The Overnight Report: All A Twitter

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

By Greg Peel

The Dow closed down -28 points or -0.1% while the S&P lost -0.2% to 2438 and the Nasdaq fell -0.1%.

Big Australians

Yesterday I suggested it’s difficult to trade futures on an index that is currently beholden entirely to unpredictable movements in its constituent parts. Sure enough, the futures said up 8 points yesterday morning and at 4pm the ASX200 closed up 8 points.

I’ll shut up now.

The index was a little higher at its peak but basically it was the biggest day on the reporting calendar yesterday in term of sheer number of results and so there was one helluva lot for traders and investors to consume in a short period. The difficulty in keeping track of absolutely everything this week is resulting in many a stock making its more substantial move the day after its result release, having noted analyst assessments.

Mostly they are kick-on moves up or down, but there’s also been the odd reversal.

BHP ((BHP)) gained 1% on Tuesday on a dividend increase and news of the exit of US shale. Another  2%. By now analysts have provided their estimates of just how much the company might make from its shale sale, maybe even US$10bn, which it is assumed will be fed into shareholders’ pockets.

Not all analysts are convinced Telstra ((TLS)) dividends won’t fall even further but others note the lower dividend still makes the telco an attractive yield stock. Bargain hunters have moved back into Telstra after its big fall last week.

Materials led the sectors up yesterday with a 1.7% gain, and telcos chimed in with 0.6%. Utilities rose 0.6% to indicate yield was popular on the day and aside from a 0.9% gain in the small IT sector, all other sectors were very flat and movements netted each other out.

The top ten winners & losers boards were yet again dominated by stocks reporting on the day or the day before.

Kicking on with their moves from the day before were Bega Cheese ((BGA)), up 6%, McMillan Shakespeare ((MMS)), up 5.5%, and a2 Milk ((A2M)), up 4.5%. Downside movers were Qube ((QUB)), with another -7%, Healthscope ((HSO)), with -4%, and Saracen Minerals ((SAR)), Vocus Communications ((VOC)) and Woolworths ((WOW)) all losing in excess of -3%.

Among the companies actually reporting on the day we saw a big win for Flight Centre ((FLT)), which as at last week was 9% shorted and yesterday rose 10%. Other stocks carrying short positions of more than 5% are Alumina Ltd ((AWC)), up 6% yesterday, Perpetual ((PPT)), up 5%, and Estia Health ((EHE)), up 4.5%.

Yesterday’s reporting losers included Nanosonics ((NAN)), down -7%, Trade Me ((TME)), down -6.5%, and HT&E ((HT1)), down -5.5%.

With Wall Street not doing much last night it will be another session of earnings-related moves on the local market today. There aren’t nearly as many reports as yesterday but still quite a number. Qantas ((QAN)) is the biggie.

It might be worth noting those stocks reporting today which also feature high up in the most shorted list. In particular we have Select Harvests ((SHV)), which is 12% shorted, as well as Automotive Holdings ((AHG)), over 8% shorted.

Harvey Looms

On Wednesday night, House speaker Paul Ryan was forced to back-pedal when Trump declared he would shut down the government if he didn’t get his wall. Neither side of Congress was interested in shutting the government down, Ryan noted.

Last night Trump launched a Twitter tirade on both Ryan and Senate leader Mitch McConnell for not having already sorted out the debt ceiling and, while we’re at it, not having managed to pass a healthcare bill after seven years of “repeal and replace” rhetoric from the Republicans.

Ryan said in an interview, no doubt by now somewhat exasperated but remaining calm, that he saw “eye to eye” with the president on policy.

The Dow had jumped around 60 points from the opening bell but that’s when Trump tweeted, and that’s when Wall Street turned around and went back down.

Back in the real world, US grocery stocks took a big hit last night when Wholefoods announced that when the takeover by Amazon is rubber stamped tonight, prices will be cut as of Monday. Kroger, for one, fell -8%.

Wholefoods is to Kroger and other US supermarkets what Harris Farm is to Woolies & Coles. Annoyingly popular and successful, but at a higher price point for organic and other farm gate-type produce and thus not so much of a threat to marking potatoes down, down, for example. But what Wall Street had feared is that Amazon’s foray into food would result in the sort of price cutting to gain market share, despite the cost, that underscores Amazon’s universal strategy.

Investors didn’t expect it would happen so soon.

Consumer staples was the worst performing sector on Wall Street last night but otherwise it was all eyes on Hurricane Harvey – a Category 3 cyclone tracking towards the Texas Gulf coast and already forcing the shutdown and evacuation of oil refineries.

Refinery shutdowns mean lost demand for crude, hence WTI is down -1.6% at present. It was down by more earlier, but it has been pointed out that US refineries typically shut down for maintenance anyway when the summer driving season comes to a close.

Commodities

West Texas crude is down -US78c at US$47.60/bbl.

Copper was up 2% in London and lead down -1.5% while the other metals were mildly positive.

Iron ore fell -US90c to US$76.50/t.

The US dollar index is a tad higher at 93.29 and gold is down -US$4.50 at US$1285.80/oz.

The Aussie is flat at US$0.7900.

Today

The SPI Overnight closed down -4 points.

It is tonight that Janet Yellen and Mario Draghi will tread the boards at J-Hole. US durable goods orders data are due.

Locally, reporting season rolls on.

Rudi will connect with Sky Business via Skype around 11.15am to discuss reporting season and broker calls.
 

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