##{"id":97825,"date":"2021-11-10T09:20:45","date_gmt":"2021-11-09T22:20:45","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=97825"},"modified":"2021-11-10T10:04:14","modified_gmt":"2021-11-09T23:04:14","slug":"the-overnight-report-requisite-breather","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/11\/10\/the-overnight-report-requisite-breather\/","title":{"rendered":"The Overnight Report: Requisite Breather"},"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>\n7440.00<\/strong><\/span><\/td>\n+ 20.00<\/strong><\/span><\/td>\n0.27%<\/strong><\/span><\/td>\n<\/tr>\n
S&P ASX 200<\/strong><\/span><\/td>\n7434.20<\/strong><\/span><\/td>\n– 18.00<\/strong><\/span><\/td>\n– 0.24%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500<\/strong><\/span><\/td>\n4685.25<\/strong><\/span><\/td>\n– 16.45<\/strong><\/span><\/td>\n– 0.35%<\/strong><\/span><\/td>\n<\/tr>\n
Nasdaq Comp<\/strong><\/span><\/td>\n15886.54<\/strong><\/span><\/td>\n– 95.81<\/strong><\/span><\/td>\n– 0.60%<\/strong><\/span><\/td>\n<\/tr>\n
DJIA<\/strong><\/span><\/td>\n36319.98<\/strong><\/span><\/td>\n– 112.24<\/strong><\/span><\/td>\n– 0.31%<\/strong><\/span><\/td>\n<\/tr>\n
S&P500 VIX<\/strong><\/span><\/td>\n17.79<\/strong><\/span><\/td>\n+ 0.57<\/strong><\/span><\/td>\n3.31%<\/strong><\/span><\/td>\n<\/tr>\n
US 10-year yield<\/strong><\/span><\/td>\n1.43<\/strong><\/span><\/td>\n– 0.07<\/strong><\/span><\/td>\n– 4.34%<\/strong><\/span><\/td>\n<\/tr>\n
USD Index<\/strong><\/span><\/td>\n93.96<\/strong><\/span><\/td>\n– 0.09<\/strong><\/span><\/td>\n– 0.10%<\/strong><\/span><\/td>\n<\/tr>\n
FTSE100<\/strong><\/span><\/td>\n7274.04<\/strong><\/span><\/td>\n– 26.36<\/strong><\/span><\/td>\n– 0.36%<\/strong><\/span><\/td>\n<\/tr>\n
DAX30<\/strong><\/span><\/td>\n16040.47<\/strong><\/span><\/td>\n– 6.05<\/strong><\/span><\/td>\n– 0.04%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

By Greg Peel<\/p>\n

Inflation Signs?<\/u><\/p>\n

It was an upbeat start for the ASX200 yesterday but sentiment soon gave way to another soggy finish. Late morning the index was up 16 and then closed down -18.<\/p>\n

The biggest drag on the index was financials (-1.0%) after National Bank ((NAB)) reported a beat on earnings and dividend but disappointed on net interest margin, citing lower funding costs but low interest rates, competitive pressures and a shift to fixed-rate lending. NAB fell -0.8% and darkened the mood for the whole sector.<\/p>\n

Commonwealth Bank ((CBA)), which provides an update later this month, fell -1.2%.<\/p>\n

Unrelated to its earnings result, NAB’s business confidence survey for October unsurprisingly saw a solid rebound in both confidence and conditions post lockdowns. But what drew attention was build-up of input price pressures due to supply chain constraints and elevated demand pushing input cost inflation to the highest level in a decade.<\/p>\n

The pullback in bond yields was halted momentarily (global bond yields were all down last night) with the Aussie ten-year rising 3 points to 1.77%.<\/p>\n

Defensive and yield-paying sectors were again sold off yesterday, which makes sense, but then they were sold off on Monday too when yields were falling, which doesn’t.<\/p>\n

Telcos fell -1.0%, utilities -0.7%, staples -0.7% and this time property also fell, down -0.6%. Industrials were down -0.6%.<\/p>\n

Both healthcare (+0.5%) and technology (+1.1%) made comebacks yesterday and the main counter to the banks was provided by materials (+1.0%) thanks to gold’s renewed vigour, a stall in the iron ore price fall and buying in other metals.<\/p>\n

Lynas Rare Earths ((LYC)) topped the index board with a 7.6% gain but star of the day was Chalice Mining ((CHN)), which is not in the index. It leapt 28.5% after releasing a maiden resource at its Gonneville prospect, which is the largest nickel sulphide discovery in the world since 2000.<\/p>\n

Aside from nickel, it also contains copper, cobalt, gold, platinum and palladium.<\/p>\n

Energy fell -1.0% nonetheless, on suggestions LNG is on the way out and hydrogen is the future. Remember when gas was the future, according to the government, about five minutes ago?<\/p>\n

Never mind that the government is seeking to approve new offshore gas fields, or that Europe\/UK is currently struggling to import enough LNG to provide winter heating because China’s taking most of it and Putin is playing geopolitics with pipeline gas.<\/p>\n

The local market has now posted two soggy sessions despite more new highs on Wall Street, but last night Wall Street finally rolled over.<\/p>\n

Our futures are up 19 points this morning. Go figure.<\/p>\n

About Time<\/u><\/p>\n

If ever there was a session in which the Dow fell -250 points and no one much cared, it was last night’s. After a nine-day winning streak and consecutive new highs for the S&P500, marking a 10% rally out of the September swoon, a pullback was inevitable.<\/p>\n

And late buying reduced the Dow’s fall to -112.<\/p>\n

Inevitable as it may have been, Elon Musk’s shenanigans could have been somewhat of a trigger.<\/p>\n

Recall yesterday I noted Musk was contemplating selling -10% of his Tesla stake (US$21bn) to pay his tax bill. He decided to put this to a Twitter poll. The stock fell -5% on Monday night and when the poll came in with a resounding “yes”, it fell another -12% last night.<\/p>\n

The SEC’s really going to have some fun with this one. Tesla’s not in the Dow, but it is in the S&P and is a big chunk of the Nasdaq.<\/p>\n

In other news, US wholesale inflation rose 0.6% in October as expected to be up 8.6% annual, unchanged from September. The PPI has now averaged a 0.5% monthly gain since January when pre-pandemic the average was 0.1%.<\/p>\n

And yet the US ten-year bond yield fell -7 points to 1.43%.<\/p>\n

Falling yields in the face of stubborn inflation have many confounded, but again the explanation involves two factors: Everyone and their dog assumed rates would rise to year-end, and have been caught short, and yields are falling elsewhere, most notably in Germany where the ten-year had managed to scrape back to zero, but is now back at -0.3%.<\/p>\n

There was also some consternation last night about news Fed governor Lael Brainard was at the White House interviewing for the role of Fed chair. Brainard is considered the only other candidate beyond Jay Powell.<\/p>\n

According to Dow Jones, Brainard is known for a dovish view toward interest rates, though in practice her views on the economy have much in common with Powell. Where she differs is a tougher stance on bank regulation, for example voting to impose a countercyclical buffer on banks, which would require them to hold more capital.<\/p>\n

The S&P financials sector was the worst performer last night after consumer discretionary (Tesla).<\/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>\n1830.90<\/strong><\/span><\/td>\n+ 6.60<\/strong><\/span><\/td>\n0.36%<\/strong><\/span><\/td>\n<\/tr>\n
Silver (oz)<\/strong><\/span><\/td>\n24.25<\/strong><\/span><\/td>\n– 0.19<\/strong><\/span><\/td>\n– 0.78%<\/strong><\/span><\/td>\n<\/tr>\n
Copper (lb)<\/strong><\/span><\/td>\n4.48<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.19%<\/strong><\/span><\/td>\n<\/tr>\n
Aluminium (lb)<\/strong><\/span><\/td>\n1.14<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.48%<\/strong><\/span><\/td>\n<\/tr>\n
Lead (lb)<\/strong><\/span><\/td>\n1.08<\/strong><\/span><\/td>\n– 0.01<\/strong><\/span><\/td>\n– 0.85%<\/strong><\/span><\/td>\n<\/tr>\n
Nickel (lb)<\/strong><\/span><\/td>\n8.84<\/strong><\/span><\/td>\n– 0.00<\/strong><\/span><\/td>\n– 0.04%<\/strong><\/span><\/td>\n<\/tr>\n
Zinc (lb)<\/strong><\/span><\/td>\n1.48<\/strong><\/span><\/td>\n+ 0.00<\/strong><\/span><\/td>\n0.29%<\/strong><\/span><\/td>\n<\/tr>\n
West Texas Crude <\/strong><\/span><\/td>\n84.35<\/strong><\/span><\/td>\n+ 2.25<\/strong><\/span><\/td>\n2.74%<\/strong><\/span><\/td>\n<\/tr>\n
Brent Crude<\/strong><\/span><\/td>\n84.90<\/strong><\/span><\/td>\n+ 1.31<\/strong><\/span><\/td>\n1.57%<\/strong><\/span><\/td>\n<\/tr>\n
Iron Ore (t)<\/strong><\/span><\/td>\n92.45<\/strong><\/span><\/td>\n– 1.40<\/strong><\/span><\/td>\n– 1.49%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In other contradictory price move last night, the oils shot up yet again on news the US government is considering releasing some of its Strategic Reserve in order to relieve pressure on oil prices. Note that the two biggest factors in last night’s PPI increase were vegetables and gasoline.<\/p>\n

Prices responded by rising, rather than falling as one might expect, because such a move implies limited commercial supply, and can only be short-term, as those reserves would have to be replenished.<\/p>\n

Iron ore’s blip up on Monday proved short-lived too.<\/p>\n

The Aussie has dropped -0.6% to US$0.7379.<\/p>\n

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

The SPI Overnight closed up 20 points or 0.3%.<\/p>\n

Locally we’ll see Westpac’s consumer confidence survey for November today, which will likely echo NAB’s business survey.<\/p>\n

China will report October CPI and PPI.<\/p>\n

The US will see the CPI.<\/p>\n

A handful of AGMs today include those of Coles ((COL)) and Newcrest Mining ((NCM)).<\/p>\n

ResMed ((RMD)) goes ex.<\/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
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS<\/span><\/td>\n<\/tr>\n
CMW<\/td>\nCromwell Property<\/td>\nUpgrade to Buy from Lighten<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
DHG<\/td>\nDomain Australia<\/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
ORI<\/td>\nOrica<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
PDL<\/td>\nPendal Group<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nDowngrade to Neutral from Outperform<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
REA<\/td>\nREA Group<\/td>\nDowngrade to Sell from Neutral<\/td>\nUBS<\/td>\n<\/tr>\n
SIQ<\/td>\nSmartgroup Corp<\/td>\nUpgrade to Buy from Accumulate<\/td>\nOrd Minnett<\/td>\n<\/tr>\n
SUN<\/td>\nSuncorp Group<\/td>\nUpgrade to Buy from Neutral<\/td>\nCiti<\/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":"

Wall Street finally pulled back last night after a nine-day rally, although last buying reduced the falls. Dow down -112. (Available for non-subscribers after 10am)<\/p>\n","protected":false},"author":8,"featured_media":97831,"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\/97825"}],"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=97825"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/97825\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/97831"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=97825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=97825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=97825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}