##{"id":95183,"date":"2021-07-16T09:08:37","date_gmt":"2021-07-15T23:08:37","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=95183"},"modified":"2021-07-16T10:17:00","modified_gmt":"2021-07-16T00:17:00","slug":"the-overnight-report-lock-it-in","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/07\/16\/the-overnight-report-lock-it-in\/","title":{"rendered":"The Overnight Report: Lock It In"},"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

7237.00<\/strong><\/span><\/td>\n

– 6.00<\/strong><\/span><\/td>\n

– 0.08%<\/strong><\/span><\/td>\n<\/tr>\n

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

7335.90<\/strong><\/span><\/td>\n

– 18.80<\/strong><\/span><\/td>\n

– 0.26%<\/strong><\/span><\/td>\n<\/tr>\n

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

4360.03<\/strong><\/span><\/td>\n

– 14.27<\/strong><\/span><\/td>\n

– 0.33%<\/strong><\/span><\/td>\n<\/tr>\n

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

14543.13<\/strong><\/span><\/td>\n

– 101.82<\/strong><\/span><\/td>\n

– 0.70%<\/strong><\/span><\/td>\n<\/tr>\n

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

34987.02<\/strong><\/span><\/td>\n

+ 53.79<\/strong><\/span><\/td>\n

0.15%<\/strong><\/span><\/td>\n<\/tr>\n

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

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

+ 0.68<\/strong><\/span><\/td>\n

4.16%<\/strong><\/span><\/td>\n<\/tr>\n

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

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

– 0.06<\/strong><\/span><\/td>\n

– 4.35%<\/strong><\/span><\/td>\n<\/tr>\n

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

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

+ 0.21<\/strong><\/span><\/td>\n

0.23%<\/strong><\/span><\/td>\n<\/tr>\n

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

7012.02<\/strong><\/span><\/td>\n

– 79.17<\/strong><\/span><\/td>\n

– 1.12%<\/strong><\/span><\/td>\n<\/tr>\n

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

15629.66<\/strong><\/span><\/td>\n

– 159.32<\/strong><\/span><\/td>\n

– 1.01%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
By Greg Peel<\/p>\n
No Idea<\/u><\/p>\n
On Wednesday every sector bar technology closed stronger and yesterday every sector bar two closed lower. When the opening bell rang yesterday nothing happened. By 11.30am the index had struggled to up ten points before heading south all afternoon.<\/p>\n
The two sectors posting gains were materials (+1.4%) on a pop in the gold price and utilities (+0.7%) as Spark Infrastructure came out of its trading halt and rose another 6.1%. Spark is prepared to chat to the consortium on the hunt, but not to allow due diligence.<\/p>\n
Given the market was not fazed about the extended Sydney lockdown on Wednesday, probably focusing on federal\/state government assistance, the new Melbourne lockdown was likely not the trigger for the sell-off.<\/p>\n
China reported 7.9% year on year GDP growth in the June quarter, below 8.1% forecasts and down from 18.3% in the March quarter, bearing in mind China went into and came out of covid ahead of everyone else.<\/p>\n
Month of June industrial production rose 8.3% year on year, ahead of a 7.8% forecast but down on May’s 8.8%. Retail sales rose 12.1%, ahead of an 11.0% forecast but down on May’s 12.4%. Fixed asset investment rose 12.6% year to date, ahead of a 12.1% forecast but down on 15.4%.<\/p>\n
We may conclude that China’s economic growth is slowing – not so much of a surprise as the initial snap rebound subsides – but not slowing as rapidly as more recent forecasts.<\/p>\n
The other news late morning was Australia’s unemployment rate falling to a decade low of 4.9%, from 5.1% in May. Old news unfortunately. The telling numbers within the report were a -1.8% fall in hours worked and a 0.5 percentage point increase in the underemployment rate in Victoria, due to the previous lockdown. Otherwise, the impacts of July lockdowns await the next data drop.<\/p>\n
The biggest sector fall was that of healthcare (-1.4%), with CSL ((CSL)) bouncing around almost daily, sometimes in line with and sometimes not the Aussie dollar. Property fell -1.2%, which does make sense as lockdowns increase.<\/p>\n
Ditto the banks (-0.7%), but why the mostly defensive sectors that went up on Wednesday went down yesterday makes little sense, other than, really, nobody knows what’s going on.<\/p>\n
The recent fall in US bond yields may be adding to uncertainty and yesterday the Aussie ten-year fell -5 basis points to 1.29%, which, as of last night, is bang in line with the US equivalent. Falling yields only exacerbate bank woes.<\/p>\n
Technology fell -1.2% as the BNPL wash-out continued, led by another -6.7% for Zip Co ((Z1P)). On the flipside, ARB Corp has proven a clear covid-winner and on a trading update rose 7.2%, helping to stem the fall in consumer discretionary (-0.04%).<\/p>\n
Last night the S&P500 fell -0.3%, led down by Big Tech, but our futures are down a mere -6 points this morning, probably because we don’t have Big Tech.<\/p>\n
Or we just have no idea.<\/p>\n
Enough’s Enough<\/u><\/p>\n
Recently the mega-cap FAAMG stocks have seen a revival and pushed to new highs after Wall Street came to decide these solid earners do not really belong in the “growth” basket, rather they are as defensive as a consumer staple. But they can’t keep hitting new highs every day.<\/p>\n
Next week they start to report earnings, so best to lock in some profits now ahead of any “sell the fact” response, which in the early days of the season has already been the trend.<\/p>\n
That’s the most likely explanation given the US ten-year bond yield fell another -6 basis points to 1.30% last night. Growth stocks are the ones who benefit most, in valuation terms, from falling yields.<\/p>\n
But why do yields keep falling?<\/p>\n
US industrial production rose 0.4% in June, but take out the impact of constrained auto production due to the chip shortage, and that becomes a solid 0.8%.<\/p>\n
Weekly new jobless claims fell to a new covid low of 360,000, down -26,000 from the week before.<\/p>\n
The Philadelphia Fed activity index slipped to 21.9 from 30.7 a month ago, but as a zero-neutral measure these are still runaway numbers. The Empire (New York Fed) index hit a record high of 43.0, up from 17.4.<\/p>\n
It’s thus a bit hard to argue that lower US yields are the result of slowing US growth.<\/p>\n
In a second day of testimony to Congress, Jerome Powell reiterated the Fed’s stance on monetary policy, but this can hardly be a driver for further yield weakness given he’s been reiterating till he’s blue in the face for the last three months.<\/p>\n
While the FOMC is indeed “actively” talking about taper timing, the suggestion is only if the high inflation numbers seen in May-June persist to the end of the year will the Fed actually respond.<\/p>\n
The truth may lie with delta. While delta is a randomly chosen Greek letter it is also used to denote probability in options valuation. And further spread of the variant is currently high probability.<\/p>\n
Dr. Francis Collins, director of the US National Institutes of Health told CNN that the “delta variant is spreading, people are dying, we can’t actually just wait for things to get more rational.”<\/p>\n
The standout pace of US vaccination has come to a halt, with Republican states well behind on dose numbers.<\/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 1829.40<\/strong><\/span><\/td>\n + 2.10<\/strong><\/span><\/td>\n 0.11%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n 26.32<\/strong><\/span><\/td>\n + 0.09<\/strong><\/span><\/td>\n 0.34%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n 4.28<\/strong><\/span><\/td>\n + 0.08<\/strong><\/span><\/td>\n 1.82%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n 1.13<\/strong><\/span><\/td>\n – 0.00<\/strong><\/span><\/td>\n – 0.04%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n 1.05<\/strong><\/span><\/td>\n + 0.02<\/strong><\/span><\/td>\n 1.48%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n 8.48<\/strong><\/span><\/td>\n + 0.06<\/strong><\/span><\/td>\n 0.71%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n 1.34<\/strong><\/span><\/td>\n + 0.02<\/strong><\/span><\/td>\n 1.29%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n 71.65<\/strong><\/span><\/td>\n – 1.48<\/strong><\/span><\/td>\n – 2.02%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n 73.33<\/strong><\/span><\/td>\n – 1.26<\/strong><\/span><\/td>\n – 1.69%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n 222.30<\/strong><\/span><\/td>\n + 4.45<\/strong><\/span><\/td>\n 2.04%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
While the US dollar rose again last night, metal prices also rose. If the Chinese economy is indeed slowing, this suggests more stimulus is needed.<\/p>\n
Delta is also a worry for oil producers, as continued spread suggests lower demand. But it also appears the UAE and Saudi Arabia have reached a compromise that implies some easing of OPEC production constraints.<\/p>\n
Given stronger commodity prices, lockdowns are clearly weighing on the Aussie. It’s down -0.8% to the greenback’s 0.2% gain, at US$0.7424.<\/p>\n
Today<\/u><\/p>\n
The Bank of Japan meets today.<\/p>\n
The US will see retail sales and consumer sentiment data tonight.<\/p>\n
Alumina Ltd ((AWC)) and Rio Tinto ((RIO)) release quarterly reports while Auckland International Airport ((AIA)) reports June traffic stats.<\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
ABC<\/td>\n ADBRI<\/td>\n Upgrade to Equal-weight from Underweight<\/td>\n Morgan Stanley<\/td>\n<\/tr>\n
ARF<\/td>\n Arena REIT<\/td>\n Downgrade to Equal-weight from Overweight<\/td>\n Morgan Stanley<\/td>\n<\/tr>\n
BLD<\/td>\n Boral<\/td>\n Downgrade to Underweight from Equal-weight<\/td>\n Morgan Stanley<\/td>\n<\/tr>\n
CSR<\/td>\n CSR<\/td>\n Upgrade to Overweight from Equal-weight<\/td>\n Morgan Stanley<\/td>\n<\/tr>\n
GXY<\/td>\n Galaxy Resources<\/td>\n Upgrade to Buy from Accumulate<\/td>\n Ord Minnett<\/td>\n<\/tr>\n
OGC<\/td>\n OceanaGold<\/td>\n Upgrade to Neutral from Underperform<\/td>\n Macquarie<\/td>\n<\/tr>\n
ORE<\/td>\n Orocobre<\/td>\n Upgrade to Buy from Accumulate<\/td>\n Ord Minnett<\/td>\n<\/tr>\n
PLS<\/td>\n Pilbara Minerals<\/td>\n Upgrade to Hold from Lighten<\/td>\n Ord Minnett<\/td>\n<\/tr>\n
PNV<\/td>\n Polynovo<\/td>\n Downgrade to Hold from Accumulate<\/td>\n Ord Minnett<\/td>\n<\/tr>\n
VEA<\/td>\n Viva Energy<\/td>\n Upgrade to Add from Hold<\/td>\n Morgans<\/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":"
The Nasdaq took a sudden tumble last night ahead of next week’s Big tech earnings results, Dow up 53. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":95190,"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\/95183"}],"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=95183"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/95183\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/95190"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=95183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=95183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=95183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}