The Overnight Report: Twist In The Tale

This story features A2 MILK COMPANY LIMITED, and other companies. For more info SHARE ANALYSIS: A2M

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

By Greg Peel

Ever-Changing Scene

The local market again was forced yesterday to weigh the macro overlay against the micro impact of the day’s earnings releases as Biden’s “imminent” call sent Wall Street tumbling again on Friday night. For the past two weeks the 7200 level in the ASX200 has provided a baseline but that broke yesterday morning as the index fell -65 points.

Then came the news that Putin had agreed to meet with Biden this week, and the mood changed. The market was more able to concentrate on the day’s results and the index was up 27 points inside the last hour.

Alas, we will be back where we started today. Putin has officially “recognised” the independence of the two Russian separatist states inside Ukraine, where fighting has been underway since Russia took Crimea eight years ago. A reasonable solution to the problem, or further act of aggression? It didn’t help that in announcing the recognition, Putin declared that from an historical perspective, Ukraine had “no right” to exist as a sovereign nation.

Suffice to say the West has denounced the move. We have no Wall Street impact to assess, but the German DAX was down -2% last night and our futures are down -70 points this morning. Oil prices have jumped 3% despite the increasing possibility the ban on Iranian exports may soon be lifted.

I’m not qualified to contemplate what might come next, so let’s just review the day’s local corporate action.

Earnings result winners on the day were led out by a2 Milk ((A2M)), up 11.1%, and Endeavour Group ((EDV)), up 10.3%. Infant formula, beer and pokies are all of course staples, so that sector gained 2.3%.

The winning sector on the day was utilities, up 3.7% following Cannon-Brookes’ takeover offer for AGL Energy ((AGL)), which rose 10.6% to well above the offer price.

If that was frustrating for Cannon-Brookes, his significant shareholding in Tyro Payments ((TYR)) didn’t do him any favours. That stock fell -26% on result.

The other result losers on the day were Super Retail ((SUL)), down -9.5%, and Altium ((ALU)), down -5.9%. Super Retail had the discretionary sector down -0.9%.

The telco sector rose 1.3% after Telstra ((TLS)) announced a deal with TPG Telecom ((TPG)), which was mutually positive for their share prices, and Kiwi telco Chorus ((CNU)) jumped 9.9% on result.

The biggest losing sector was technology (-2.7%) following another weak session for the Nasdaq, and the fact that when uncertainty reigns, the first stocks to be jettisoned are the risky growth stocks.

PointsBet Holdings ((PBH)) fell -11.1%, Block ((SQ2)) -6.8% and Zip Co ((Z1P)) -7.8%.

It was a quieter day in other sectors, except for healthcare (-1.3%), which again reflected selling in CSL ((CSL)).

Beneath a cloud of anxiety, the earnings season rolls on.

Commodities

While no tank has crossed the border, talk is of Putin’s latest move to be sufficient to kick off the imposition of sanctions. That appears to be the assumption being made by oil traders, as energy export bans would play a significant part.

The US has been in negotiations with Saudi Arabia to use its excess capacity – currently beholden to production quotas – to make up the shortfall of oil supply to Europe. If it agrees, then that presumably signals the end of OPEC-Plus.

As has been discussed, Beijing’s interference in the iron ore market may result in a swift exit of speculators, but it does not take long for the physical demand/supply balance to re-inform pricing.

The Aussie is up 0.1% at US$0.7189.

Today

The SPI Overnight closed down -70 points or -1.1%.

Today’s sizeable list of reporting companies includes ARB Corp ((ARB)), Cochlear ((COH)) and Coles ((COL)).

Note that the daily list of companies going ex-dividend is also now beginning to grow steadily. Today’s list includes Wesfarmers ((WES)).

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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