The Overnight Report: Faceplant

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

The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

World Overnight
SPI Overnight	6989.00	+ 7.00	0.10%
S&P ASX 200	7087.70	+ 81.70	1.17%
S&P500	4589.38	+ 42.84	0.94%
Nasdaq Comp	14417.55	+ 71.54	0.50%
DJIA	35629.33	+ 224.09	0.63%
S&P500 VIX	22.09	+ 0.13	0.59%
US 10-year yield	1.77	– 0.03	– 1.89%
USD Index	95.92	– 0.38	– 0.39%
FTSE100	7583.00	+ 47.22	0.63%
DAX30	15613.77	– 5.62	– 0.04%

By Greg Peel

Risk On

It was a pretty quiet day on the ASX yesterday. The ASX200 opened up 60 points, was up 90 points by late morning, and stayed there.

The 7000 level was left well and truly behind, with 7100 now looming. But it was not a Buy Everything affair following a bottoming phase. Sector moves were disparate.

One way to beat inflation is to buy it, in the form of resource stocks. Energy led the index with a 2.8% gain yesterday, backed up by materials on 2.0%. It was the first day of trading in BHP Group ((BHP)) as a single entity, and the biggest stock on the market rose 1.6%. A chart-topping 6.2% gain for Champion Iron ((CIA)) was indicative of general iron ore miner buying, despite the iron ore price not moving while China is on a holiday.

The banks made their contribution with 1.1%, in the wake of the RBA remaining “patient” before deciding on a rate hike. Consumer discretionary is the ultimate risk-on sector, and it rose 1.1%.

Utilities did not tag along with energy (-0.4%). The defensives were generally less sought after, posting sub-1% gains. Technology stood out by closing flat, despite another 0.8% gain for the Nasdaq overnight. The culprit was Block ((SQ2)), down -5.6% as it followed its US listing.

Credit Corp ((CCP)) topped the losers’ list with a -6.6% fall, having reported earnings on Tuesday. The result was a miss at the headline, but mostly due to a timing issue and brokers remain upbeat.

Amcor ((AMC)) reported yesterday and fell -3.5%. Supply and inflation challenges.

The earnings season continues today but we’ll also have a quarterly update from Westpac ((WBC)), which will set the scene for just how the banks are faring amidst omicron.

That’s about it – as I said, it was a quiet day.

Job Shock

Stop Press: As I write, Meta Platforms (ie Facebook) has just posted an earnings miss and is down -20% in the aftermarket. Similarly, Spotify, from which artists such as Neil Young and Joni Mitchell have been withdrawing their song books, is down -17%.

PayPal reported in Tuesday’s aftermarket, and fell -23% overnight.

The results exemplify a stark contrast between US tech names this earnings season, and generally over the last several months. PayPal’s woes were not evident in solid results, and share price gains, for all of Visa, Mastercard and American Express earlier.

Facebook has been creamed, but Google last night gained 7.6% after reporting in Tuesday’s aftermarket, proving a major underpinning to Nasdaq and S&P500 gains in the day-session. Google, which closed at US$2960 a share (market cap US$2trn), has announced a 20-1 stock split, which would thus make it eligible for the Dow in future.

Earnings shocks abound, but the other shock last night was the US private sector jobs number for January. Economists were anticipating an omicron impact, but still forecast a net gain of 200,000 jobs. There were plenty of gasps when the result was a -300,000 net loss – the first loss since the initial covid impact in 2020.

Economists are now rethinking their non-farm payroll forecasts for Friday, although there’s rarely much correlation between the two data points. The release did nevertheless cause Wall Street to stumble early in the session last night, and the ten-year bond yield to pull back -3 basis points to 1.77%.

It is unlikely the Fed is going to rethink its policy regardless.

Wall Street managed to shrug off the jobs number and push on anyway. There was no huge last half hour rally this time, just a more measured rise to the close.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1806.20	+ 6.40	0.36%
Silver (oz)	22.63	+ 0.06	0.27%
Copper (lb)	4.47	+ 0.03	0.74%
Aluminium (lb)	1.37	– 0.02	– 1.56%
Lead (lb)	1.02	– 0.01	– 0.86%
Nickel (lb)	10.58	+ 0.05	0.45%
Zinc (lb)	1.65	– 0.00	– 0.15%
West Texas Crude	88.33	+ 0.17	0.19%
Brent Crude	89.56	+ 0.41	0.46%
Iron Ore (t)	141.75	0.00	0.00%

Nothing much to see here.

OPEC-Plus meets tonight but is not expected to shift from its previous plan of modestly increasing production from this month. It is not enough, analysts suggest, to cap the ongoing rise in oil prices, and some OPEC members will be unable to match the new quotas anyway given their own omicron problems.

The US dollar continues to slide, so the Aussie’s up another 0.3% at US$0.7149.

Today

The SPI Overnight closed up 7 points.

Locally we’ll see numbers for building approvals and trade today.

Centuria Office REIT ((COF)), Janus Henderson ((JHG)) and Pinnacle Investments ((PNI)) report earnings.

As noted Westpac provides an update.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ABB	Aussie Broadband	Upgrade to Outperform from Neutral	Credit Suisse
ABC	AdBri	Upgrade to Neutral from Underperform	Credit Suisse
ALU	Altium	Downgrade to Neutral from Buy	Citi
ANN	Ansell	Upgrade to Neutral from Underperform	Macquarie
		Downgrade to Hold from Add	Morgans
ARB	ARB Corp	Upgrade to Buy from Hold	Ord Minnett
AWC	Alumina Ltd	Upgrade to Buy from Hold	Ord Minnett
BXB	Brambles	Downgrade to Underweight from Equal-weight	Morgan Stanley
CAR	Carsales	Upgrade to Outperform from Neutral	Credit Suisse
CPU	Computershare	Upgrade to Buy from Neutral	UBS
CSR	CSR	Upgrade to Outperform from Neutral	Credit Suisse
EHE	Estia Health	Downgrade to Hold from Accumulate	Ord Minnett
IDX	Integral Diagnostics	Upgrade to Buy from Accumulate	Ord Minnett
LVT	LiveTiles	Upgrade to Buy from Neutral	Citi
MPL	Medibank Private	Downgrade to Lighten from Hold	Ord Minnett
NHF	nib Holdings	Downgrade to Lighten from Hold	Ord Minnett
PBH	PointsBet	Downgrade to Neutral from Outperform	Credit Suisse
PTM	Platinum Asset Management	Upgrade to Equal-weight from Underweight	Morgan Stanley
REA	REA Group	Upgrade to Buy from Neutral	Citi
RMD	ResMed	Upgrade to Buy from Neutral	Citi
SWP	Swoop Holdings	Upgrade to Speculative Buy from Hold	Morgans

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

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