The Overnight Report: Excitement Builds

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World Overnight
SPI Overnight	7101.00	+ 19.00	0.27%
S&P ASX 200	7058.40	+ 9.00	0.13%
S&P500	4547.38	+ 33.36	0.74%
Nasdaq Comp	14284.53	+ 159.05	1.13%
DJIA	35151.04	+ 203.76	0.58%
S&P500 VIX	13.41	– 0.39	– 2.83%
US 10-year yield	4.42	– 0.02	– 0.43%
USD Index	103.44	– 0.48	– 0.46%
FTSE100	7496.36	– 7.89	– 0.11%
DAX30	15901.33	– 17.83	– 0.11%

By Greg Peel

Snooze Button

The ASX slept its way through yesterday as the ASX200 failed to gain any traction despite the futures being optimistic before the open. The futures said up 28 and the index did manage up 23 mid-session, but not for long.

Despite the index closing up 9 points, only three sectors managed to close in the green, with seven falling on the day and materials closing completely “unch”.

Energy was the only sector to much move the dial (+1.3%) as oil prices rebounded and coal miner Coronado Resources ((CRN)) topped the index with a 3.8% gain.

The banks (+0.6%) got the index over the line and discretionary was healthy (+0.6%) as retailers offer discounts this week, ahead of Christmas, rather than waiting for Boxing Day. One day someone might explain the logic.

Those two sectors ignored another 3-4 point rise in bond yields, while all other defensives and rate-sensitives fell by amounts ranging from technology (-0.1%) to staples (-0.8%).

Staples have been on the nose in recent sessions. Traders are looking to a frugal Christmas feast this year it would seem.  

And Santa has not had many requests for new runners. Having provided an update suggesting week sales for the first nineteen weeks of FY24, Accent Group ((AX1)), which is in the ASX300, fell over -8% yesterday for the second day in a row.

Wall Street revved up again last night and our futures are showing up 19, remembering they were up 28 yesterday, although the minutes of the RBA meeting due late morning will likely hold the key.

Artificial Upheaval

I reported yesterday the board of OpenAI had sacked co-founder and CEO, Sam Altman. Apparently Microsoft, which has poured billions into OpenAI and is exclusive partner in ChatGPT, was not informed beforehand. Microsoft has now offered Altman a job.

Altman has not yet accepted, and there is supposedly a bit of a revolt going on amongst OpenAI employees — some 700 behind AI development. Rumour is Altman may yet return to OpenAI and it will be the board that goes.

In the meantime, customer relationship management company Salesforce, which like Microsoft is a Dow component, has offered all 700 a job and whatever pay they’re currently on.

Commentators agree were any of those 700 to jump ship, they’d be snapped up elsewhere in a heartbeat.

Microsoft shares jumped 2% on the news in a session in which all the Mag7 closed in the green. Salesforce closed up 1.8%. OpenAI is not listed.

Watch this space.

Meanwhile, AI chipmaker Nvidia, which reports earnings after the bell tonight, rose 2.3%.

Otherwise, there was nothing in particular to drive last night’s exuberance. The major indices opened little-changed and then steadily rallied to the close.

The US ten-year bond yield fell -2 points to 4.42%.

A leading economic indicator published last night did show a -0.8% fall in October, which could be considered “good” news in the Fed rate cut camp, but that’s the nineteenth straight month of the indicator suggesting a recession that never comes.

One is reminded of the Irish pub that had a sign out “Free beer tomorrow”. The sign was there every day.

The S&P500 has now rallied 9.6% from its October low. If it gets to over 10% then it's “officially” out of correction territory, if that sort of thing floats your boat.

Wall Street will need to do it by lunchtime on Wednesday before everyone leaves for Thanksgiving.

The minutes of the Fed meeting are out tonight, along with Nvidia’s result.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1976.80	– 4.30	– 0.22%
Silver (oz)	23.42	– 0.30	– 1.26%
Copper (lb)	3.71	+ 0.02	0.47%
Aluminium (lb)	1.00	+ 0.01	0.78%
Nickel (lb)	7.53	– 0.03	– 0.46%
Zinc (lb)	1.16	+ 0.00	0.16%
West Texas Crude	77.60	+ 1.71	2.25%
Brent Crude	82.15	+ 1.54	1.91%
Iron Ore (t)	131.25	+ 2.92	2.28%

Yesterday the PBoC kept its loan prime rate near record lows, as widely expected, but also injected some 80bn renminbi of liquidity into markets, which counts as stimulus.

Good news for iron ore and oil.

The Aussie is on a tear as the US dollar continues to pull back, up another 0.7% at US$6564.

Today

The SPI Overnight closed up 19 points or 0.3%.

Minutes of the RBA meeting today, minutes of the Fed meeting tonight.

AGL Energy ((AGL)), BlueScope Steel ((BSL)) and Fortescue Metals ((FMG)) are three of a handful of companies holding AGMs today.

TechnologyOne ((TNE)) reports earnings.

Amcor ((AMC)) and Elders ((ELD)) go ex-div.

US earnings season calendar: https://www.ii.co.uk/investing-with-ii/international-investing/us-earnings-season

The Australian share market over the past thirty days…

Index	20 Nov 2023	Week To Date	Month To Date (Nov)	Quarter To Date (Oct-Dec)	Year To Date (2023)
S&P ASX 200 (ex-div)	7058.40	0.13%	4.10%	0.14%	0.28%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
A2M	a2 Milk Co	Upgrade to Buy from Neutral	Citi
ALL	Aristocrat Leisure	Upgrade to Accumulate from Hold	Ord Minnett
ALQ	ALS Ltd	Upgrade to Lighten from Sell	Ord Minnett
AX1	Accent Group	Downgrade to Neutral from Buy	Citi
NHF	nib Holdings	Upgrade to Hold from Lighten	Ord Minnett
NUF	Nufarm	Upgrade to Buy from Neutral	Citi
SEK	Seek	Upgrade to Buy from Neutral	UBS
SVR	Solvar	Upgrade to Buy from Hold	Bell Potter
TPG	TPG Telecom	Downgrade to Underweight from Equal-weight	Morgan Stanley
WDS	Woodside Energy	Downgrade to Sell from Neutral	Citi

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

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