The Overnight Report: Taking A Punt

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies. For more info SHARE ANALYSIS: CBA

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

By Greg Peel

Blown Away Again

Bank analysts at brokers in the FNArena database went into Commonwealth Bank’s ((CBA)) result release yesterday with two Hold and five Sell or equivalent ratings between them. CBA jumped 5.6%. The bank is overvalued compared to peers they say, as they have been saying since time immemorial. No one upgraded their rating.

CBA’s result was a fillip for all the majors, leading the financials index up 2.6% yesterday. CBA alone was worth 26 index points, on a day of standout winners and losers in the result season game.

Computershare ((CPU)) topped the pops with an 11.2% surge, helping to boost an already buoyant technology sector (4.2%) following a strong Nasdaq lead.

Temple & Webster ((TPW)) has been riding the covid ups and downs, and yesterday jumped 9.7% on its result release, but is not in the ASX200.

In the naughty corner, mixed miner Mineral Resources ((MIN)) fell -8.9% to be the worst index performer, while auto-parts distributor Bapcor ((BPA)) fell -7.9%. The stock had previously rallied on the back of a strong result from peer GUD Holdings ((GUD)) this week.

In a switch from the recent trend, the resources sectors were the only sectors to close in the red yesterday, with energy down -0.4% and materials down -0.6%. Oil prices had pulled back -2% overnight, and iron ore pulled back -2% during the day, missing the chance to close above US$150/t (spot).

Chinese regulators said yesterday they had summoned market information providers recently and told them not to fabricate price hike information or drive up prices. They also vowed to keep the market stable with more effective measures.

The last time Beijing made waves the iron ore price fell -50%. But at the same time the government is providing stimulus and support to the Chinese steel industry. Can’t have your cake.

Fortescue Metals ((FMG)) made it on to the top five index losers’ list with a -3.6% drop, and Mineral Resources obviously copped it as well.

On a net basis, the local earnings season is so far looking very positive, but it’s very early days. Earnings results continue to drive Wall Street as well, amidst the macro noise, providing a solid platform.

Our futures are up another 41 points this morning, which would imply a swift move through 7300 after breaking up through 7200.

There’s only a handful of stocks reporting today, and National Bank ((NAB)) will round out the bank reporting “season” with its update today, having jumped 2.4% yesterday on CBA’s coattails.

Better not disappoint.

Back in Black

Disney (Dow) has just reported in the Wall Street aftermarket and is up 9%. Mind you, it’s a long way back to the stock’s pandemic peak.

The same can be said for the 2020 stay-at-home favourites such as Zoom, DocuSign, Shopify and Etsy, all of which were creamed in January having already, in some cases, more than halved from their peaks, and all of which caught a bid last night.

Probably summing up the mood was a 5.4% gain for Meta.

Technology was the best performing sector on Wall Street last night, amid some positive earnings results in other sectors. It seems investors are punting on tonight’s inflation number not being any worse than the current 7.2% forecast, and perhaps even lower.

Also helping was a -3 basis point pullback in the US ten-year yield, following a well-received auction.

Among the day’s earnings reports, restaurant chain Chipotle jumped 10% but drawing a lot of attention was solar energy company Enphase Energy, which jumped 12% on result and dragged the whole solar sub-sector up with it.

Before last night, around 60% of S&P500 companies had reported for a net 77% earnings beat, which is above average.

In other news, US weekly mortgage applications dropped by -10% last week, showing higher rates are beginning to bite. And the Fed hasn’t started yet.

Regarding yesterday’s suggestion from Macron that he may have staved off a Russian invasion, Putin has responded by suggesting Macron got it all wrong.

Didn’t seem to bother Wall Street.

Commodities

Better get in quick, there’s only three days’ worth of copper inventories sitting at the LME, according to the latest data.

Which, aside from iron ore’s pullback, is about all of note above.

The Aussie is, however, up another 0.5% at US$7183 despite no move in the greenback.

Today

The SPI Overnight closed up 41 points or 0.6%.

US January CPI tonight.

AGL Energy ((AGL)), AMP ((AMP)) and Mirvac ((MGR)) are just some of today’s reporters.

As noted, NAB will provide an update.

For upcoming earnings result dates, and a summary of results to date, please refer to the FNArena Corporate Results Monitor.

The Australian share market over the past thirty days…

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

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