	– 25.56	– 0.57%
Nasdaq Comp	13773.61	– 144.28	– 1.04%
DJIA	34645.99	– 17.73	– 0.05%
S&P500 VIX	14.23	+ 0.43	3.12%
US 10-year yield	4.26	– 0.02	– 0.56%
USD Index	104.57	+ 0.04	0.04%
FTSE100	7527.53	+ 30.66	0.41%
DAX30	15715.53	– 85.46	– 0.54%

By Greg Peel

Buy the Dip

For the third day running, the ASX200 fell in the morning and rallied in the afternoon. Yesterday, the index took a 50 point round trip from the open to the low and back to the close of up 14, regaining the 7200 mark for now.

It is interesting this pattern should be evident in the heart of ex-dividend season. Early falls have not simply been all about dividends, but one wonders whether someone forgot to explain dividends to momentum algos that see opening weakness and jump on board, before the humans right the ship.

Clearly there are buyers on the dips nonetheless, but investment in 2023 is like pulling teeth. The index was at 7200 in early January. It’s since travelled up to 7500 and down to 6900 and if you run a straight line through the middle of the year-to-date chart, you’re at 7200.

Materials was the best performing sector yesterday (+0.9%), as iron ore prices continued to push higher, confounding analysts long expecting sub-US$100/t prices. Analysts also largely expect a run-up ahead for the gold price, but that can’t get out of its own way in the low US$1900s/oz. Gold was down again last night.

Energy was the worst performer (-1.4%). Viva Energy ((VEA)) fell -7.3% on speculation Swiss-based Vitol was considering selling its Viva stake in a $500m minimum block trade. Yet the big oil names all fell.

The oil price tipped over ever so slightly on Monday night, perhaps triggering a bit of profit-taking after a solid run. Oil prices resumed normal service last night.

The coin came up heads for healthcare yesterday (+0.8%), with ResMed ((RMD)) finally seeing some buying amidst this whole obesity drug versus sleep apnoea debate that no one seems to know the answer to.

Communication services fell -0.6% because TPG Telecom ((TPG)) went ex.

Remaining sector moves were small and mixed, and the banks sat it out, as did bond yields.

In economic news, NAB’s business survey for August showed conditions rising 3 points to +13 but confidence stable at +2. That seems to be somewhat of a “make hay while the sun shines” set-up.

While most of the survey’s price and cost measures declined after the July spike, they are well above June levels. The price indicators are in line with inflation printing just under 5%, ANZ Bank economists point out, suggesting inflation may prove hard to quash.

While conditions may be okay at the moment for businesses, it’s not the case for consumers. Westpac’s confidence index for September fell -1.7% to 79.7. For once the RBA’s rate pause did not instil any hope. Confidence did improve among mortgagors, with the pause and a possible end in sight, but the cost of living and ongoing inflation remain the key drags, keeping wallets in pockets.

With Wall Street down overnight (once again all about Big Tech), our futures are down -21 points this morning. There are again some big ex-divs today, so can we make it four in a row?

I See the Future

Stalwart cloud database company Oracle, which has been around since Homer (the other one), reported earnings after the close on Monday night and last night fell -13.5% after missing on revenue guidance. It’s the stock’s biggest one-day fall in 22 years.

The problem? Oracle is another AI player. Another which clearly became overbought on the hype.

Hence, the US technology sector took a tumble last night, but that wasn’t the only reason.

Apple launched the iPhone 15 last night, as well as a new watch and earphones. Ho hum. Bit of a tweak here, bit of a tweak there, but nothing to make the average smart phone buyer feel the need to rush out and upgrade from their 14, or 13, or even 12. Analysts were not expecting any great excitement.

What they were expecting was a price rise for the regular version. It didn’t eventuate. Sales of iPhones have been in a downtrend for several quarters, now everyone has a smart phone. A price rise was needed, it seems, to halt falling revenues. Apple fell -1.7%. Looks small, but as has oft been noted in this Report, when Apple sneezes Wall Street dies of pneumonia.

Apple shares have now fallen on the day of the launch of all of the 12,13,14 and 15. While that may be a trend, the stock is still up around 40% year to date, because hardware is not the company’s only business.

Otherwise, selling on Wall Street last night was also put down to squaring up ahead of tonight’s CPI release. An increase in the annual headline rate is well anticipated, but the core is less certain. The expectation is it should manage another dip on an annual basis, but if not, Wall Street might take it badly.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1912.80	– 9.00	– 0.47%
Silver (oz)	23.10	+ 0.05	0.22%
Copper (lb)	3.77	– 0.02	– 0.48%
Aluminium (lb)	0.98	– 0.00	– 0.11%
Nickel (lb)	8.89	– 0.24	– 2.59%
Zinc (lb)	1.11	– 0.00	– 0.13%
West Texas Crude	88.84	+ 1.55	1.78%
Brent Crude	91.93	+ 1.27	1.40%
Iron Ore (t)	120.33	+ 2.10	1.78%

Iron ore and oil are the two commodities that keep on rising. Oil is easily explained, but not iron ore, or at least Chinese steel production, which has long been expected to ease.

Gold just can’t find any momentum.

The Aussie is down a tad at US$0.6426.

Today

The SPI Overnight closed down -21 points or -0.3%.

The US CPI is the big event tonight.

Breville Group ((BRG)), Brambles ((BXB)), IGO Ltd ((IGO)) and Medibank Private ((MPL)) are today’s bigger exes.

Syrah Resources ((SYR)) reports earnings.

The Australian share market over the past thirty days…

Index	12 Sep 2023	Week To Date	Month To Date (Sep)	Quarter To Date (Jul-Sep)	Year To Date (2023)
S&P ASX 200 (ex-div)	7206.90	0.70%	-1.35%	0.05%	2.39%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ATA	Atturra	Upgrade to Add from Hold	Morgans
CMM	Capricorn Metals	Downgrade to Neutral from Outperform	Macquarie
DTL	Data#3	Downgrade to Hold from Add	Morgans
PTM	Platinum Asset Management	Upgrade to Neutral from Sell	UBS
SGM	Sims	Upgrade to Neutral from Sell	Citi

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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