The Overnight Report: Trade Weighs

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            [6] => ((WEB))
            [7] => ((FLT))
            [8] => ((HTA))
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This story features QBE INSURANCE GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: QBE
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Step to the Right precedes jump to the Left!

No point in me talking politics. The situation has been sliced, diced and julienned all night by the media. Suffice to say that on all the permutations, Bill Shorten appears to a prime minister in waiting, either very soon or by next year.

Hence the financials were down yet another -1.2% yesterday. There was a bit of help from QBE Insurance ((QBE)) going ex, but that’s by the by.

The downstream energy players might have been in for another bad day for the same reason but a big jump in the oil price balanced out on the upstream side of the business, taking the energy sector up 0.8%. The gas giants had good sessions but the two main energy providers stood still.

Still on gas, pipeline utility APA Group ((APA)) acknowledged yesterday a change of government may jeopardise the takeover bid on the table from a Hong Kong consortium, which has yet to pass ACCC and FIRB approval, noting that the Treasurer of the day has the last word based on FIRB’s recommendation. APA fell -8.0% and the utilities sector thus fell -3.0%.

As they say on the nightly news, “On to finance now”.

Beyond the gravitational pull of Canberra, if Australia had a Nasdaq it would have strongly outperformed the broader market again yesterday. The IT sector rose another 1.9%, as WiseTech Global ((WTC)) kicked on with another 19.2% gain, Appen ((APX)) rose a further 12.3% despite not yet having reported – look out next week – and Smartgroup Corp ((SIQ)) chimed in with a 12.9% gain despite having reported on Wednesday.

However, investors did have a bit of a rethink about Carsales ((CAR)) post result. It rose 11% on Wednesday and fell -7.4% yesterday after some brokers cried “overvalued”.

Outside of the Nasdaq, it was a tale of two travel agents yesterday as Webjet ((WEB)) reported and jumped 18.2%, while Flight Centre ((FLT)) reported and fell -8.1%. The latter is also embroiled in yet another (for Australia) staff underpayment/customer rip-off scandal.

Outside of result season, telcos kicked on another 1.9% yesterday as more punters were swept up in the excitement of a merger that hasn’t yet happened, and still may not. Hutchison Telecom ((HTA)), owner of Vodafone, jumped another 50%.

For those who struggle with percentages, two 50% gains in two days does not equate to 100%. But it does mean yesterday’s 50% gain was, in dollar terms, 50% more than Wednesday’s 50% gain. Got it?

The other victim of Caesar’s bad day at the Forum is the Aussie. It fell sharply yesterday and on a rebound in the US dollar last night, fell even more sharply to be down a full -1.4% at US$0.7247.

Interestingly, the futures are up 19 points this morning. I don’t think we can quite say the uncertainty is over. There was no lead from Wall Street so perhaps the Aussie helped.

Waiting Game

Wall Street was soggy across the board last night. Volumes were again summer-thin and no one was much fazed.

Tariffs on another US$16bn of Chinese imports into the US came into effect last night and a minute later, tariffs on another US$16bn of US imports into China came into effect. Hence the usual suspects had bad sessions yet again – the big US exporters and resource sector companies.

The tariff timetable was known so one can only assume investors were hoping that these latest tranches might have been by now headed off at the trade talks underway in Washington. But the only news out of Washington is that there isn’t any. There is yet no progress to report.

Fed chair Jerome Powell will speak in Jackson Hole tonight. He is not obliged to say anything earth shattering but Wall Street’s interest is piqued given the president’s recent grumblings over rising interest rates.

(Funny how Ben Bernanke was a “chairman”, as were his predecessors, but then Janet Yellen had to be a “chair”, so now Powell is simply a “chair” as well. Very PC.)

So Wall Street is in a waiting mode. The earnings season is now all but over so it’s a case of “What now?” Trade will clearly be the dominating issue as we head into the months of September and October – historically the weakest – and then onto the November mid-terms.

Commodities

Just when commodity prices were enjoying a little bit of a reprieve thanks to a weaker greenback, the greenback leapt back 0.6% last night. It’s a bit of a double-whammy effect, given the US dollar is up on the escalating trade war, which impacts on commodity prices, and commodity prices are also impacted by the escalating trade war.

Nickel bore the brunt, while gold, which I thought had gone back to sleep, fell ten bucks to lose most of what it had grafted back in previous sessions.

Today

The SPI Overnight closed up 19 points or 0.3%, just as it had done (pretty much) yesterday morning.

The US will see numbers on durable goods orders tonight.

Locally, well, I’m told there might be some news out of Canberra.

Back in the real world, today brings another solid round of earnings results of earnings results but mercifully not to the extent of the prior two days.

The Australian share market over the past thirty days…

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