{"id":91500,"date":"2021-02-09T09:04:33","date_gmt":"2021-02-08T22:04:33","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=91500"},"modified":"2021-02-09T10:15:13","modified_gmt":"2021-02-08T23:15:13","slug":"the-overnight-report-the-good-oil-2","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/02\/09\/the-overnight-report-the-good-oil-2\/","title":{"rendered":"The Overnight Report: The Good Oil"},"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>\n6796.00<\/strong><\/span><\/td>\n– 14.00<\/strong><\/span><\/td>\n– 0.21%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6880.70<\/strong><\/span><\/td>\n+ 40.20<\/strong><\/span><\/td>\n0.59%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n3915.59<\/strong><\/span><\/td>\n+ 28.76<\/strong><\/span><\/td>\n0.74%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n13987.64<\/strong><\/span><\/td>\n+ 131.35<\/strong><\/span><\/td>\n0.95%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n31385.76<\/strong><\/span><\/td>\n+ 237.52<\/strong><\/span><\/td>\n0.76%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n21.24<\/strong><\/span><\/td>\n+ 0.37<\/strong><\/span><\/td>\n1.77%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.16<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.85%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n90.94<\/strong><\/span><\/td>\n– 0.10<\/strong><\/span><\/td>\n– 0.11%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n6523.53<\/strong><\/span><\/td>\n+ 34.20<\/strong><\/span><\/td>\n0.53%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n14059.91<\/strong><\/span><\/td>\n+ 3.19<\/strong><\/span><\/td>\n0.02%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Material Gains<\/u><\/p>\n

The rally for the ASX200 yesterday was all about the materials sector, which closed up a standout 2.0% compared to 0.6% for the index. The index was up 60 points at its peak, which happened to be 6900, and there it found some sellers.<\/p>\n

Solid gains in all base metals and gold, and a move up during the session for the iron ore price, underscored material strength. The big iron ore miners posted 2-3% increases.<\/p>\n

The excitement spread further, into rare earths, with Lynas Rare Earths ((LYC)) rising 7.1% to be third best index performer and Mineral Resources ((MIN)), which also mines iron ore, in fourth with 5.6%.<\/p>\n

Mineral sands producer Iluka Resources ((ILU)) took fifth with 4.9%.<\/p>\n

Every silver lining has a cloud, nonetheless. The Aussie is up 0.5% to be back over US77c.<\/p>\n

The top individual stock movers on the day were Zip Co ((Z1P)), rising 12.9% on a rumour the company is considering a dual listing in the US, and Vocus Group ((VOC)), up 12.8% after receiving a takeover bid from Macquarie Infrastructure & Real Assets (MIRA).<\/p>\n

The stronger Aussie is of course good for many retailers. Consumer discretionary rose 1.5%, while other sectors posted less than one percent gains. The banks (+0.3%) took a bit of a breather, healthcare (flat) sat it out for once, while the sector losers on the day were property (-1.1%) and utilities (-2.1%).<\/p>\n

Selling continued in the electricity space, with AGL Energy ((AGL)) dragging down utilities and Origin Energy ((ORG)) putting the brakes on the energy sector. Analysts are now debating the longer term viability of legacy power generators in a clean, green world, although Origin does have a backstop in the form of its LNG interest.<\/p>\n

Origin nevertheless topped the index losers’ board yesterday (-3.6%), while persistently volatile UR Westfield ((URW)) weighed on property (-3.2%).<\/p>\n

Interestingly, the Australian ten-year yield posted another 7 basis point gain yesterday, to 1.26%. We recall Thursday’s selling was supposedly all about panic over rising yields, which was then all forgotten about on Friday. Rising yields can explain falls in the utilities and property sectors, and -0.6% for industrials (toll roads, airports) yesterday, but this time there was no evidence of panic.<\/p>\n

Strength in mining stocks is being supported by infrastructure spending plans as a means of covid recovery in all of China, the US and Australia, and likely others as well.<\/p>\n

Then there’s the burgeoning EV market, which governments here wish to ignore.<\/p>\n

On Wall Street overnight, it was all about oil. However, it looks like 6900 might hold the local market in the short term, with our futures down -14 this morning.<\/p>\n

Onward ever Upward<\/u><\/p>\n

Further 2% gains in oil prices, taking Brent back over US$60\/bbl and marking six straight sessions of gains, is being attributed not to increasing demand – for that you need planes back in the sky and cars back on the road – but dwindling inventories. And the historically unusual production discipline being shown by OPEC.<\/p>\n

Word is that OPEC-Plus is still willing to tough it out for now, as production curtailments are working, but at some point what’s left of marginal US shale production after last year’s bankruptcies will kick back in when prices reach commercially viable levels.<\/p>\n

This didn’t stop the S&P energy sector posting a standout 4.2% gain, with the banks well behind in second with 1.0%. Utilities are also otherwise being hit in the US (-0.8%) as US bond yields rise.<\/p>\n

Beyond energy, only utilities and healthcare (-0.2%) fell last night, and relatively even gains among the three major indices imply there is no clear rotation underway, such as growth versus value or Big Tech versus the rest, rather buying is widespread.<\/p>\n

All of the Dow, S&P500, Nasdaq and Russell small cap index hit new all-time highs last night.<\/p>\n

As noted yesterday, talk of a correction has abated for now, thanks to Wall Street surviving the GameStop mini-correction. There is no denying the signals suggest overheating, but valuations are backed by ultra-loose monetary policy, ultra-high fiscal policy soon to make its mark, vaccine rollouts, a now falling death rate, and most empirically, strong corporate earnings results.<\/p>\n

With just over half of S&P500 companies having now reported, earnings are running at 1.7% growth. Yes, whacko you say, but even a small positive net result would not only confirm analyst forecasts were way too pessimistic, but that the US has come out of the covid “earnings recession”, which had earnings retreating in both the June and September quarters.<\/p>\n

So for now, Wall Street is net bullish. Until it isn’t. Corrections never occur when everyone expects one, only when complacency sets 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>\n1833.30<\/strong><\/span><\/td>\n+ 18.10<\/strong><\/span><\/td>\n1.00%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n27.51<\/strong><\/span><\/td>\n+ 0.78<\/strong><\/span><\/td>\n2.92%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n3.64<\/strong><\/span><\/td>\n+ 0.04<\/strong><\/span><\/td>\n1.11%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n0.92<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.64%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.93<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.69%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n8.17<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.15%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.19<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 1.04%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n57.94<\/strong><\/span><\/td>\n+ 1.09<\/strong><\/span><\/td>\n1.92%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n60.56<\/strong><\/span><\/td>\n+ 1.22<\/strong><\/span><\/td>\n2.06%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n159.80<\/strong><\/span><\/td>\n+ 3.90<\/strong><\/span><\/td>\n2.50%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gold appears back in rally mode, while base metals had a more mixed session last night.<\/p>\n

Iron ore is bouncing around each day, but appears to be consolidating after its fall from the highs, prompted by news of Beijing’s plan to cut steel production.<\/p>\n

As noted, the Aussie is up 0.5% at US$0.7707.<\/p>\n

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

The SPI Overnight closed down -14 points or -0.2%.<\/p>\n

NAB releases its January business confidence survey today.<\/p>\n

Today’s earnings results include those of Challenger ((CGF)), Computershare ((CPU)), James Hardie ((JHX)), Shopping Centres Australasia Property Group ((SCP)) and Suncorp ((SUN)).<\/p>\n

Macquarie Group ((MQG)) provides a quarterly update.<\/p>\n

FNArena's Corporate Results Monitor is updated daily throughout the month: https:\/\/www.fnarena.com\/index.php\/reporting_season\/<\/a><\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ABC<\/td>\nAdBri<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
AMC<\/td>\nAmcor<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
CIA<\/td>\nChampion Iron<\/td>\nUpgrade to Neutral from Sell<\/td>\nCiti<\/td>\n<\/tr>\n
CSR<\/td>\nCSR<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
GWA<\/td>\nGWA Group<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
MFG<\/td>\nMagellan Financial Group<\/td>\nUpgrade to Outperform from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
MGX<\/td>\nMount Gibson Iron<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
MQG<\/td>\nMacquarie Group<\/td>\nDowngrade to Sell from Neutral<\/td>\nCiti<\/td>\n<\/tr>\n
ORG<\/td>\nOrigin Energy<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
REA<\/td>\nREA Group<\/td>\nDowngrade to Underperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
TWE<\/td>\nTreasury Wine Estates<\/td>\nDowngrade to Equal-weight from Overweight<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
UWL<\/td>\nUniti Group<\/td>\nDowngrade to Accumulate from Buy<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
WES<\/td>\nWesfarmers<\/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

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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":"

While stimulus and vaccines continue to underpin Wall Street, last night saw the energy sector take centre stage. Dow up 237. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":91510,"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\/91500"}],"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=91500"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/91500\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/91510"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=91500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=91500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=91500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}