##{"id":102071,"date":"2022-06-08T08:58:23","date_gmt":"2022-06-07T22:58:23","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=102071"},"modified":"2022-06-08T10:06:46","modified_gmt":"2022-06-08T00:06:46","slug":"the-overnight-report-didnt-see-that-coming","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2022\/06\/08\/the-overnight-report-didnt-see-that-coming\/","title":{"rendered":"The Overnight Report: Didn\u2019t See That Coming"},"content":{"rendered":"\n\n\n\n\n\n\n\n\n\n\n\n\n
World Overnight<\/strong><\/span><\/td>\n<\/tr>\n
SPI Overnight<\/strong><\/span><\/td>\n7146.00<\/strong><\/span><\/td>\n+ 45.00<\/strong><\/span><\/td>\n0.63%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n7095.70<\/strong><\/span><\/td>\n– 110.60<\/strong><\/span><\/td>\n– 1.53%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n4160.68<\/strong><\/span><\/td>\n+ 39.25<\/strong><\/span><\/td>\n0.95%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n12175.23<\/strong><\/span><\/td>\n+ 113.86<\/strong><\/span><\/td>\n0.94%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n33180.14<\/strong><\/span><\/td>\n+ 264.36<\/strong><\/span><\/td>\n0.80%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n24.02<\/strong><\/span><\/td>\n– 1.05<\/strong><\/span><\/td>\n– 4.19%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n2.97<\/strong><\/span><\/td>\n– 0.07<\/strong><\/span><\/td>\n– 2.17%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n102.34<\/strong><\/span><\/td>\n– 0.05<\/strong><\/span><\/td>\n– 0.05%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7598.93<\/strong><\/span><\/td>\n– 9.29<\/strong><\/span><\/td>\n– 0.12%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n14556.62<\/strong><\/span><\/td>\n– 97.19<\/strong><\/span><\/td>\n– 0.66%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Shock and Awe<\/u><\/p>\n

“Given the current inflation pressures in the economy, and the still very low level of interest rates, the Board decided to move by 50 basis points today. The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”<\/em><\/p>\n

After Wall Street had closed slightly higher yesterday morning, and the futures were showing down a mere -5 points, it was clear the ASX was in for a quiet period in the lead up to the RBA decision at 2.30pm.<\/p>\n

Except that the ASX200 was down -50 points in the first half hour.<\/p>\n

US futures had turned lower, but it appears as if an uneasy feeling of dread had crept across the market. Around half of economists were forecasting the RBA would go a full 40 points rate hike, when only a bit more than a third said 25. A couple of fools even suggested 50 points.<\/p>\n

By 2.30pm the index was already down -65 points. The driving force were the banks. Never mind the benefit of increased net interest margins a rate hike — and particularly a 40 points rate hike — would bring, Australian households are already suffering from soaring food and fuel prices, wages not keeping pace with inflation, and household debt-to-income levels at historical highs, so all Australians need right now is a big jump in their variable mortgage payments.<\/p>\n

When the RBA statement was released, the index immediately plunged to be down -124 points. There was not much reprieve thereafter.<\/p>\n

The financials sector closed down -2.3%. Not the biggest percentage move on the day, but by far the most powerful. Technology fell -3.0%, mostly because Apple announced it was jumping on the BNPL bandwagon, sending Zip Co ((ZIP)) down -14.4% to be the worst index performer on the day, along with its peers.<\/p>\n

Real Estate fell -2.9%, as higher bond rates undermine REIT dividends. The Aussie ten-year yield rose 7 points to 3.55%. The two-year jumped 17 points to 2.76%.<\/p>\n

Consumer discretionary fell -2.3%, with consumers forced to lock down their wallets. Even staples fell -1.6%.<\/p>\n

The resource sectors tried manfully to hold on, but in the end materials closed down -0.2% and energy -0.3%. All sectors closed in the red.<\/p>\n

The question now is, will the RBA do it again next month?<\/p>\n

The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead.<\/em><\/p>\n

Another 50 pointer?<\/p>\n

The size and timing of future interest rate increases will be guided by the incoming data…<\/em><\/p>\n

ANZ Bank economists, for one, who were in the 40 points camp, suggest a 50 pointer in August is more likely than July, given the June quarter CPI result will be known by then. Otherwise there’s only monthly jobs numbers. This implies only 25 in July.<\/p>\n

But we know the RBA is now on a tear to fight inflation. Nothing should really be that surprising.<\/p>\n

A lot of potential buyers would have just stood aside and let it happen yesterday. This morning the futures are up 45 points.<\/p>\n

Grim Determination<\/u><\/p>\n

Only three weeks after an earnings report that sent Wall Street into a tailspin, US Target downgraded its margin guidance last night. The prior shock of weak June quarter earnings guidance was all about lockdown-suitable inventory the chain couldn’t shift. It was stuck with trackie-daks up to the eyeballs, and garden lounges were clogging the aisles.<\/p>\n

The only way to move it is to discount. The Dow fell -270 points from the open. Target’s not a Dow stock, there is a wider implication. Yet after falling sharply early, Target clawed its way back to close down only -2.3%. Indeed, Wall Street spent all session recovering and then pushing higher.<\/p>\n

There will be no surprise when the Fed hikes by 50 points next week. Nor any surprise when it follows up in July. September remains up in the air (no August meeting), but Wall Street is coming to the conclusion that will probably be 50 as well. This is very bad news for growth stocks.<\/p>\n

But the Nasdaq rallied 0.9% last night, as did the S&P500. The bottom line is most of those growth stocks had fallen as far as -60%, -70% or even -80% year to date. How much further can they fall? Investors are looking for bargains, and it didn’t hurt that the US ten-year yield slipped back below 3% last night.<\/p>\n

By contrast, the energy sector is up almost 70% year to date. Yet last night the sector again outperformed the index in rising a further 3%.<\/p>\n

Many on Wall Street remain convinced the market can continue to rally, at least in the near term. Thereafter it likely depends on the trajectory of inflation. Plenty still believe the 2022 low is not yet in.<\/p>\n

Commodities<\/u><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Spot Metals,Minerals & Energy Futures<\/strong><\/span><\/td>\n<\/tr>\n
Gold (oz)<\/strong><\/span><\/td>\n1852.10<\/strong><\/span><\/td>\n+ 10.70<\/strong><\/span><\/td>\n0.58%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n22.22<\/strong><\/span><\/td>\n+ 0.19<\/strong><\/span><\/td>\n0.86%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n4.32<\/strong><\/span><\/td>\n– 0.05<\/strong><\/span><\/td>\n– 1.11%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n1.36<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.50%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.99<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.98%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n13.05<\/strong><\/span><\/td>\n– 0.20<\/strong><\/span><\/td>\n– 1.53%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.72<\/strong><\/span><\/td>\n– 0.04<\/strong><\/span><\/td>\n– 2.42%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n119.41<\/strong><\/span><\/td>\n+ 0.91<\/strong><\/span><\/td>\n0.77%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n120.81<\/strong><\/span><\/td>\n+ 0.71<\/strong><\/span><\/td>\n0.59%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n145.81<\/strong><\/span><\/td>\n+ 0.57<\/strong><\/span><\/td>\n0.39%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The US has begun shipping in oil from Venezuela. OPEC has increased its production quota. But Shanghai continues to reopen and the US summer driving season has begun.<\/p>\n

Oil prices press higher.<\/p>\n

Following a 0.5% rate hike from the RBA, the Aussie is up 0.5% at US$0.7234.<\/p>\n

Today<\/u><\/p>\n

The SPI Overnight closed up 45 points or 0.6%.<\/p>\n

There’s nothing of particular note on the calendar today.<\/p>\n

The Australian share market over the past thirty days…<\/strong><\/p>\n

<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ANN<\/td>\nAnsell<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
APX<\/td>\nAppen<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
COE<\/td>\nCooper Energy<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Accumulate from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
CPU<\/td>\nComputershare<\/td>\nUpgrade to Hold from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
DMP<\/td>\nDomino's Pizza Enterprises<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
HLS<\/td>\nHealius<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
IPL<\/td>\nIncitec Pivot<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
TAH<\/td>\nTabcorp<\/td>\nDowngrade to Hold from Add<\/td>\nMorgans<\/td>\n<\/tr>\n
TCL<\/td>\nTransurban Group<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

For more detail go to FNArena's Australian Broker Call Report<\/a>, which is updated each morning, Mon-Fri.<\/p>\n

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<\/a>. (Subscribers can access prices on the website.)<\/em><\/p>\n

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)<\/strong><\/em><\/p>\n

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.<\/em><\/p>\n

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com<\/em><\/p>\n

FNArena is proud about its track record and past achievements: Ten Years On<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Wall Street turned around from early gains last night to close higher, but the local market is still in shock. Dow up 264. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":102076,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[84],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/102071"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=102071"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/102071\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/102076"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=102071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=102071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=102071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}