{"id":77586,"date":"2018-11-02T09:04:28","date_gmt":"2018-11-01T22:04:28","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=77586"},"modified":"2018-11-02T10:22:02","modified_gmt":"2018-11-01T23:22:02","slug":"the-overnight-report-blind-faith","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2018\/11\/02\/the-overnight-report-blind-faith\/","title":{"rendered":"The Overnight Report: Blind Faith?"},"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 (Dec)<\/strong><\/span><\/td>\n5813.00<\/strong><\/span><\/td>\n+ 5.00<\/strong><\/span><\/td>\n0.09%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n5840.80<\/strong><\/span><\/td>\n+ 10.50<\/strong><\/span><\/td>\n0.18%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n2740.37<\/strong><\/span><\/td>\n+ 28.63<\/strong><\/span><\/td>\n1.06%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n7434.06<\/strong><\/span><\/td>\n+ 128.16<\/strong><\/span><\/td>\n1.75%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n25380.74<\/strong><\/span><\/td>\n+ 264.98<\/strong><\/span><\/td>\n1.06%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n19.34<\/strong><\/span><\/td>\n– 1.89<\/strong><\/span><\/td>\n– 8.90%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n3.14<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 0.47%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n96.30<\/strong><\/span><\/td>\n– 0.74<\/strong><\/span><\/td>\n– 0.76%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7114.66<\/strong><\/span><\/td>\n– 13.44<\/strong><\/span><\/td>\n– 0.19%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n11468.54<\/strong><\/span><\/td>\n+ 21.03<\/strong><\/span><\/td>\n0.18%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Wobbly Start<\/u><\/p>\n

With the October swoon now behind us in terms of the calendar, and Wall Street looking like it has found a bottom for now, the scene was set for the Australian market to open the month on a strong note yesterday. But it wasn’t really the case.<\/p>\n

From a market perspective, investors seem unconvinced. It was a very choppy session yesterday dominated by individual stock news unrelated to the macro picture, and despite being up 47 points at 11am, the ASX200 was down -10 points at 3.30pm before a late flurry.<\/p>\n

It was not the only story of the day, but it was the big one that kicked off early gains. BHP ((BHP)) has finally completed the sale of its US shale assets, for US$10.5bn. It plans to return US$10.4bn to shareholders through a special dividend and buyback.<\/p>\n

None of which should have surprised, but perhaps there was a sense of relief with regard the capital return – no shock announcement of a major acquisition being considered – and the fact BHP has been caught in the October downdraught that prompted a sharp rally of as much as 6% early in the session, before a fade-back to a more realistic 3%. The materials sector rose 1.3%.<\/p>\n

National Bank ((NAB)) reported earnings, and here there were no real surprises either. The RC fallout cut into profits, and the buy-the-fact trade was worth 0.5% for NAB when all the other three majors saw a return to selling yesterday.<\/p>\n

Yet the financials sector managed a 0.2% gain, aided by rumours Macquarie Group ((MQG)) were running the ruler over AMP ((AMP)). AMP jumped 7%. Macquarie reports earnings today.<\/p>\n

Woolworths ((WOW)) revealed its September quarter sales numbers yesterday and they were good for a 1% gain, but at the expense of its rival, so staples closed up only 0.1%.<\/p>\n

IT (+1.9%) continued to track the Nasdaq back while energy (-0.9%) is dealing with a sliding oil price. But one might ask: From where did investors draw funds to jump on the BHP bandwagon?<\/p>\n

Aside from three of four banks seeing selling, Telstra ((TLS)) fell -2% and thus telcos -1.1%.<\/p>\n

Other notable stock moves included Corporate Travel ((CTD)), which fell -27% on Wednesday and bounced back 11% yesterday on analyst calls of oversold. Short squeezes were evident following updates on the lithium and milk fronts. Orocobre ((ORE)), as at last week 16% shorted, jumped 11% and Bellamy’s ((BAL)), 8% shorted, jumped 10%.<\/p>\n

And Emeco ((EHL)) just keeps surging back (+9%).<\/p>\n

There’s a lot a reshuffling of deckchairs going on in regard to portfolio allocation as we come out of the darkness of October and into the light of November – historically one of the most positive months. It’s just a matter of which ship those deckchairs will find themselves on. The local market is not weighing into the correction being done and dusted just because Wall Street has managed to string together three up-days in a row (the first in six weeks). The Dow is up another 264 overnight, and the SPI futures managed only 5.<\/p>\n

Note that the Aussie is up a whopping 1.8% this morning, which may have something to do with it. And maybe Apple. See below.<\/p>\n

Trumped<\/u><\/p>\n

It was weak start on Wall Street as the US October manufacturing PMI was released, showing a fall to a six-month low 57.7 from 59.8 in September, well below 58.7 expectations. Now, most countries would give their right arm to see a number like 57.7, but this is Trump’s America in which reviving the US manufacturing sector is at the heart of the plan.<\/p>\n

It was all going so well, until the tariffs started to bite. The US result is evidence thereof, and China’s 50.2 equivalent only underscores the internecine impact of protectionism. Note that the independent Caixin measure of China’s PMI came in at 50.1, which was actually better than expected.<\/p>\n

It was thus rather timely that half an hour into trading came a tweet form the President. Just had a long chat with my mate Xi, Trump said in not so many words, and discussions on trade are coming along nicely ahead of out get together at the G20. Xi, for his part, acknowledged both parties are suffering as a result of the tariffs.<\/p>\n

So Wall Street very quickly recovered, before trending slowly higher over the rest of the session. Having been the biggest loser among the three major indices, the Nasdaq was again the outperformer to the upside. But even worse hit in October was the Russell small cap index, and it rallied 2.2% last night.<\/p>\n

The first half hour suggested there was perhaps not a wave of new money ready to hit the market in the new month, post-correction. Maybe it did start to flow post-tweet. Wall Street now appears to be looking for any excuse to buy, given it’s well known Trump’s tweets have to be taken with a grain of salt. Anything positive suggested by the president or his aides on the trade front has to date come to nought.<\/p>\n

Earnings season flows on in the background, and last night’s standout was chemical company DowDuPont (Dow), which jumped 7%. DowDuPont is another stock, along with you Boeings, Cats, 3Ms etc that has copped the brunt of trade fear selling all year.<\/p>\n

Not so flash was the highly anticipated result from Apple, which came out after the close of trade. Apple shares are down -7% in the aftermarket. It should be noted that Apple well outperformed the FANGs during the correction, and has been bought up these past couple of sessions ahead of the result. But if tonight sees the world’s biggest company down -7% as suggested, Wall Street’s winning streak may not make the four.<\/p>\n

And while stocks were rallying last night, the greenback was plunging, down 0.8% on its index in the wake of the manufacturing PMI number. This move clipped a long running graft upwards, and traders were probably caught long. The US ten-year yield fell a couple of basis points to 3.14%, which is also a positive for US stocks. We are now back in the perverse situation of bad news (PMI) actually being quite good as it should keep the Fed in its box.<\/p>\n

Non-farm payrolls tonight.<\/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>\n1232.50<\/strong><\/span><\/td>\n+ 16.90<\/strong><\/span><\/td>\n1.39%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n14.71<\/strong><\/span><\/td>\n+ 0.47<\/strong><\/span><\/td>\n3.30%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n2.76<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.11%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.88<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.31%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.87<\/strong><\/span><\/td>\n+ 0.02<\/strong><\/span><\/td>\n1.80%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n5.25<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 0.42%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.18<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.19%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude (Dec)<\/strong><\/span><\/td>\n63.50<\/strong><\/span><\/td>\n– 1.58<\/strong><\/span><\/td>\n– 2.43%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude (Jan) <\/strong><\/span><\/td>\n72.74<\/strong><\/span><\/td>\n– 2.30<\/strong><\/span><\/td>\n– 3.07%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t) futures<\/strong><\/span><\/td>\n72.89<\/strong><\/span><\/td>\n+ 0.08<\/strong><\/span><\/td>\n0.11%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Just when it looked like it was all over again for gold, as the safe haven trade waned, the greenback plunge has sent gold shooting up seventeen bucks.<\/p>\n

No great joy for base metals however, but at least they’ve stabilised.<\/p>\n

The oils were down again, sharply, on the second of the week’s US inventory lotteries. It seems the world is stockpiling oil ahead of the loss of of Iranian production.<\/p>\n

If the forex cowboys were caught long the greenback, they were caught well short the Aussie. It’s up 1.8% to US$0.7207.<\/p>\n

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

The SPI Overnight closed up 5 points.<\/p>\n

US jobs and trade numbers will be in focus tonight, but locally we’ll see retail sales and wholesale inflation.<\/p>\n

Earnings results are due today from Macquarie, as well as CSR ((CSR)) and Orica ((ORI)).<\/p>\n

Galaxy Resources ((GXY)) holds its AGM. Galaxy is also 16% shorted.<\/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\n\n\n\n\n
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
BLD<\/td>\nBORAL<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
BPT<\/td>\nBEACH ENERGY<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Buy from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
EVN<\/td>\nEVOLUTION MINING<\/td>\nDowngrade to Hold from Add<\/td>\nMorgans<\/td>\n<\/tr>\n
IGO<\/td>\nINDEPENDENCE GROUP<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
IRE<\/td>\nIRESS MARKET TECHN<\/td>\nUpgrade to Buy from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
LOV<\/td>\nLOVISA<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
MND<\/td>\nMONADELPHOUS GROUP<\/td>\nUpgrade to Neutral from Sell<\/td>\nCiti<\/td>\n<\/tr>\n
NHF<\/td>\nNIB HOLDINGS<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
PPT<\/td>\nPERPETUAL<\/td>\nUpgrade to Neutral from Sell<\/td>\nUBS<\/td>\n<\/tr>\n
SCP<\/td>\nSHOPPING CENTRES AUS<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
WTC<\/td>\nWISETECH GLOBAL<\/td>\nUpgrade to Buy from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
WTP<\/td>\nWATPAC<\/td>\nDowngrade to Hold from Add<\/td>\nMorgans<\/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":"

A tweet from The Man suggesting progress on US-China trade talks saved Wall Street from a a weak start last night. Dow up 264.<\/p>\n","protected":false},"author":8,"featured_media":77594,"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\/77586"}],"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=77586"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/77586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/77594"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=77586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=77586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=77586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}