The Overnight Report: Season Ends On Sour Note

This story features HARVEY NORMAN HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: HVN

US equities yet again tried to rally overnight but it wasn’t to be. As President Trump announced tariffs will be implemented from next week, gains turned into losses.

SPI futures are indicating a down day for the Aussie market today.

Today also marks the official deadline for the February results season.

So who hasn’t reported yet? Harvey Norman ((HVN)) comes to mind, as does Airtasker ((ART)), and Pexa Group ((PXA)), and The Star Entertainment Group ((SGR)).

Regarding the much troubled casino operator, news has already broken Star Entertainment’s board has been unable to sign off financial statements for the second time in six months.

Keep an eye out for those who release their financials long after 5pm today.

It won’t work, of course, as investors will still be able to respond on Monday morning, but there’s always a number that tries to fly under the radar with financial numbers they’d rather not make public.

https://fnarena.com/index.php/reporting_season/

Good morning.

Equity markets were weak overnight after President Trump said planned tariffs against Mexico, Canada and China would take effect on 4 March.

Soft euro area money supply data is consistent with an ECB cut next week.

ANZ Bank economists commented this morning crude oil rallied amid renewed supply side issues.

WTI crude rose after US President Donald Trump confirmed plans to impose tariffs on Canada and Mexico, two key suppliers of oil to the US, starting 4 March.

The tariffs threaten to disrupt North America’s tightly integrated oil industry and raise demand for US crude to substitute any Canadian or Mexican oil which may be diverted elsewhere.

The US imports approximately 4mb/d from Canada and 400kb/d from Mexico. Earlier in the day Trump also revoked Chevron’s oil licence to operate in Venezuela, citing electoral conditions and the country’s failure to take migrants from the US.

Chevron is the only US major left in the country and was producing around 200kb/d.

That had constituted around 20% of Venezuela’s total production.

This comes as the Trump administration applies maximum pressure on Iran.

The US Treasury Department put sanctions on over 30 individuals and tankers, as part of efforts to squeeze Iran’s oil revenues.

Base metals endured a mixed session as the uncertain economic backdrop weighed on sentiment.

Nickel managed to buck the trend and end the session higher amid signs of stronger demand.

Iron ore fell amid weak sentiment. Still according to those ANZ Bank economists, speculation is mounting China may reduce steel production by -50mt this year, as officials look to tackle mounting overcapacity in the industry.

This would ultimately weigh on iron ore demand. Concerns are also rising around the impact of Trump’s wide-ranging tariffs threats. A 25% tariff on US imports of steel has already been announced.

Gold dropped in response to the stronger USD. The AUD has fallen -1.2% to 0.6243.

Stephen Auth, Chief Investment Officer for Equities at Federated Hermes:

“As we ply the straits of the sirens, strapping ourselves to the mast of our over-weights to stocks while also staying overweight money markets may prove to have been an even better idea than we’d imagined.

“Several of the near-term risks we’ve been highlighting are cropping up all at once now, so the odds of things getting rockier from here are rising.

“Still, the intermediate-term picture remains so promising that we are unlikely to be steered out of our overweight stocks position, and we haven’t changed our 7,000-year-end target on the S&P 500.

“US federal government layoffs so far are small but coming all at once. Uncertainty around future cuts could magnify the impact.

“Still, more cuts are coming, and when layoffs like this happen nearly simultaneously, they can pack a bigger psychological punch than the straight numbers suggest they should.

“Last weekend’s German elections signalled an emerging shift within Europe toward more conservative social and economic policy options, while keeping the far right and far left parties at bay.

“Given the amount of dry economic tinder in Europe, any shift towards less regulation, lower taxes and more private sector could have a powerful multiplier effect.

“Over in China, Xi may be preparing to play his next move. Another big near-term upside potential for the global economy is China, so bad off that it may be good.

“With Trump threatening, Xi would seem to have no good move except domestic stimulus, including welcoming back the tech entrepreneurs who “Made China Great Previously.”

“Such a move would be a boon globally. In this light, the reemergence of Jack Ma, Alibaba’s founder, warmed many capitalist hearts in China this weekend.”

On the calendar today:

-Australia Jan private sector credit

-Japan Jan Industrial Production

-Japan Jan retail sales

-US Jan personal income/spend

-US Jan Trade Balance

-Life360 ((360)) earnings report

-Australian Finance Group ((AFG)) earnings report

-AMP ((AMP)) ex-div 1c (20%)

-Airtasker ((ART)) earnings report

-Avita Medical ((AVH)) earnings report

-Boss Energy ((BOE)) earnings report

-Centre Point Alliance ((CAF)) ex-div 1.25c (100%)

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

Corporate news in Australia:

-Ramsay Health Care ((RHC)) intends to refocus on its Australian operations and sell its European businesses

-Oaktree, TA Associates, and FirstCape reportedly all vie for Perpetual’s ((PPT)) wealth unit

CIBC Economics on US durable goods in January:

While the headline figure was hot, that masked some softness in in today’s durable goods report.

Headline orders surged by 3.1% m/m due to the ever volatile commercial aircraft segment, over a percentage point above expectations, and the prior month was revised up four notches to a 1.8% contraction.

Excluding the volatile transportation category, orders were flat and came short of expectations which called for 0.3% growth in the month.

Core capital goods shipments (excluding defense and transportation), which is a leading indicator of business investment in equipment, declined by 0.3% in the month, below consensus expectations of 0.3% growth.

Capital goods orders, however, jumped by 0.8%, beating consensus view of a 0.3% increase.

Optimism around regulatory and tax changes, along with a very healthy consumer and moderate financial conditions are the forces that are supporting equipment investment.

But tariff talk and the uncertainty for business associated with higher import costs has increased since January. 

If imposed, tariffs, will put a dent in US growth and investment will be one of the first places it starts to show up.

The Australian share market over the past thirty days

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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