{"id":79300,"date":"2019-03-08T09:07:46","date_gmt":"2019-03-07T22:07:46","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=79300"},"modified":"2019-03-08T10:13:16","modified_gmt":"2019-03-07T23:13:16","slug":"the-overnight-report-back-to-the-future-3","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2019\/03\/08\/the-overnight-report-back-to-the-future-3\/","title":{"rendered":"The Overnight Report: Back To The Future"},"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 (Mar)<\/strong><\/span><\/td>\n6235.00<\/strong><\/span><\/td>\n– 35.00<\/strong><\/span><\/td>\n– 0.56%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6263.90<\/strong><\/span><\/td>\n+ 18.30<\/strong><\/span><\/td>\n0.29%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n2748.93<\/strong><\/span><\/td>\n– 22.52<\/strong><\/span><\/td>\n– 0.81%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n7421.46<\/strong><\/span><\/td>\n– 84.46<\/strong><\/span><\/td>\n– 1.13%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n25473.23<\/strong><\/span><\/td>\n– 200.23<\/strong><\/span><\/td>\n– 0.78%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n16.59<\/strong><\/span><\/td>\n+ 0.85<\/strong><\/span><\/td>\n5.40%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n2.64<\/strong><\/span><\/td>\n– 0.06<\/strong><\/span><\/td>\n– 2.08%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n97.66<\/strong><\/span><\/td>\n+ 0.80<\/strong><\/span><\/td>\n0.83%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7157.55<\/strong><\/span><\/td>\n– 38.45<\/strong><\/span><\/td>\n– 0.53%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n11517.80<\/strong><\/span><\/td>\n– 69.83<\/strong><\/span><\/td>\n– 0.60%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Damn the Torpedoes<\/u><\/p>\n

It’s full steam ahead for the ASX200, apparently, at least on the basis of yesterday’s trade. Might be different today – the futures are down -35 points this morning – but yesterday it seemed the index was simply hell bent on making it back to the previous (post-GFC) high.<\/p>\n

A rally of 18 points doesn’t seem so exciting but when we put that in the context of no less than 40 stocks going ex-dividend yesterday (not all index stocks), including substantial hand-outs from both BHP Group ((BHP)) and Rio Tinto ((RIO)), it really was quite a performance. Wall Street had been soggy overnight and so had been most commodity prices.<\/p>\n

Not only BHP and Rio, but South32 ((S32)) and Iluka Resources ((ILU)) went ex, yet the materials sector managed only to fall -0.3%, so a net gain in reality. That left the volatile IT sector (-0.7%) as the only patch of weakness in an otherwise green-on-screen session. So few and far between were the share price falls, Rio managed to top the losers’ board just by going ex.<\/p>\n

The trade data released yesterday may have provided some impetus.<\/p>\n

Australia’s trade surplus widened sharply in January on a 9.3% surge in exports. This included a 6.2% increase for coal and 3.4% for other minerals, as well as 2.4% in agriculture (meat and wool). But the biggest driver were exports of non-monetary gold (gold not related to central bank reserves but for industrial or aesthetic use), which managed to increase 174%. This segment is very lumpy and very volatile.<\/p>\n

So gold did rather distort the numbers, but we should acknowledge the lag effect that will have the big jump in the iron ore price cycling through shortly. It then depends on volumes.<\/p>\n

Perhaps more remarkable was a 1.0% gain for consumer discretionary despite a disappointing retail sales number. Sales rose only 0.1% in January after falling -0.4% in December. Forecasts were for a 0.4% rebound. The annual rate fell to 2.7% from 2.8%.<\/p>\n

While the slow death of department stores continued in January, the most notable decline was in furniture and other household goods, and that’s hardly a surprise. Yet despite the weak result, four of the top five ASX200 winners yesterday were a consumer discretionary stock, and all five were consumer stocks.<\/p>\n

A chance to bargain hunt post result season? Gains ranged from 3-5% for (in descending order) Super Retail ((SUL)), Costa Group ((CGC)), Elders ((ELD)), JB Hi-Fi ((JBH)) and Tassal Group ((TGR)). Elders is a staple.<\/p>\n

Or more anticipation of an RBA rate cut? See: Yesterday’s Overnight Report.<\/p>\n

Bad news is good news.<\/p>\n

Bad News is Bad News <\/u><\/p>\n

A year ago the ECB had ended QE and for markets it was a matter of when, not if, Mario Draghi would hike the cash rate (from zero) for the first time since the GFC, in the wake of the Fed. Last night the ECB said it now expected to keep rates on hold throughout 2019.<\/p>\n

The central bank has cut its eurozone 2019 growth forecast to 1.1% from 1.7%. In order to provide stimulus to the European banking system, a new round of cheap loans to banks, known as LTROs (long term refinancing operations), will be commenced.<\/p>\n

The German stock market fell -0.6% and the French -0.4%. Further recognition of slowing global growth had Wall Street down -0.9%.<\/p>\n

I noted earlier the local SPI futures are down -35 points this morning (-0.6%). It would be somewhat ironic if after two days of rallying on the hope the RBA might soon have to cut rates, the ECB does exactly that (after a fashion) and we’re heading south.<\/p>\n

Wall Street’s rally from Christmas had a lot to do with the Fed now moving to a neutral stance, trade talks notwithstanding, but now Wall Street, too, is feeling the global pinch.<\/p>\n

At least last night, bearing in mind the big rally of the last two months has stalled.<\/p>\n

The question is as to whether the US economy can continue to flourish when all about are sinking. Last night’s data suggests it’s a possibility – US productivity rose at a 1.9% annual rate in the December quarter, ahead of 1.8% expectations, to mark the fastest pace of growth in four years.<\/p>\n

But there’s no getting around the fact global growth is exactly that – global. We’re all in this together. If resolution of trade wars wasn’t critical enough already, it appears to be getting more critical every day.<\/p>\n

Last night’s update from President Trump was “We’ll see what happens”.<\/p>\n

And don’t forget Brexit.<\/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>\n1284.90<\/strong><\/span><\/td>\n– 1.60<\/strong><\/span><\/td>\n– 0.12%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n14.97<\/strong><\/span><\/td>\n– 0.08<\/strong><\/span><\/td>\n– 0.53%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n2.93<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.39%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.84<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.38%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.95<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.24%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n6.04<\/strong><\/span><\/td>\n– 0.09<\/strong><\/span><\/td>\n– 1.53%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.25<\/strong><\/span><\/td>\n– 0.02<\/strong><\/span><\/td>\n– 1.32%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n56.59<\/strong><\/span><\/td>\n+ 0.42<\/strong><\/span><\/td>\n0.75%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n66.18<\/strong><\/span><\/td>\n+ 0.33<\/strong><\/span><\/td>\n0.50%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t) futures<\/strong><\/span><\/td>\n87.05<\/strong><\/span><\/td>\n+ 1.45<\/strong><\/span><\/td>\n1.69%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

On the ECB’s growth forecast cut, the euro tanked. The euro is the largest chunk of the US dollar index, by a margin, so it’s up 0.8%. Not good for commodity prices.<\/p>\n

Base metals felt that way, but iron ore just seems to be bouncing around in the eighties.<\/p>\n

Oil prices might have been different but for the latest data showing OPEC production is near four-year lows.<\/p>\n

If ever there was a prompt for the Aussie to slip under 70, last night was it. But the Aussie’s only down -0.2% at US$0.7010 on the balance of the strong trade surplus and, probably, the fact forex traders seem always to be short.<\/p>\n

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

The SPI Overnight closed down -35 points or -0.6%.<\/p>\n

China will release February trade numbers today and inflation data on Sunday.<\/p>\n

It’s jobs night in the US.<\/p>\n

Sonic Healthcare ((SHL)) is today’s bigger ex-div in a smaller list of mostly small companies.<\/p>\n

It’s a Friday – always a good day for profit-taking.<\/p>\n

Note that the US goes onto summer time on the weekend. From Tuesday morning the NYSE will close at 7am Sydney time, as will our SPI Overnight.<\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ANZ<\/td>\nANZ BANKING GROUP<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
CHC<\/td>\nCHARTER HALL<\/td>\nUpgrade to Accumulate from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
CIM<\/td>\nCIMIC GROUP<\/td>\nDowngrade to Neutral from Outperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
COH<\/td>\nCOCHLEAR<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
GDF<\/td>\nGARDA DIV PROP FUND<\/td>\nDowngrade to Hold from Add<\/td>\nMorgans<\/td>\n<\/tr>\n
MYR<\/td>\nMYER<\/td>\nUpgrade to Hold from Sell<\/td>\nDeutsche Bank<\/td>\n<\/tr>\n
RIO<\/td>\nRIO TINTO<\/td>\nDowngrade to Neutral from Buy<\/td>\nUBS<\/td>\n<\/tr>\n
SCP<\/td>\nSHOPPING CENTRES AUS<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
SIL<\/td>\nSMILES INCLUSIVE<\/td>\nDowngrade to Hold from Add<\/td>\nMorgans<\/td>\n<\/tr>\n
SXY<\/td>\nSENEX ENERGY<\/td>\nDowngrade to Lighten from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
TAH<\/td>\nTABCORP HOLDINGS<\/td>\nDowngrade to Lighten from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
TPE<\/td>\nTPI ENTERPRISES<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
VCX<\/td>\nVICINITY CENTRES<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
VRL<\/td>\nVILLAGE ROADSHOW<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/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

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

The ECB will now keep rates on hold and reintroduce stimulative measures. Here we go again. Dow down -200.<\/p>\n","protected":false},"author":8,"featured_media":79309,"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\/79300"}],"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=79300"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/79300\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/79309"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=79300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=79300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=79300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}