The Overnight Report: Oil Gets A Boost

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            [3] => ((MQG))
            [4] => ((ANZ))
            [5] => ((CSR))
            [6] => ((JBH))
            [7] => ((HVN))
            [8] => ((XRO))
            [9] => ((BTT))
            [10] => ((GNC))
            [11] => ((AMP))
            [12] => ((GMA))
            [13] => ((GPT))
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            [6] => JBH
            [7] => HVN
            [8] => XRO
            [9] => BTT
            [10] => GNC
            [11] => AMP
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This story features WESTPAC BANKING CORPORATION, and other companies.
For more info SHARE ANALYSIS: WBC
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 gained 0.1% to 2399 and the Nasdaq rose 0.1%.

Green on Screen

After a stuttering start, the ASX200 recovered to post a steady gain throughout the local session yesterday, on good volume. It was clearly a tick of approval for the budget, or at least a “thank God there were no real nasties in there” relief rally.

Except, perhaps, with regard the bank tax, which unsurprisingly has dominated post-budget debate. Banks had been sold down on the rumour on Tuesday and early weakness in the index yesterday largely reflected selling from the slower movers. In the wash-up, Westpac ((WBC)) and National Bank ((NAB)) closed down another -0.7%, CommBank ((CBA)) -0.4% and Macquarie Group ((MQG)) -0.6% after recovering steeper early losses.

ANZ Bank ((ANZ)), on the other hand, rose 0.8%. The thinking here is that if the Big Five are to pass on the levy to shareholders through dividend cuts, ANZ won’t be involved because it is the only bank to date to have already cut its dividend to satisfy expected capital requirements.

The financials sector as a whole nevertheless closed up 0.2% on the day. Lenders outside the Big Five, such as your BoQs, Bendelaides and Suncorps, are the big winners from the competitive advantage they enjoy from not being levied.

Otherwise, every sector was a winner on the day, in a reasonably even rally. Industrials managed a 0.9% gain despite the drag of CSR’s ((CSR)) -12% thumping. Within industrials lie many of the construction and building products companies that will benefit from the government’s big infrastructure spending package. CSR missed out because it posted a weak earnings result.

Consumer discretionary was a surprise winner on the day despite not getting their desired GST on offshore purchases, and despite Westpac’s consumer confidence index falling -0.7% to 99. The sector led with a 1.3% gain as the like of JB Hi-Fi ((JBH)) and Harvey Norman ((HVN)) bounced back from Tuesday’s selling. And perhaps there was a fear the consumer confidence result would be worse.

Healthcare rallied 0.8% on there being no real surprises for the sector that is arguably most vulnerable to government policy changes.

Materials and energy weren’t particularly budget affected, but rather rallied on price improvements for iron ore and oil.

All up a positive day, very much a home grown one with Wall Street continuing to go nowhere. At 5875, and with futures positive again overnight, it looks like the index is setting its sights on recovering 5900.

Individual Stories

There was some concern on Wall Street last night regarding Trump’s sacking of his FBI chief and a call from the Democrats for an independent investigation into the Russian connection. The sacking itself is not the issue, rather the distraction this might mean for the White House and subsequent delay this might cause for progress on tax reform et al.

But the White House assured those drones working feverishly on policy would not be called away from their desks while any investigation proceeded, not being in any way involved.

Thus it was left for individual stock stories and a rally in the oil price to provide any sort of movement in US markets last night.

Among the Dow components, Disney posted an earnings beat but a revenue miss for the quarter and was thus sold down -2.2%. Boeing announced it had halted testing of its new 737 airliner, due to be rolled out next week, while an engine issue is investigated. Its shares fell -1.3%.

It doesn’t seem like much but Disney's loss was worth -17 Dow points and Boeing’s -16. The Dow closed down -36.

It was that time of the week last night the chocolate wheel of weekly US crude inventories was spun, and this time it came up with the biggest fall in a week for the year to date. This result is more in keeping with the seasonal expectation of greater demand, following on from surprise inventory builds over the last couple of weeks.

Both WTI and Brent jumped 2.5%.

The energy sector was thus a winner on the day, while elsewhere the current Wall Street sideways drift continued. The Nasdaq did nevertheless manage to hit another all-time high.

Commodities

West Texas crude is up US$1.18 at US$47.34/bbl.

A 1.5% gain for lead was the only standout in a mixed but inconsequential session on the LME.

Iron ore is unchanged at US$59.90/t.

Gold is down slightly at US$1218.80/oz with the US dollar index up 0.1% at 99.66.

The Aussie is up 0.2% at US$0.7356.

Today

The SPI Overnight closed up 12 points or 0.2%.

We have already this morning seen the RBNZ leave its cash rate on hold and Kiwi-based Xero ((XRO)) post its earnings result.

BT Investment Management ((BTT)) and Graincorp ((GNC)) also post earnings today while AMP ((AMP)) has already released some quarterly numbers ahead of its AGM today. Genworth Mortgage Insurance ((GMA)) and GPT Group ((GPT)) also hold AGMs today.

The Bank of England holds a policy meeting tonight.

Rudi will travel to Macquarie Park to appear on screen today; Sky Business, noon-2pm.
 

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