##{"id":97566,"date":"2021-10-29T08:59:21","date_gmt":"2021-10-28T21:59:21","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=97566"},"modified":"2021-10-29T10:35:26","modified_gmt":"2021-10-28T23:35:26","slug":"the-overnight-report-lets-get-high","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/10\/29\/the-overnight-report-lets-get-high\/","title":{"rendered":"The Overnight Report: Let\u2019s Get High"},"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<\/strong><\/span><\/td>\n7422.00<\/strong><\/span><\/td>\n+ 18.00<\/strong><\/span><\/td>\n0.24%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n7430.40<\/strong><\/span><\/td>\n– 18.30<\/strong><\/span><\/td>\n– 0.25%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n4596.42<\/strong><\/span><\/td>\n+ 44.74<\/strong><\/span><\/td>\n0.98%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n15448.12<\/strong><\/span><\/td>\n+ 212.28<\/strong><\/span><\/td>\n1.39%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n35730.48<\/strong><\/span><\/td>\n+ 239.79<\/strong><\/span><\/td>\n0.68%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n16.53<\/strong><\/span><\/td>\n– 0.45<\/strong><\/span><\/td>\n– 2.65%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.57<\/strong><\/span><\/td>\n+ 0.04<\/strong><\/span><\/td>\n2.55%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n93.36<\/strong><\/span><\/td>\n– 0.52<\/strong><\/span><\/td>\n– 0.55%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7249.47<\/strong><\/span><\/td>\n– 3.80<\/strong><\/span><\/td>\n– 0.05%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n15696.33<\/strong><\/span><\/td>\n– 9.48<\/strong><\/span><\/td>\n– 0.06%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Market Challenges RBA<\/u><\/p>\n

Yesterday’s action on the ASX was driven by three factors: a big fall in commodity prices; ongoing company updates; and a huge jump in bond yields.<\/p>\n

Energy (-1.9%) and materials (-1.2%) were the standout worst performers, not just on overnight plunges in base metals, thermal coal and oil prices but on the day’s news regarding iron ore.<\/p>\n

Yesterday Beijing issued an action plan to ensure carbon emissions peak before 2030, urging industry to continue to cut steel capacity, improve recycling rates of steel scrap, and promote electric arc furnaces technologies.<\/p>\n

By the close in Singapore yesterday spot iron ore had fallen over -5%.<\/p>\n

While miners were notable among the top five index losers yesterday, AGM\/quarterly updates did not go well for PointsBet Holdings ((PBH)), which fell -18.3%, and IOOF Holdings ((IFL)), which fell -8.5%.<\/p>\n

The winners’ board was dominated by updaters, featuring 3-5% gains for all of Reliance Worldwide ((RWC)), Boral ((BLD)), Reece ((REH)) and JB Hi-Fi ((JBH)).<\/p>\n

ANZ Bank ((ANZ)) reported a beat on earnings yesterday and rose 0.7%, helping the banks up 0.2% to provide some counter to resources. Healthcare and discretionary each rose 0.1% to make up the only sector gainers on the day, while industrials closed flat.<\/p>\n

But it’s going to be a very, very interesting day next Tuesday. And there’ll be a horse race as well.<\/p>\n

Yesterday the Aussie two-year bond rate jumped…wait for it…28 basis points to 0.46%. The five-year rose 15bps to 1.49% and ten-year 5bps to 1.85%.<\/p>\n

These are indicative rates only, interpolated from actual bonds across the yield curve (a ten-year bond is only a ten-year bond for a day). The benchmark actual bond currently relevant to the RBA’s QE program is the April 2024, which jumped 30bps to 0.50% when the RBA is meant to be capping it at 0.10%.<\/p>\n

So where was the RBA yesterday? Indeed, all month? Yesterday’s selling in bonds was presumably triggered by Wednesday’s core inflation rate increase into the RBA’s target zone.<\/p>\n

Industrials did well to close flat on these moves in yield, but yield-payers staples and utilities fell -0.5% and property -0.2%, while growth sector technology fell -0.6%.<\/p>\n

But today is another day, again featuring a big round of individual stock events. Macquarie Group ((MQG)), Janus Henderson ((JHG)) and ResMed ((RMD)) all report earnings, Origin Energy ((ORG)), Beach Energy ((BPT)) and Carsales ((CAR)) are among those providing updates.<\/p>\n

Earnings are responsible for another solid, record-breaking session on Wall Street overnight. But with the S&P500 up 1%, our futures are only up 0.2% this morning.<\/p>\n

Things can only get Meta<\/u><\/p>\n

I reported earlier this week on Facebook’s disappointing result, and how the company was attempting to shift its focus, and its money, into investment in the “metaverse”, likely in an attempt to shift the world’s focus away from a legacy social media business being attacked on all fronts.<\/p>\n

Well last night Facebook went the whole hog, and changed its name to Meta. No doubt this will be immediately adopted by all and sundry, just as we no longer Google something, we Alphabet it. At least Facebook has also changed its ticker code, to MVRS (get it?) from FB, while Alphabet’s ticker is still GOOG.<\/p>\n

Before we get to last night’s run to a new record high for the Nasdaq, taking the S&P with it, we might look at a couple of earnings reports that came out in this morning’s aftermarket.<\/p>\n

Amazon and Apple are both down -4% at present, after both posted misses.<\/p>\n

Amazon’s excuse? Supply shortages, rising wage costs, and a struggle to find new employees with the seasonally biggest quarter of its year now upon us.<\/p>\n

For Apple? Chip shortage hitting iPhone sales.<\/p>\n

Both stocks had, however, run up in the session ahead of their results, as had all the mega-cap tech names, driving to Nasdaq and S&P. But the Dow wasn’t left out, with strong results from Merck, Ford and Caterpillar the stand-out drivers.<\/p>\n

Indeed, every S&P500 sector closed in the green. Why the sudden enthusiasm?<\/p>\n

Well aside from earnings, the Democrats have reached a compromise. Biden’s infrastructure package, which began at US$3.5rtn over ten years, is now just US$1.75bn. Concessions have been made across all the “social infrastructure” aspects, and also on the funding side (taxes).<\/p>\n

The Republicans won’t have a bar of it, of course.<\/p>\n

The other news was a first estimate of US September quarter GDP of 2.0% growth, down from 6.7% growth in June. While a big delta-driven slowdown was expected, 2.0% significantly missed consensus of 2.8%.<\/p>\n

The US ten-year yield shot back up 4 basis points to 1.57% and the US dollar index plunged -0.6%, but Wall Street wasn’t fussed. Had the number come in “hot”, there would be more concern over the Fed’s tapering\/rate hike timeline on the growth side to add to the inflation issue.<\/p>\n

All eyes now on tonight’s September PCE inflation number.<\/p>\n

Yet we can only assume that unless investors change their minds over the Amazon and Apple results after closer scrutiny, last night’s new high for the Nasdaq will be short-lived. When mega-caps fall -4% it is significant, and Apple in particular is in all three indices.<\/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>\n1798.90<\/strong><\/span><\/td>\n+ 1.70<\/strong><\/span><\/td>\n0.09%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n24.05<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.04%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n4.49<\/strong><\/span><\/td>\n+ 0.04<\/strong><\/span><\/td>\n0.98%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n1.21<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.57%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n1.11<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n1.33%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n9.03<\/strong><\/span><\/td>\n+ 0.15<\/strong><\/span><\/td>\n1.64%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.55<\/strong><\/span><\/td>\n+ 0.01<\/strong><\/span><\/td>\n0.42%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n83.13<\/strong><\/span><\/td>\n+ 1.05<\/strong><\/span><\/td>\n1.28%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n84.50<\/strong><\/span><\/td>\n+ 0.38<\/strong><\/span><\/td>\n0.45%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n113.15<\/strong><\/span><\/td>\n– 6.50<\/strong><\/span><\/td>\n– 5.43%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Some reprieve for base metals, other than hardest hit aluminium, after Wednesday night’s falls. Iron ore we already knew about.<\/p>\n

The trend in recent months is one of the oils never putting together more than one negative session.<\/p>\n

One might have expected a combination of surging Aussie bond rates and a big fall in the greenback would have had the Aussie up more than 0.3%, at US$0.7543.<\/p>\n

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

The SPI Overnight closed up 18 points or 0.2%.<\/p>\n

In the wake of Wednesday’s surprise core CPI result, today we’ll see the PPI.<\/p>\n

China will release October PMIs.<\/p>\n

The eurozone will release its first estimate of September quarter GDP.<\/p>\n

Aside from the PCE, the US will see consumer sentiment.<\/p>\n

I have already highlighted today’s local corporate events.<\/p>\n

The Australian share market over the past thirty days…<\/strong><\/p>\n<\/p>\n

<\/p>\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
A2M<\/td>\na2 Milk Co<\/td>\nUpgrade to Neutral from Underperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
CHL<\/td>\nCamplify<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
COE<\/td>\nCooper Energy<\/td>\nDowngrade to Accumulate from Buy<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
ORI<\/td>\nOrica<\/td>\nUpgrade to Overweight from Equal-weight<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
RWC<\/td>\nReliance Worldwide<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
SGF<\/td>\nSG Fleet<\/td>\nUpgrade to Outperform from Neutral<\/td>\nMacquarie<\/td>\n<\/tr>\n
SGM<\/td>\nSims<\/td>\nUpgrade to Buy from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
SIQ<\/td>\nSmartgroup Corp<\/td>\nUpgrade to Outperform from Neutral<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nUpgrade to Add from Hold<\/td>\nMorgans<\/td>\n<\/tr>\n
WAF<\/td>\nWest African Resources<\/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":"

The Nasdaq finally made it to a new high last night, but it may not last long. Dow up 239. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":97575,"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\/97566"}],"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=97566"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/97566\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/97575"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=97566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=97566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=97566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}