The Overnight Report: Eight Years

Array
(
    [0] => Array
        (
            [0] => ((NVT))
            [1] => ((NEC))
            [2] => ((QAN))
            [3] => ((OSH))
            [4] => ((RHC))
        )

    [1] => Array
        (
            [0] => NVT
            [1] => NEC
            [2] => QAN
            [3] => OSH
            [4] => RHC
        )

)

This story features NINE ENTERTAINMENT CO. HOLDINGS LIMITED, and other companies.
For more info SHARE ANALYSIS: NEC
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

The Dow closed down -51 points or -0.2% while the S&P fell -0.3% to 2375 and the Nasdaq dropped -0.4%.

School’s Out

Just when it looked like education provider Navitas ((NVT)) was getting back on its feet after the impact of its big contract loss, now the government looks like clamping down on the number of regions the company can operate in. It just goes to show the dangers of investing in listed companies so reliant on supportive government regulation and so exposed to changes thereto. Think McMillan Shakespeare, think health care service providers.

Navitas fell -15% yesterday to render the consumer discretionary sector the worst performer on the day with an -0.8% drop. It was a day in which that sector was specifically in focus.

Australian retail spending recovered somewhat in January after a disappointing December. Sales rose 0.4% as forecast to an annual rate of 3.1%, below the 4.3% decade average. Ensuring modest sales growth is anaemic wage growth, itself driven by the domination of part time jobs over full time jobs in the economy.

The standout segment of sales growth in January was household goods, which ties in with the ongoing and increasingly precipitous housing boom. Although as CBA’s economists suggest, the summer heatwave in NSW may have sparked a rash of air conditioner and fan buying.

The numbers failed to bring any joy to the sector. Healthcare (-0.7%) was the other notable loser on the day while materials (+1.1%) was the leader in the latest of a volatile run and telcos (+1.0%) provided support. The market appears to change its mind every day at present as to whether the miners and Telstra are worth owning.

Which is probably indicative of a market in a state of limbo – a not uncommon state to be in once earnings result season had faded into the distance. March is typically a quiet month and given Wall Street appears to be in its own state of watch-and-wait limbo there is little outside influence to determine whether the ASX200 should next hit 5800 or 5600.

The session began yesterday with some selling before recovering and grafting ahead to the close. Sector moves were mixed. Conviction was not apparent.

Second Time Lucky

Donald Trump has reinstated his travel bans, this time on six of the original seven Muslim countries. Iraq is the odd one out, apparently because Iraq has been very cooperative in providing the information needed to satisfactorily vet these radical terrorists…sorry, to vet these travellers from another land.

It appears Wall Street is currently delineated in terms of Trump policies deemed to be positive and policies deemed not positive. Any further talk of tax reform, regulation roll-back and infrastructure spending is met with a cheer, while anything to do with immigration bans or border taxes is met with caution. Last night was a night for caution.

It was also a night to feel a creeping uncertainty over North Korea’s latest ballistic missile launches. Although you wouldn’t know that from a drop in the gold price. Once upon a time you could guarantee gold was the benchmark of geopolitical fear, but not anymore it seems.

Presumably nothing would please Trump more than to blast North Korea off the map but that would not be welcomed by China, who fears the millions of refugees that would stream across the border. Ditto South Korea, whose economy simply couldn’t handle it. The US is fighting the rogue regime via UN sanctions which China signs up to and then ignores, instead continuing to buy up North Korean coal and iron ore, thus keeping the regime afloat.

Malaysia is North Korea’s other supporter, but things seemed to have soured on that front given recent events.

So as Wall Street bungles along in its own limbo, hanging around not far from all-time highs, such factors are providing a (minor) distraction. It could be a long week as the world awaits Friday’s US jobs number, which presumably will settle the score on the monetary policy side.

What will happen on the fiscal policy side is anyone’s guess.

It’s worth noting that last night was the eight year anniversary of the S&P500 hitting its intra-day GFC low of 666. Since that day the S&P has rallied 250%, the Dow 220% and the Nasdaq 350%.

The ASX200 has managed 70%.

Commodities

The US dollar index is up only 0.1% at 101.66 but gold is down -US$7.70 to US$1225.90/oz, no doubt running scared from all this March rate hike talk.

Nickel was again the outlier on the LME last night in rising 1% when both copper and zinc fell -1% and aluminium and lead also traded lower.

Iron ore is unchanged at US$91.60/t.

Oil prices are little moved.

The Aussie is steady at US$0.7583.

Today

The SPI Overnight closed down -8 points.

The RBA board will meet today and leave rates on hold. The local construction PMI is out today.

Today’s list of stocks going ex-dividend includes Nine Entertainment ((NEC)), Qantas ((QAN)), Oil Search ((OSH)) and Ramsay Health Care ((RHC)).

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available in the FNArena Cockpit.  Click here. (Subscribers can access prices in the Cockpit.)

(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)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

Click to view our Glossary of Financial Terms