The Overnight Report: All A-Twitter

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This story features APPEN LIMITED, and other companies.
For more info SHARE ANALYSIS: APX
The company is included in ALL-ORDS and ALL-TECH

By Greg Peel

Nothing Artificial

It was a choppy old session for the ASX200 yesterday. The index opened higher to be up 24 points around 11am before sawtoothing its way south all afternoon to hit a low of down -11 at 3pm. Then it bounced straight back to up 19 at the close.

The open, and the close, were likely reflective of trade developments. In between, it looks like the profit-takers were moving in. Which begs the question of just how much upside is there left on offer if the US and China really do agree on a trade deal?

In the morning we knew that the Chinese had extended their stay in Washington because a deal was getting closer. In the afternoon it was confirmed what had been expected for a while now, that Trump has extended Friday’s deadline. If you think Australia’s getting excited about a trade deal, have a look at the Chinese stock market yesterday. Up 5.6%.

Indeed the Shanghai index is up over 15% in February when a quietly optimistic Wall Street has managed only 3.5%.

But back to the local market, where once again earnings reports were in the frame. And where once again, the ASX200 winners’ and losers’ boards were dominated by reporting companies posting big share price moves.

There was nothing artificial about AI specialist Appen’s ((APX)) 21.7% leap into top spot, just nudging out payments disruptor Afterpay Touch ((APT)) on 19.2%. To round out a trio of new age growth names, Nanosonics ((NAN)) took the bronze with 12.4%.

Back in the ancient world, the Colorbond crew at BlueScope Steel ((BSL)) managed a 6.3% gain while Automotive Holdings ((AHG)) kicked on another 6.3% after reporting on Friday.

On the flipside, there was more trouble in the sandpit as G8 Education ((GEM)) yet again disappointed, having started the year with so much promise. It fell -11%. Outdoor advertising has lost its gloss in a weaker consumer environment. The company with the silly name ((OML)) fell -8.6%.

The weak consumer environment lends itself to the weak housing environment and Lendlease ((LLC)) is not immune. It fell -6.4%. SpeedCast International ((SDA)) crashed to earth, falling -5.6%.

Among the sectors, the aforementioned weak consumer was evident in a -0.6% fall for consumer discretionary, while the coin came up tails for Telstra and telcos fell -0.8%.

Healthcare rose a solid 1.0% and materials kicked on with another 0.7% gain but of course the big winner on the day was IT, up 3.1%, albeit having little impact on the index. Other sectors were mildly positive.

By rights we should be kicking on again today alongside Wall Street if the recent pattern were to persist, except that yesterday’s session did hint of consolidation ahead of any real news on trade and oil prices are down -3% overnight, thanks to a separate Trump tweet.

The futures are thus down -15 this morning.

Take Your Time

The tweet that enthused global markets was confirmation that the prior March 1 deadline for tariff increases, which was once “hard and fast” despite actually being an extension in itself, has been extended. No new date has been set as yet.

Trump dropped the deadline due to “substantial progress” across key topics such as intellectual property, technology transfers, agriculture and currency, and said if that continues, he will meet with President Xi at his Florida hideaway to wrap up a deal.

Chinese state-owned media declared the extension was made because there are “still some differences to be ironed out”.

But Trump went one step further, suggesting there would soon be a “signing ceremony”, which implies an actual deal is nigh.

But not too nigh. Trump hopes to hold that ceremony in “coming weeks”, so while the extension is ostensibly good news on the trade front, global markets are now set for more meandering in the wilderness through next month as yet again we wait and watch.

In the meantime perhaps we can turn our attention to the UK collapsing into anarchy.

The S&P500 is now back at technical resistance at 2800. The Dow is within a mere 3% of its all-time high. As we head into what might be another information vacuum on trade for a while, one has to believe Wall Street is ripe for consolidation.

Commodities

“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”

Yes, him again.

I would have thought if oil prices are getting too high the president would prefer OPEC not to relax, but rather reverse production cuts and pump themselves silly. But anyhow, oil prices are down -3%. And there’s a certain irony in the reason for recent oil price strength – trade deal optimism.

That same optimism is supposedly why copper had a good session last night, but it seems the others stayed in bed. Iron ore slipped back.

The US dollar index dipped slightly but the Aussie is up 0.5% at US$0.7172, being China trade reliant.

Today

The SPI Overnight closed down -15 points or -0.2%.

We are now heading into a long tail for this February earnings season given the month ends on a Thursday. There are a few big hitters left to report but the bulk of releases from here feature mostly smaller companies.

Today’s list includes Caltex Australia ((CTX)), Estia Health ((EHE)) and FlexiGroup ((FXL)).

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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