{"id":91897,"date":"2021-02-26T09:13:03","date_gmt":"2021-02-25T22:13:03","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=91897"},"modified":"2021-02-26T10:14:53","modified_gmt":"2021-02-25T23:14:53","slug":"the-overnight-report-on-second-thoughts","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/02\/26\/the-overnight-report-on-second-thoughts\/","title":{"rendered":"The Overnight Report: On Second Thoughts"},"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>\n6696.00<\/strong><\/span><\/td>\n– 97.00<\/strong><\/span><\/td>\n– 1.43%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n6834.00<\/strong><\/span><\/td>\n+ 56.20<\/strong><\/span><\/td>\n0.83%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n3829.34<\/strong><\/span><\/td>\n– 96.09<\/strong><\/span><\/td>\n– 2.45%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n13119.43<\/strong><\/span><\/td>\n– 478.54<\/strong><\/span><\/td>\n– 3.52%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n31402.01<\/strong><\/span><\/td>\n– 559.85<\/strong><\/span><\/td>\n– 1.75%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n28.89<\/strong><\/span><\/td>\n+ 7.55<\/strong><\/span><\/td>\n35.38%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.52<\/strong><\/span><\/td>\n+ 0.13<\/strong><\/span><\/td>\n9.29%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n90.22<\/strong><\/span><\/td>\n+ 0.09<\/strong><\/span><\/td>\n0.10%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n6651.96<\/strong><\/span><\/td>\n– 7.01<\/strong><\/span><\/td>\n– 0.11%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n13879.33<\/strong><\/span><\/td>\n– 96.67<\/strong><\/span><\/td>\n– 0.69%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Oh God It’s Friday<\/u><\/p>\n

Here we go again. The madness continues. Strap in.<\/p>\n

It was last Friday the local market went into a tailspin when a sudden spike in an already strong Aussie dollar sparked a swift bout of profit-taking in stocks. The week before, we’d seen a sudden sell-off one day when the Australian ten-year yield jumped a handful of basis points to over 1.30%.<\/p>\n

Yesterday the Australian ten-year jumped 16 basis points<\/em> to 1.72%. Did we blink? No. The ASX200 rose 56 points. Last night the Aussie collapsed a full cent, having hit US80c yesterday. So today we buy? No, the futures are down a hundred points this morning.<\/p>\n

Adding to the irony is the fact the futures are down because Wall Street is down, and Wall Street is down because the US ten-year yield jumped 13 basis points to 1.52% last night. The Aussie is down sharply overnight, but the interest yield spread from them to us has widened (Aussie 10-year now at 1.89%).<\/p>\n

The drop in the Aussie probably reflects a sudden bout of profit-taking after a solid run-up over the past couple of weeks, triggered by hitting the 80 mark, despite another solid night for commodity prices. By rights that should temper inevitable falls on our stock market today, but it won’t.<\/p>\n

Not only is today Friday, it’s also the last trading day of the month. Chances are that by the close today, we will have wiped out just about all of the month’s gains.<\/p>\n

Not much point in dwelling on yesterday’s sector moves. We recall however that there is a results season underway, which mercifully ends today. Some highlights from yesterday:<\/p>\n

Reporting good numbers and being rewarded were Sandfire Resources ((SFR)), up 11.1%, Clinuvel Pharma ((CUV)), up 9.2%, Bravura Solutions ((BVS)), up 8.1% and Ramsay Health Care ((RHC)), up 7.7%. Flight Centre ((FLT)) reported a shocker, of course, but an upbeat outlook and a big short position had that stock up 8.9%.<\/p>\n

Nanosonics ((NAN)) was trashed on Wednesday on its result, but an “overdone” call from brokers and two upgrades in the FNArena database had the stock up 9.5% yesterday. Nanosonics also has a big short position.<\/p>\n

Service Stream ((SSM)) was the day’s biggest loser, down -21.4% on report, followed by a2 Milk ((A2M)), down -16.2%. Also reporting on the day were Regis Resources ((RRL)), down -7.9% and Zip Co ((Z1P)), down -7.7%.<\/p>\n

So just how far will<\/em> we fall today? The futures say a hundred. Metals prices are up again (except gold) and the Aussie is down<\/em> a cent. The perfect scenario for the materials sector (ex-gold) and pretty good for energy, with oil prices steady.<\/p>\n

Rising bond yields are great news for banks. But, it will be a case of sell first and ask questions later. And computers don’t ask questions.<\/p>\n

Hello? Anyone?<\/u><\/p>\n

Suppose you held a bond auction and nobody came.<\/p>\n

That’s what happened to the US Treasury last night when it tried to auction off a tranche of seven-year bonds. Demand was a weak as anyone could remember for a very long time. No one, it seems, is too keen to lend money to the US government. Not ahead of another massive stimulus package being funded.<\/p>\n

US bond yields immediately spiked all along the curve. The ten-year, which had found some stability this week just below 1.40%, hit 1.63%, before settling back at 1.52%.<\/p>\n

Simmering fears of a solid rebound in the US economy and subsequent inflation pressures re-ignited and it was Goodnight Irene, led by the Nasdaq.<\/p>\n

There was a late attempt to recover, then another wave hit, and only a final burst prevented the indices from closing on their lows for the day.<\/p>\n

On Tuesday night Wall Street had staved off what looked like an attempt by hedge funds to trigger the Nasdaq correction many were fearing. The Nasdaq fell -4% but it didn’t work. The Dow had dropped early as well but rallied back to close higher, and then on relief the correction did not transpire, Wall Street ran up solidly on Wednesday night.<\/p>\n

From Tuesday’s low to Wednesday’s close, the Dow put on some 780 points.<\/p>\n

And then proceeded to lose a good chunk of those last night. At this stage the Dow is roughly square for the week. But tonight is also the last trading day of the month on Wall Street.<\/p>\n

US durable goods orders rose 1.4% in January to mark the biggest rise in six months. New jobless claims fell back to 730,000 last week, down -111,000 from the week before. Earlier in the year, this would have been great news for Wall Street.<\/p>\n

But not now that bonds are responding in kind…<\/p>\n

Another problem for investors is the vast bulk of retirement savings are held in passive, so-called balanced funds, which carry a 60\/40 equity\/fixed income allocation. The point being, normally, if stocks go down bonds go up (in price), and vice-versa. Hence the “balance”.<\/p>\n

Last night both were heavily sold.<\/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>\n1771.20<\/strong><\/span><\/td>\n– 28.50<\/strong><\/span><\/td>\n– 1.58%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n27.43<\/strong><\/span><\/td>\n– 0.41<\/strong><\/span><\/td>\n– 1.47%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n4.28<\/strong><\/span><\/td>\n+ 0.08<\/strong><\/span><\/td>\n1.90%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n1.00<\/strong><\/span><\/td>\n+ 0.02<\/strong><\/span><\/td>\n2.01%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n0.97<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n1.10%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n8.71<\/strong><\/span><\/td>\n– 0.17<\/strong><\/span><\/td>\n– 1.88%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.31<\/strong><\/span><\/td>\n+ 0.02<\/strong><\/span><\/td>\n1.89%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n63.49<\/strong><\/span><\/td>\n+ 0.36<\/strong><\/span><\/td>\n0.57%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n66.99<\/strong><\/span><\/td>\n+ 0.04<\/strong><\/span><\/td>\n0.06%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n174.30<\/strong><\/span><\/td>\n+ 1.80<\/strong><\/span><\/td>\n1.04%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A familiar sight in metals, other than nickel pulling back a tad.<\/p>\n

The big fall in gold is all about bonds.<\/p>\n

The oils are holding their own on ongoing limited US supply.<\/p>\n

The US dollar is little moved, and the Aussie is down -1.2% at US$0.7859.<\/p>\n

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

The SPI Overnight closed down -97 points or -1.4%.<\/p>\n

Australian private sector credit numbers for January are due today.<\/p>\n

China releases February PMIs.<\/p>\n

The US will see January’s read on PCE inflation. Be afraid.<\/p>\n

There will be a couple of stragglers early next week but otherwise today is the last day of the February result season. The list is a little smaller today than the past two peak days, but not by much.<\/p>\n

If I had to pick a highlight today it would be Harvey Norman ((HVN)).<\/p>\n

Note Coles ((COL)) goes ex today.<\/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\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
ABY<\/td>\nADORE BEAUTY GROUP<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
APA<\/td>\nAPA<\/td>\nUpgrade to Buy from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
APE<\/td>\nEAGERS AUTOMOTIVE<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Accumulate from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
ASB<\/td>\nAustal<\/td>\nUpgrade to Hold from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
ATL<\/td>\nApollo Tourism & Leisure<\/td>\nDowngrade to Lighten from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
BIN<\/td>\nBingo Industries<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
BOQ<\/td>\nBank Of Queensland<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
CCX<\/td>\nCity Chic<\/td>\nDowngrade to Neutral from Buy<\/td>\nCiti<\/td>\n<\/tr>\n
CGC<\/td>\nCosta Group<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Neutral from Buy<\/td>\nUBS<\/td>\n<\/tr>\n
FCL<\/td>\nFineos Corp<\/td>\nDowngrade to Hold from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
HLO<\/td>\nHELLOWORLD TRAVEL<\/td>\nUpgrade to Hold from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
HVN<\/td>\nHarvey Norman Holdings<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
IDX<\/td>\nIntegral Diagnostics<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
JHC<\/td>\nJapara Healthcare<\/td>\nDowngrade to Accumulate from Buy<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
LLC<\/td>\nLendlease<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
MGX<\/td>\nMount Gibson Iron<\/td>\nDowngrade to Neutral from Outperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
MPL<\/td>\nMedibank Private<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
MWY<\/td>\nMidway<\/td>\nUpgrade to Buy from Hold<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
NAN<\/td>\nNanosonics<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Hold from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
NHC<\/td>\nNew Hope Corp<\/td>\nUpgrade to Neutral from Underperform<\/td>\nMacquarie<\/td>\n<\/tr>\n
NTD<\/td>\nNational Tyre & Wheel<\/td>\nHold<\/td>\nMorgans<\/td>\n<\/tr>\n
NXT<\/td>\nNextdc<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
SCG<\/td>\nScentre Group<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
SEK<\/td>\nSeek Ltd<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Underperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
TYR<\/td>\nTyro Payments<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
WSA<\/td>\nWestern Areas<\/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

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":"

Just when Wall Street thought a correction had been headed off, a weak US Treasury auction saw investors run screaming into the hills once more. Dow down -559. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":91903,"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\/91897"}],"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=91897"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/91897\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/91903"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=91897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=91897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=91897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}