The Overnight Report: Do That To Me One More Time

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

By Greg Peel

The Dow closed up 140 points or 0.6% while the S&P gained 0.5% to 2690 and the Nasdaq added 0.8%.

M&Ania

You know you’re in a bull market when…

Just these past couple of weeks we’ve seen the Tabcorp/Tatts merger moving towards completion, Cleanaway bidding for Tox Free and bids made for AWE and Westfield. And yesterday we saw another one.

Construction industry SaaS company Aconex ((ACX)) has struggled since last year to live up to expectations, only beginning to right the ship in recent months. Short traders have nevertheless continued to keep Aconex in their sights, with the stock over 10% shored as of last week. That trade turned sour yesterday when US giant Oracle made a bid.

Aconex shares jumped 44% yesterday, leading the IT sector to a win on the day with a 2.4% gain. It was a cherry on top of the positive lead from Wall Street on Friday night as tax reform looms large this week in the US. The ASX200 cracked 6000 from the opening bell and, finally, held onto it.

Indeed, the peak was made late morning and then everyone went to lunch.

ANZ Bank ((ANZ)) also added fuel to the fire by announcing a buyback, ahead of today’s AGM. Capital management of some form has been expected since ANZ divested of its non-bank businesses and with capital requirements front and centre, a special dividend was not an option.

ANZ’s news spurred the banks on to a 0.7% gain. The others have been or are looking to make divestments as well.

Strong commodity prices overnight ensured a 1.3% gain for materials, while healthcare (+0.8%) is back in business now the switch into Telstra has apparently run its course (telcos down -0.1%). Ahead of Christmas, and following reports of teething problems at Amazon Australia, the consumer sectors also contributed with gains of 0.5-0.6%.

Energy sat on the bench as the oil price steadies.

The day began with the futures up around 30 points and the morning the futures are again up around 30 points as Wall Street continues to price in expectations of tax reform success before Christmas. Metals prices are again strong overnight. Iron ore is up almost 4%.

If we can crack through the previous high of 6050, it should be blue sky above. We have to get through Thursday’s derivative expiry but otherwise volumes will begin to thin from here, and drop to negligible next week, suggesting thin air.

We’d better hope tax reform does not stumble before Santa gets here.

Record Record

All three major US indices hit new records again last night. The Dow posted its 70^th all-time high for the year, a record number for any one year. The Nasdaq hit 7000 for the first time. Berkshire Hathaway shares traded at US$300,000 for the first time. Yes, that’s per share.

And if that wasn’t enough, the US housing market sentiment index posted a 5 point gain to 74 in December, its highest reading since 1999.

There is now a tax bill that will not be fiddled with again. The Senate has the numbers to pass the bill, albeit there’s a slight risk with Senator John McCain again absent this week for medical treatment. The bill is expected go to the House tomorrow. If passed, as expected, it then goes back to the Senate and – Steven Mnuchin says “no doubt” – then it will land on the president’s desk.

God bless America.

There really not much more to say on the matter, other than the Dow was up 224 at its peak before profit-taking brought it back some. There might be some hint here of what will happen when the bill is actually passed.

January this year saw Wall Street surge on the expectation of tax reform. Will January next year bring the long-awaited pullback? Getting back to those records, last night the Dow marked a 25% increase year to date.

Commodities

All bar zinc kicked on with it last night in London following Friday night’s base metal rally. Nickel added another 2%.

Iron ore rose US$2.60 to US$73.30/t.

Gold is up US$5.20 at US$1260.80/oz with the US dollar index down -0.2% at 93.72.

West Texas crude is off -US18c at US$57.15/bbl.

The Aussie is up 0.2% at US$0.7666.

Today

The SPI Overnight closed up 29 points or 0.5%. That would put us into fresh record (post-GFC) territory.

The minutes of the last RBA meeting will come out today to little excitement.

Westpac will provide a December quarter reading on consumer confidence.

ANZ Bank ((ANZ)) holds its AGM.

****

The Australian share market over the past thirty days…

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