The Overnight Report: And Back To Reality

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By Greg Peel

The Dow closed up 9 points or 0.1% while the S&P added 0.2% to 1094 and the Nasdaq rose 0.3%.

It was all happening on Tuesday night with economic data and earnings releases and takeover activity. Last night, virtually nothing happened. One is reminded that August is the peak month for summer holidays in the US and most Wall Street firms are running on skeleton staff. And even those skeletons are bored.

Not that a Dow close of up 9 points means there was no movement at all. The Dow actually opened down 75 points and was up 67 at lunch time. Wall Street needed something to grasp onto and it found Target's earnings report as something to play on, initially selling on a revenue miss then buying back and more on an upbeat conference call with the CEO. But that was about the only point of interest.

The fact that the stock indices are putting in sizable fluctuations lately before closing flat is simple. The only players in the market at present are day-traders and high-frequency computers and they aim to be square by the end of the session. There is no investor interest. Because there is no investor interest, small orders are moving stock prices sizable distances.

Investors are all in bonds, and they were steady last night with the ten-year yield at 2.64%. The US dollar index was also steady at 82.24. Gold eked out a US$4.60 gain to US$1229.30/oz but the Aussie took a hit – down 0.7 of a cent to US$0.8988. The Aussie was sold in yesterday's local session on slowing leading indicators and a lower than expected rise in June quarter wage costs. More reason why the RBA will probably see out 2010 on 4.5%.

Wednesday is the day they spin the weekly US oil inventory chocolate wheel, and last night's result had oil down US35c to US$75.42/bbl. Londoners are also sitting on deck chairs in Bournemouth sporting knotted handkerchiefs, so base metals were dead. Aluminium did fall 1.5% nevertheless.

The SPI Overnight fell 9 points or 0.2%.

The only real news of interest came after the bell, when it was announced General Motors had filed its much anticipated IPO application. While not yet priced, analysts expect the GM offer will raise in the order of US$14-18bn. Let's put that into context. Once America's biggest and mightiest company (“What's good for GM is good for America!”) is on offer for around US$16bn. BHP yesterday bid US$37bn for a company in Saskatoon that sells sh*t to farmers.

There's a big wave of earnings reports in Australia today. Highlights will include AMP ((AMP)), Brambles ((BXB)), Downer ((DOW)), QBE ((QBE)) and Wesfarmers ((WES)) but there are many more.

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