The Overnight Report: Looking For Direction

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It was a mixed overnight session in commodity and stock markets, with oil prices firming initially before coming back, and stock prices drifting for much of the European session only to rebound later.

World Overnight
SPI Overnight	8256.00	+ 6.00	0.07%
S&P ASX 200	8198.20	– 10.70	– 0.13%
S&P500	5709.54	+ 0.79	0.01%
Nasdaq Comp	17925.12	+ 14.76	0.08%
DJIA	42196.52	+ 39.55	0.09%
S&P500 VIX	18.90	– 0.36	– 1.87%
US 10-year yield	3.79	+ 0.04	1.12%
USD Index	101.63	+ 0.42	0.41%
FTSE100	8290.86	+ 14.21	0.17%
DAX30	19164.75	– 48.39	– 0.25%

By Chris Weston, Head of Research, Pepperstone

Good morning.

After the barrage of headline risk seen in the prior session, market participants have acted with a clearer thought process, and with a certain calm perhaps temporarily – descending across asset classes.

Brent crude remains a key focal point and a source of directional risk for broad markets. On the day, an early rally into US$76.14/bbl, with price pushing above the 24 Sept pivot high, was met with a wall of sellers and supply, with price pulling back into US$73.58, before finding a renewed bid and closing +1.5%.

A 3.89m barrel build in the DoE’s weekly US crude inventories, amid weaker gasoline demand, a trigger for longs to part close, with calls that OPEC-Plus will leave production unchanged these fundamental factors have triggered some selling in the near-term.

But while US President Biden is reportedly attempting to deter Israel from targeting Iranian bases, the geopolitical headline risk remains firmly entrenched and the street remains ready to act should new news present itself.  

The intraday reversal in crude was a partial signal for gold longs to take some off the table, although one would argue the 4bp to 5bp rise in US Treasury yields (across the curve) and the subsequent 0.4% rise in the DXY was also a key factor in pushing the yellow metal -0.2% lower on the day.

The USD was treated to a modestly hotter ADP payroll, but the market looks more intently at its positioning ahead of today’s US services ISM and tomorrow’s US nonfarm payrolls (NFP).

With sizeable two-way risk in markets derived from the NFP outcome, it seems prudent for the more tactical-focused traders to reduce USD shorts and US Treasury longs into the key labour data.  

US equity has held up well on the day, with dip buyers stating their case amid some signs of traders unwinding downside hedges. S&P500 futures traded below Tuesday’s low of 5733, and the price action-focused traders would have then been on notice for a clearer signal on follow-through after the bearish reversal seen in the prior daily.

That wasn’t to be, and the buyers stepped in pushing the futures market higher and negating the bearish daily reversal, with the S&P500 cash market closing flat on the day.

Breadth was lacklustre, with 44% of S&P500 companies higher on the day, with energy and tech putting in the points, while the staples and consumer discretionary sectors closed lower by -0.8% – notably led lower by weakness in Tesla and Nike.

The moves in US equity don’t really offer Asia too much to work with, with our opening calls looking well dispersed.

The ASX200 looks to open 0.2% higher, and index longs will naturally want to see a firm close above the 8200, while also hoping for a rise in SPI futures towards 8300.  

On the calendar today:

-Australia Aug trade balance, PMI Sept

-Japan PMI

-China Public Holiday

-Eurozone PMI

-UK PMI

-US Aug factory orders, durable goods

-ARB Corp ((ARB)) ex-div 35c (100%)

-New Hope Corp ((NHC)) ex-div 22c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Corporate news in Australia:

-Accent Group ((AX1)) becomes the exclusive distributor for Lacoste and Dickies in Australia and New Zealand

-Genesis Energy ((GNE)) is acquiring a 65% stake in ChargeNet for NZ$64m

– Louis Dreyfus (LDC) secures control of Namoi Cotton ((NAM)) after rival Olam Agri pulls out with the ASX cancelling over $800,000 in trades for Namoi Cotton after failing to publish a new $150m takeover offer from Louis Dreyfus before trading began

-SPC is returning to the ASX through a reverse takeover of Original Juice Co and a dairy business acquisition

-Les Szekely to sell most of his 5.5% stake in SiteMinder ((SDR)) and retire from the board in December

-Canada has launched a national security review of Paladin Energy’s ((PDN)) $1.5bn acquisition of Fission Uranium, citing concerns over Chinese investor influence

Spot Metals,Minerals & Energy Futures
Gold (oz)	2680.10	– 4.70	– 0.18%
Silver (oz)	32.11	+ 0.40	1.26%
Copper (lb)	4.67	+ 0.09	1.90%
Aluminium (lb)	1.21	+ 0.02	1.86%
Nickel (lb)	8.20	+ 0.24	2.95%
Zinc (lb)	1.44	+ 0.02	1.72%
West Texas Crude	71.00	+ 0.24	0.34%
Brent Crude	74.66	+ 0.05	0.07%
Iron Ore (t)	109.29	+ 0.55	0.51%

The Australian share market over the past thirty days

Index	02 Oct 2024	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2024)
S&P ASX 200 (ex-div)	8198.20	-0.17%	-0.87%	-0.87%	8.00%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
FBU	Fletcher Building	Upgrade to Buy from Sell	Citi

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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. (Subscribers can access prices on the website.)

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