The Overnight Report: Undecided

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            [6] => ((QAN))
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            [8] => ((IRE))
            [9] => ((MYR))
            [10] => ((WTC))
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            [14] => ((AHG))
            [15] => ((ORE))
            [16] => ((NXT))
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This story features AGL ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: AGL
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Misleading

On Wednesday the ASX200 closed up 2 points and yesterday it closed up 7 points. Anyone could be forgiven for thinking the market had gone to sleep, and that results season was a yawn.

Not so.

Yesterday morning the futures suggested up 2 points despite the Dow being down -166. Perhaps in the context of 2018, 166 Dow points is as good as unchanged. The ASX200 then opened up 30-odd points from the bell, spent all morning falling back -45 or so points to lunchtime, and then rallied in the afternoon for a slight gain.

Interestingly, the two worst sector performers on the day were energy (-1.3%) and utilities (-2.2%), but that’s mostly because both Woodside Petroleum ((WPL)) and AGL Energy ((AGL)) went ex-dividend. Take out that impact and the picture would have been brighter still.

Take note: the number of stocks going ex-dividend on any given day will accelerate through to the end of result season and beyond.

Outside of ex-divs, earnings results once again dominated. It appears that as long as Wall Street doesn’t have another tantrum, the Australian market is happy to retain a domestic focus.

Of the top five ASX200 winners yesterday, four reported earnings. Nine Entertainment ((NEC)) matched rival Seven’s earlier pop in gaining 16.2%, suggesting rumours of the death of FTATV may be premature. Travel agents had their day in the sun, with Webjet ((WEB)) rising 16% and Flight Centre ((FLT)) 10.4% despite the relentless barrage of TV ads for online travel services.

Auto parts company ARB Corp ((ARB)) chimed in with 9.9%, and a2 Milk rounded out the top five by rallying another 7% following Wednesday’s 30% pop. Just shy of the top five was Qantas ((QAN)), which ascended 6.3%.

On the downside, we find disappointers in Blackmores ((BKL)), down -14.7% and Iress ((IRE)), down -5.3%. Rounding out the Top 5 were Myer ((MYR)), which fell another -5.8% to be down -62% in twelve months and -84% in five years, WiseTech Global ((WTC)), which kicked on with a further -4.9% after falling -23% on Wednesday, and an increasingly crusty Domino’s Pizza ((DMP)), down -4.6%.

In sector terms, the falls in energy and utilities were balanced out by a 0.4% gain for the financials, 0.7% for healthcare and 0.5% for materials. BHP ((BHP)) made a bit of a comeback once investors realised higher costs, as noted in the company’s earnings result, were largely one-off impacts.

The Dow is up 164 points this morning, so unchanged. The SPI futures have come over all optimistic, up 36 points. Wednesday and Thursday were the two biggest days in the results season, by a margin. There are still plenty of reports coming as the month moves to a close, but the daily numbers do now start to ease.

Nothing to see here

There are two points to note about last night’s session on Wall Street. One is that despite the weak technical signal provided on Wednesday night, when indices closed on their lows, the Dow was up 350 points at midday.

The other is that no one really knows why. Nor does anyone know why the Dow gave most of that back in the afternoon. What commentators do nevertheless agree on is that volatility is back, so get used to it.

One might argue that Wall Street rallied from the outset because the US ten-year bond yield didn’t. On Wednesday night the ten-year popped up to 2.95% after the release of the Fed minutes, and with a whopping US$250bn of US government debt being issued over the course of the week, last night could well have been the session in which the ten-year hit 3.00% — seen as somewhat of a line in the sand for equities.

Instead, the ten-year did very little at all throughout the session, and closed down at 2.92%.

Why the afternoon sell-off? Well that could represent either selling that still has to be cleaned out post-correction and/or those in the market that believe the prior low must once again be tested before the bull market can resume.

On Wednesday night the leading sector was financials and the worst performer was real estate. Last night the leading sector was real estate and the worst performer was financials. What changed in the meantime? Nothing really.

Volatility. Get used to it.

Commodities

China returned to metals markets last night but made no great impact. The iron ore price moved, slightly, for the first time in a week, while base metals prices did nothing unusual.

Having jumped up on Wednesday night, the US dollar index fell back -0.3% last night, providing gold with some support.

A 2% gain for oil prices came down to the usual US weekly inventory surprise.

The Aussie is up 0.4% at US$78.41.

Today

The SPI Overnight closed up 36 points. All week there has been pretty much zero correlation with where the futures are in the morning and where the ASX200 is in the afternoon.

Woolworths ((WOW)) is the biggie on the reporting calendar today, along with Automotive Holdings ((AHG)), Orocobre ((ORE)), NextDC ((NXT)) and plenty of others.

Rudi will connect with Sky Business this morning, via Skype, probably around 11am, to discuss broker calls, corporate results and the share market.

The Australian share market over the past thirty days…

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