The Overnight Report: All Is Forgiven

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The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

World Overnight
SPI Overnight	6910.00	+ 42.00	0.61%
S&P ASX 200	6971.60	– 16.50	– 0.24%
S&P500	4515.55	+ 83.70	1.89%
Nasdaq Comp	14239.88	+ 469.31	3.41%
DJIA	35131.86	+ 406.39	1.17%
S&P500 VIX	24.83	– 2.83	– 10.23%
US 10-year yield	1.78	0.00	0.00%
USD Index	96.56	– 0.71	– 0.73%
FTSE100	7464.37	– 1.70	– 0.02%
DAX30	15471.20	+ 152.25	0.99%

By Greg Peel

Squaring Up

Having raced up to the 7000 mark and shied away from it on Friday, yesterday the ASX200 opened down -56 points in the first ten minutes, before stumbling its way back to 7000 again by mid-afternoon.

Again it shied away, closing -16 points down on Friday’s close. It seemed like a quieter session index-wise, which was welcome after a tumultuous week, but at the sector level it was all over the shop.

Six sectors closed in the green and five in the red, with movements spread from a 3.7% gain for technology, following a surge back in the Nasdaq, and a -1.8% fall for the banks. The latter likely reflects squaring up ahead of today’s critical RBA meeting, and indeed the whole session appeared a squaring up affair, also being the last day of the month.

Moves were more informative at the individual stock level.

In line with the Nasdaq bounce, the most beaten-down tech names made up most of the top five index winners yesterday. Afterpay, now trading as Block ((SQ2)) – the SQ reflecting that Block used to be called Square — topped the charts with 8.1%, with Zip Co ((Z1P)) following on 7.5%. Life360 ((360)) gained 7.3% and WiseTech Global ((WTC)) 4.9%.

Squeezing in on 7.9% was ARB Corp ((ARB)) after posting a rare positive profit “warning” ahead of its upcoming earnings release. Solid inventory levels were the key.

Unlike Ansell ((ANN)), which plunged -14.3% after its profit warning, which came down to – you guessed it – supply shortages.

It is abundantly clear this results season will be all about those companies which managed to weather supply-side challenges in the half and those who didn’t.

Vale BHP Plc. As of today, BHP Group ((BHP)) is just one Big Australian, although for one day the UK shares will trade as BHPN before becoming just BHP tomorrow. On last count (it’s a moveable feast), BHP will leap up to a 12% market cap within the ASX200.

From now on the Australian stock market will mostly follow the iron ore price around.

The iron ore price strangely fell yesterday by -4%, when typically it goes dead quiet in Chinese New Year, but it simply gave back the equivalent jump up on Friday. It will probably shut up shop from today.

By rights the market should be quiet again today ahead of 2.30pm but Wall Street has doubled down on Friday night’s rally and our futures are up 42 points this morning.

That would suggest we crack 7000. What happens after that is as yet unclear.

Groundhog Day

Tesla had fallen -20% year to date and last night rose 10%. The stock had actually fallen -30% from its November high but that’s when Elon was selling to pay his tax bill.

That’s about all you need to know about last night’s session on Wall Street. Having spent last week wildly forming a bottoming pattern and then confirming a reversal on Friday night, last night was just a re-run. And once again, it all happened in the last half hour.

Wall Street has swung from “get me out!” to “get me in!”.

In surging back another 3.4%, the Nasdaq managed to avert its worst January since 2008. But having fallen -20%, the Nasdaq still closed the month down around -10%.

Unlike Australia’s final day of the month, every S&P500 sector closed in the green last night, lead out by consumer discretionary (+3.8%) and technology (+2.7%).

We’ll have to see whether this renewed exuberance continues into February, as the US earnings season will continue and gradually tail off all the way to the Fed meeting in March, at which the first rate hike is expected to be announced.

There are eight six-weekly Fed meetings per year. We’ve had one, but thereafter Goldman Sachs last night joined a consensus view that the Fed will hike no less than five times this year. Bank of America is calling for seven.

And it is still possible the first hike will be a double, ie 50 basis points, though Fed member Bostic retracted his earlier suggestion, clarifying last night a 50bp move "is not my preferred policy action".

No doubt the debate will rage for the next month, but we can only wait.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1797.20	+ 5.60	0.31%
Silver (oz)	22.43	– 0.03	– 0.13%
Copper (lb)	4.37	+ 0.00	0.06%
Aluminium (lb)	1.39	– 0.01	– 0.59%
Lead (lb)	1.03	– 0.00	– 0.05%
Nickel (lb)	10.33	+ 0.05	0.46%
Zinc (lb)	1.65	– 0.00	– 0.18%
West Texas Crude	88.20	+ 1.38	1.59%
Brent Crude	91.21	+ 1.18	1.31%
Iron Ore (t)	141.75	– 6.15	– 4.16%

Base metals have indeed gone quiet with China absent, as expected, so I don’t know what was going on in iron ore.

The oils just keep powering ahead, with President Biden last night talking to the Emir of Qatar about providing gas to Europe if the whole Ukrainian thing kicks off. The problem is Qatar typically sells to Asia on long term contracts.

Anyone know where to find some LNG?

The forex cowboys got themselves short Aussie again. The greenback tipped over last night after its solid run and the Aussie has flown back 1.1% to US$0.7073.

Today

The SPI Overnight closed up 42 points or 0.6%.

The first of the month brings manufacturing PMIs from across the globe, and locally we’ll also see house prices and housing finance and retail sales data.

The RBA statement is out at 2.30pm.

Credit Corp ((CCP)) and Centuria Industrial REIT ((CIP)) report earnings today and Virgin Money ((VUK)) provides a quarterly update.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
3PL	3P Learning	Downgrade to Equal-weight from Overweight	Morgan Stanley
ABP	Abacus Property	Downgrade to Lighten from Hold	Ord Minnett
ALU	Altium	Downgrade to Neutral from Buy	Citi
AND	Ansarada Group	Downgrade to Hold from Add	Morgans
AWC	Alumina Ltd	Upgrade to Buy from Hold	Ord Minnett
CHC	Charter Hall	Upgrade to Buy from Accumulate	Ord Minnett
CNI	Centuria Capital	Upgrade to Buy from Accumulate	Ord Minnett
COE	Cooper Energy	Downgrade to Underperform from Neutral	Macquarie
DXS	Dexus	Upgrade to Buy from Hold	Ord Minnett
EVN	Evolution Mining	Upgrade to Add from Hold	Morgans
FMG	Fortescue Metals	Downgrade to Underperform from Neutral	Credit Suisse
GPT	GPT Group	Downgrade to Hold from Accumulate	Ord Minnett
HPI	Hotel Property Investments	Upgrade to Buy from Accumulate	Ord Minnett
IDX	Integral Diagnostics	Upgrade to Buy from Accumulate	Ord Minnett
LVT	LiveTiles	Upgrade to Buy from Neutral	Citi
MCR	Mincor Resources	Downgrade to Neutral from Outperform	Macquarie
MIN	Mineral Resources	Downgrade to Neutral from Buy	Citi
		Downgrade to Sell from Hold	Ord Minnett
MPL	Medibank Private	Downgrade to Lighten from Hold	Ord Minnett
NEA	Nearmap	Upgrade to Buy from Neutral	Citi
NHF	nib Holdings	Downgrade to Lighten from Hold	Ord Minnett
OZL	OZ Minerals	Upgrade to Buy from Neutral	Citi
		Downgrade to Neutral from Outperform	Macquarie
PBH	PointsBet	Downgrade to Neutral from Outperform	Credit Suisse
PMV	Premier Investments	Upgrade to Outperform from Neutral	Credit Suisse
REA	REA Group	Upgrade to Buy from Neutral	Citi
RMD	ResMed	Upgrade to Buy from Neutral	Citi
WSA	Western Areas	Underweight	Morgan Stanley

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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