##{"id":94831,"date":"2021-07-02T09:14:00","date_gmt":"2021-07-01T23:14:00","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=94831"},"modified":"2021-07-02T10:15:38","modified_gmt":"2021-07-02T00:15:38","slug":"the-overnight-report-positive-start","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/07\/02\/the-overnight-report-positive-start\/","title":{"rendered":"The Overnight Report: Positive Start"},"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 (Jun)<\/strong><\/span><\/td>\n

7205.00<\/strong><\/span><\/td>\n

+ 25.00<\/strong><\/span><\/td>\n

0.35%<\/strong><\/span><\/td>\n<\/tr>\n

S&P ASX 200<\/strong><\/span><\/td>\n

7265.60<\/strong><\/span><\/td>\n

– 47.40<\/strong><\/span><\/td>\n

– 0.65%<\/strong><\/span><\/td>\n<\/tr>\n

S&P500<\/strong><\/span><\/td>\n

4319.94<\/strong><\/span><\/td>\n

+ 22.44<\/strong><\/span><\/td>\n

0.52%<\/strong><\/span><\/td>\n<\/tr>\n

Nasdaq Comp<\/strong><\/span><\/td>\n

14522.38<\/strong><\/span><\/td>\n

+ 18.42<\/strong><\/span><\/td>\n

0.13%<\/strong><\/span><\/td>\n<\/tr>\n

DJIA<\/strong><\/span><\/td>\n

34633.53<\/strong><\/span><\/td>\n

+ 131.02<\/strong><\/span><\/td>\n

0.38%<\/strong><\/span><\/td>\n<\/tr>\n

S&P500 VIX<\/strong><\/span><\/td>\n

15.48<\/strong><\/span><\/td>\n

– 0.35<\/strong><\/span><\/td>\n

– 2.21%<\/strong><\/span><\/td>\n<\/tr>\n

US 10-year yield<\/strong><\/span><\/td>\n

1.48<\/strong><\/span><\/td>\n

+ 0.04<\/strong><\/span><\/td>\n

2.56%<\/strong><\/span><\/td>\n<\/tr>\n

USD Index<\/strong><\/span><\/td>\n

92.54<\/strong><\/span><\/td>\n

+ 0.18<\/strong><\/span><\/td>\n

0.19%<\/strong><\/span><\/td>\n<\/tr>\n

FTSE100<\/strong><\/span><\/td>\n

7125.16<\/strong><\/span><\/td>\n

+ 87.69<\/strong><\/span><\/td>\n

1.25%<\/strong><\/span><\/td>\n<\/tr>\n

DAX30<\/strong><\/span><\/td>\n

15603.81<\/strong><\/span><\/td>\n

+ 72.77<\/strong><\/span><\/td>\n

0.47%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
By Greg Peel<\/p>\n
With a Whimper<\/u><\/p>\n
Yesterday’s weakness on the ASX arguably started on Wednesday afternoon as profits were locked in for year-end, but smacked more of straightforward selling before an increasingly uncertain domestic backdrop. The weakness belied yet more new highs on Wall Street.<\/p>\n
Every sector closed in the red yesterday, bar a less than 0.1% gain for materials, supported by gold miners.<\/p>\n
Uncertainty is stemming from two fronts – the rising case-count, and what the government, specifically federal, is going to do about it. In the latter case we can add in the utter vaccine confusion created by Canberra.<\/p>\n
It is notable that healthcare has had a weak couple of sessions despite the Aussie dollar falling back under US75c. The government is stuck with a stockpile of AZ vaccine it can’t shift, so it’s handing it out to the kiddies. The AZ vaccine is produced locally by CSL ((CSL)).<\/p>\n
Healthcare fell -0.8% yesterday and the biggest sector heavyweight – the banks – fell -0.9% for no obvious reason other than the delta variant is threatening extended lockdowns, which may lead to job losses and loan defaults.<\/p>\n
There were 24 new cases in Sydney yesterday, up from 22 the day before, so still the numbers are increasing but at an incremental pace. There were also 4 new cases among returned travellers, which will be highlighted today when the state premiers load their weapons ahead of a chat with Scott.<\/p>\n
Consumer discretionary, staples and industrials all fell over -1%. Lockdowns are clearly negative for toll roads and airports (so are a cut to returned traveller numbers) and they are arguably an each-way bet for discretionary, trading off bricks & mortar against online. But selling in staples seems out of place at such a time.<\/p>\n
The sector has had a solid run recently nonetheless. Metcash ((MTS)) in particular had enjoyed post-result gains but yesterday fell -4.5%. Domino’s Pizza ((DMP)), in discretionary, fell -3.3% despite having benefited from last year’s lockdowns. Aristocrat Leisure ((ALL)) – the second biggest stock in discretionary — fell -2.3%.<\/p>\n
Still looks like profit-taking going on, therefore, or at least a cautious shift as fund managers are opening their playbooks for FY22.<\/p>\n
The good news is the futures are up 0.4% this morning to the S&P500’s 0.5%.<\/p>\n
OPEC-Plus met last night and decided to postpone a production quota decision until tonight, which was very positive for the WTI crude price, and thus should be for local energy stocks today.<\/p>\n
With a Bang<\/u><\/p>\n
Not that<\/em> much of a bang, but a 0.5% gain for the S&P500 is a little less incremental than has been the case in the past week’s run of new highs.<\/p>\n
Helping to buoy Wall Street was last week’s new jobless claims number, which at 364,000 is the lowest in the pandemic era.<\/p>\n
The US jobs report is out tonight.<\/p>\n
To that end, two segments stood out in last night’s US June manufacturing PMI. Overall, the index fell back to 60.6 from May’s 61.2 but anything above 60 implies rapid growth. But within the index, employment fell to 49.9 from 50.9, ie into contraction. Employers are still pinning their hopes on the expiry of US “JobSeeker” in September, which will mean the end of welfare payments exceeding low-end wages.<\/p>\n
But will this snap shut the unemployment to job vacancy gap? The US Secretary of Commerce suggests there’ll be a lot of jobs, particularly in service industries, that simply won’t come back. If we look at retail, the rise of online has led to the reduction of store footprints, and those stores used to employ people, particularly young people.<\/p>\n
The case is the same downunder.<\/p>\n
The other standout in the PMI were prices paid. The number rose to 92.1 from 88.0. This is not a measure of growth but of acceleration of growth. It’s the highest number since 1979 – the year of the second oil shock and double-digit inflation.<\/p>\n
Transitory or structural?<\/p>\n
It was also interesting last night, as we head towards the US earnings result season proper this month, that two early reporters posted solid beats and were subsequently sold down sharply. Memory chip maker Micron and chemist chain Walgreens (Dow) fell -5.7% and -7.4% respectively.<\/p>\n
What do you have to do the please the market?<\/p>\n
The same trend was evident last quarter when many an earnings beat was met with profit-taking, misses were treated with derision, and only blow-away numbers elicited buying.<\/p>\n
The S&P rose 14% in the June quarter, largely on continually upgraded earnings forecasts. Much has been made of the S&P forward PE multiple of 21x being elevated, and certainly above average. If those earnings forecasts can be beaten on a net basis, as they were in the first quarter, but investors use the opportunity to take profits, then that PE could squeeze pretty quickly (E up and<\/em> P down).<\/p>\n
All will soon be revealed. Meanwhile, the focus will be on tonight’s jobs report.<\/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>\n 1776.70<\/strong><\/span><\/td>\n + 6.50<\/strong><\/span><\/td>\n 0.37%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n 26.03<\/strong><\/span><\/td>\n – 0.08<\/strong><\/span><\/td>\n – 0.31%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n 4.22<\/strong><\/span><\/td>\n – 0.02<\/strong><\/span><\/td>\n – 0.54%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n 1.13<\/strong><\/span><\/td>\n – 0.00<\/strong><\/span><\/td>\n – 0.41%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n 1.03<\/strong><\/span><\/td>\n – 0.01<\/strong><\/span><\/td>\n – 0.54%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n 8.21<\/strong><\/span><\/td>\n – 0.07<\/strong><\/span><\/td>\n – 0.82%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n 1.32<\/strong><\/span><\/td>\n – 0.02<\/strong><\/span><\/td>\n – 1.16%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n 75.23<\/strong><\/span><\/td>\n + 1.76<\/strong><\/span><\/td>\n 2.40%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n 75.67<\/strong><\/span><\/td>\n + 0.55<\/strong><\/span><\/td>\n 0.73%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n 218.80<\/strong><\/span><\/td>\n + 0.40<\/strong><\/span><\/td>\n 0.18%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
The US dollar was a bit stronger but metal price moves look to be simply a reversal of the gains posted for June-end.<\/p>\n
Gold is clawing its way back nonetheless, despite the greenback.<\/p>\n
The reason OPEC-Plus has postponed its production decision by a day is because the UAE is now concerned about the robustness of global oil demand recovery, which to date had been driven by economies reopening, but could be under threat from delta.<\/p>\n
A decision is also pending on the lifting of Iran sanctions, but that won’t be resolved in a day.<\/p>\n
It had been previously assumed, given the rally in oil prices, a production increase of 500,000bpd suggested by Russia would be swiftly agreed upon, but this delay suggests otherwise, hence a speculative jump in price last night.<\/p>\n
The Aussie is down -0.3% at US$0.7475.<\/p>\n
Today<\/u><\/p>\n
The SPI Overnight closed up 25 points or 0.4%.<\/p>\n
Locally we see housing finance numbers today.<\/p>\n
The US will see data for trade, factory orders and jobs.<\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ASG<\/td>\n Autosports<\/td>\n Downgrade to Neutral from Outperform<\/td>\n Macquarie<\/td>\n<\/tr>\n
CKF<\/td>\n Collins Foods<\/td>\n Downgrade to Hold from Add<\/td>\n Morgans<\/td>\n<\/tr>\n
ING<\/td>\n Inghams<\/td>\n Downgrade to Neutral from Outperform<\/td>\n Macquarie<\/td>\n<\/tr>\n
MGH<\/td>\n MAAS<\/td>\n Downgrade to Hold from Add<\/td>\n Morgans<\/td>\n<\/tr>\n
REH<\/td>\n Reece<\/td>\n Downgrade to Underperform from Neutral<\/td>\n Macquarie<\/td>\n<\/tr>\n
RWC<\/td>\n Reliance Worldwide<\/td>\n Downgrade to Neutral from Outperform<\/td>\n Macquarie<\/td>\n<\/tr>\n
TLS<\/td>\n Telstra<\/td>\n Upgrade to Add from Hold<\/td>\n Morgans<\/td>\n<\/tr>\n
WOW<\/td>\n Woolworths<\/td>\n Downgrade to Underperform from Neutral<\/td>\n Credit 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
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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":"
Wall Street has opened the second half with rallies across all indices. Dow up 131. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":94837,"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\/94831"}],"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=94831"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/94831\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/94837"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=94831"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=94831"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=94831"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}