The Overnight Report: Nothing To See Here

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This story features MACQUARIE GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: MQG
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

The Dow closed down -36 points or -0.2% while the S&P lost -0.1% to 2396 as the Nasdaq rose 0.3%.

When the Levy Breaks

The rumour hit yesterday the government was about to slap a “mining tax” on the banks and that’s exactly what we got last night. The 0.06% levy imposed on institutional loans will take $6bn out of the $30bn in profits posted by the “Big Five”, with Macquarie Group ((MQG)) now also considered guilty by association.

This cost will of course be borne by customers unless the ACCC can ensure that it’s shareholders taking the hit, meaning any Australian with a superannuation fund.

The ASX200 closed down -30 points yesterday, and the banks accounted for -45 points. Every other sector rose on the day. Financials fell -2.4% in a session in which big caps were otherwise back in the buyers’ sights. Materials rose 1.0%, energy rose 1.1% and telcos rose 2.2%, all no doubt recipients of funds from bank selling.

It’s not often you see Commonwealth Bank ((CBA)) and Westpac ((WBC)) rating numbers two and three on the top decliners board. CBA picked a bad day to provide a weaker than expected trading update.

JB Hi-Fi ((JBH)) was independently the biggest loser, falling -4.4% after a US hedge fund called the stock a “top short”, thanks to the Amazon factor. For the record, the stock is currently around 7% shorted. Playmate Harvey Norman ((HVN)) is over 9% shorted. That stock was the fourth worst performer yesterday.

It didn’t help that consumer spending fell -0.1% in March when a 0.3% gain was forecast. The RBA has been warning of a consumer recession on the back of debt-laden household budgets, and such a result is testament, although the impact from Cyclone Debbie and a relentless period of rain in NSW in the month must be taken into account.

Consumer discretionary still managed to close up 0.2% yesterday.

Unless I nodded off, I heard no mention from the Treasurer last night of the expected GST on offshore purchases. This is a positive for domestic retailers.

I heard quite a bit about “good debt” spending on infrastructure, and this should have a positive impact on relevant industries today, even if the Labor, sorry, Coalition government is going to do the work itself.

Otherwise, the minutiae of last night’s budget will be much discussed from here on and of course, it all has to get past the Senate. Suffice to say, the futures are up 19 points this morning and the Aussie is down -0.6%.

Speaking of Amazon…

Amazon hit a new all-time high last night, as did Apple and, consequently, the Nasdaq. Apple passed the milestone of US$800bn in market cap.

Apple is also in the Dow but weakness elsewhere saw the price average trading slightly lower. The fact the S&P yet again closed very flat underscores the lack of any drivers on Wall Street at present. The northern summer is approaching.

There’s a German election coming up of course, and a UK election beforehand. There’s an OPEC meeting due which will determine whether oil production cuts remain in place. There’s a Fed meeting next month. Otherwise, there’s little for Wall Street to do as it awaits any further news out of the White House.

Commodities

Things weren’t exactly jumping in commodity markets last night either. Every commodity covered here bar iron ore fell last night, but none by more than -0.5%.

Iron ore rose US40c to US$59.90/t. All base metal prices were slightly weaker.

Gold is down -US$4.90 at US$1221.10/oz.

West Texas crude is down -US32c at US$46.16/bbl.

Commodity prices were not helped by a 0.5% gain in the US dollar index to 99.59.

The Aussie is -0.6% lower at US$0.7339. Will Australia lose its AAA rating on “good debt” spending? Does it really matter?

Today

The SPI Overnight closed up 19 points or 0.3%.

Will the banks fight back today? Wait for the next round of repricing.

Westpac will release its monthly consumer confidence survey today, which will be used as the benchmark for budget before-and-after analysis next month.

China will release inflation numbers.

CSR ((CSR)) will release its earnings report today, News Corp ((NWS)) will report quarterly earnings and REA Group ((REA)) will provide a quarterly update.
 

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