The Overnight Report: All Quiet

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(
    [0] => Array
        (
            [0] => ((WBC))
            [1] => ((TLS))
            [2] => ((WSA))
            [3] => ((NST))
            [4] => ((BLD))
            [5] => ((NEC))
            [6] => ((OSH))
            [7] => ((WHC))
        )

    [1] => Array
        (
            [0] => WBC
            [1] => TLS
            [2] => WSA
            [3] => NST
            [4] => BLD
            [5] => NEC
            [6] => OSH
            [7] => WHC
        )

)

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

Not with a Bang

The local futures were up 21 points on Saturday morning for reasons unknown and indeed the ASX200 had opened up by that amount yesterday morning by the end of the opening rotation, before falling immediately back to square. Not sure what was going on there.

Possibly a large buyer bought futures first to ensure a position before rotating out and into stocks on the open, but that’s just speculation. The rest of the session was a choppy ride to nowhere, closing slightly weak.

There was a fair bit of economic data to take in yesterday.

Australian company profits rose a better than expected 2.0% in the June quarter, having risen 6.5% in the March quarter. Mining profits rose 4% having risen 12% in March. Non-mining profits rose only 1%, following 4% in March, but at 6% annual growth remains solid. The numbers provide a slight upside bias to forecasts for Wednesday’s GDP result, after last week’s capex numbers prompted a trim.

Retail sales data disappointed, with sales remaining flat in July after having risen 0.4% in June. Forecasts were for a 0.3% gain. ANZ Bank economists point to lower consumer confidence as house prices fall, and to the prospect of increased mortgage rates after Westpac ((WBC)) laid down the challenge.

But on the flipside ANZ notes income tax cuts, the new childcare subsidy, lower utility prices and lower petrol prices (not for much longer) should provide an offset going forward.

House prices are nevertheless hard to ignore. National prices fell for the eleventh month in a row in August, by an average -0.3% to be down -2.0% year on year. Melbourne fared worse, with prices falling -0.6% in the month to be down -1.7% annual. Sydney prices fell -0.3% but are down -5.6% annual.

The good news for the average punter is that the greatest falls were noted in up-market suburbs, less so the wider suburbia.

You’d think weak sales and house price numbers would have weighed on consumer sectors yesterday but discretionary was flat and staples rose 0.4%.

The biggest fall was marked yet again by telcos, which have also been posting the biggest up-moves recently, as Telstra ((TLS)) continued to feel the pain of NBN Co’s cost blow-out revelations. Telstra fell -2.6% and the sector -2.2%.

The materials sector faced weakness in the iron ore price and a big fall in the nickel price but managed to ease only -0.4%. Nickel miner Western Areas ((WSA)) nevertheless topped the losers’ board with a -6.5% drop.

Providing some offset was a session-winning 16.7% pop for gold miner Northern Star Resources ((NST)) after the stock came out of a trading halt post its capital raising, which will fund an acquisition analysts see as highly accretive and the market is clearly keen on.

The offset for a weak market in general was healthcare, which rose 0.8% following a big tumble for the Aussie dollar.

Otherwise it was a bit of a hangover session to start the new month following the wrap up of result season on Friday. Today is not shaping up to be a cracker either, with Wall Street closed and the futures showing down -3 points.

We will see more important quarterly data today, but despite Sky News’ persistently heroic attempts to create some hype around today’s RBA meeting, nothing will happen.

Commodities

The US dollar stood still last night but the trend in metals prices in London remained mildly weak on trade war uncertainty, bar lead.

Renewed selling in iron ore accelerated.

Trade war fears should have the oils looking weaker but they just keep on hanging in there as the starting date for new US sanctions on Iran approaches.

The Aussie has bounced back 0.4% to US$0.7214 after its big fall on Friday night.

Today

The SPI Overnight closed down -3 points.

Australia’s June quarter current account numbers are out today, including the terms of trade.

The RBA meets.

There are some largish names going ex-dividend today, including Boral ((BLD)), Nine Entertainment ((NEC)), Oil Search ((OSH)) and Whitehaven Coal ((WHC)).

The Australian share market over the past thirty days…

For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.

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