The Overnight Report: Still Pushing Higher

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World Overnight
SPI Overnight (Mar)	6211.00	+ 20.00	0.32%
S&P ASX 200	6190.50	+ 15.30	0.25%
S&P500	2832.94	+ 10.46	0.37%
Nasdaq Comp	7714.48	+ 25.95	0.34%
DJIA	25914.10	+ 65.23	0.25%
S&P500 VIX	13.10	+ 0.22	1.71%
US 10-year yield	2.60	+ 0.01	0.35%
USD Index	96.49	– 0.11	– 0.11%
FTSE100	7299.19	+ 70.91	0.98%
DAX30	11657.06	– 28.63	– 0.25%

By Greg Peel

Choppy Waters

The SPI futures looked ambitious with a call of up 35 points yesterday morning and indeed the ASX200 struggled to up 25 points by midday. Forty minutes later it was down -7. Looks like yet another big late morning sell order hit the market.

And as has been the case in recent times, the index quickly picked itself back up on its feet but failed to fully recover by the close.

Iron ore futures were on the move in China which led to a 1.1% gain for materials, reversing Friday’s fall, and Fortescue Metals ((FMG)) topped the charts with a 5.4% rally. The big boys also had strong sessions.

Healthcare (+0.5%) was also solid while telcos (-0.5%) and utilities (-0.6%) provided some balance and a suggestion that yesterday was not one for the defensives, even though some sessions in recent times have seemed decidedly defensive.

The banks (-0.2%) were also weaker, led down by Commonwealth Bank ((CBA)) which fell -0.7% after settling a dispute with the ATO. As if it doesn’t have enough problems. CBA pointed out, nevertheless, that the $100m settlement is the annual board room cigar bill.

REA Group ((REA)) was among the bigger losers in falling -4.4%, with suggestions made the weekend auction clearing numbers are beginning to determine how the classifieds company opens its week.

Over in car leasing, ExclipX Group ((ECX)) entered a trading halt yesterday pending a trading update which will inform rival McMillan Shakespeare’s ((MMS)) decision whether or not to "merge".

All up it appears the ASX200 wants to go higher, and indeed would like to regain the post-GFC high, but just can’t sustain the traction at the moment. The index is still about where it was in the busiest week of February’s result season. That’s probably not a bad result, given it was not a particularly good result season.

Testament to that is another speculative 20 points gain for the futures overnight, albeit matching the S&P500 at 0.3%. Today’s RBA minutes may prove critical in determining whether this time the futures are right.

Fed Watching

Speaking of central banks, no one expects a rate change with the Fed’s policy statement due on Wednesday night but very much in focus will be the infamous “dot plots”, provided by the Fed each quarter. They represent the expectations of where each FOMC member sees rates in the near to medium term, and if those expectations have been lowered since December, Wall Street will be happy.

In anticipation, Wall Street is already happy, with indices tracking to their best March quarter since 1998.

Positive sentiment continues to underpin despite a suggestion by the South China Morning Post over the weekend the much anticipated trade meeting between Presidents Trump and Xi will now be postponed until June, having so far been postponed to April, after initially being slated for March.

Wall Street is hanging on to the belief that delays simply imply progress is definitely being made, albeit at a frustrating pace.

Just when it looked like Boeing might be on the road to recovery the company has been hit with two separate subpoenas, one from each of the Departments of Transport and Justice. It appears concern lies more with the Federal Aviation Administration and its relationship with Boeing, specifically why the FAA gave the thumbs up in the wake of the second Max 8 disaster when governments around the world were grounding Max planes, only to then change its mind.

At the time the FAA cited new information recovered from the crash site but typically the world looks to the FAA for a lead on such matters. Boeing shares fell -1.8% to again impede the Dow.

Meanwhile, oil prices rose again last night as a Saudi-Russian monitoring group announced conformity among participants with production cuts imposed by OPEC/Non-OPEC reached 90% in February, up from 83% in January. OPEC’s target is an -800,000 barrel per day production cut and -400,000 for Russia & Co.

Energy was the best performing sector in the S&P500 last night.

Not doing so well was Facebook, which is currently copping it from all sides. In the wake of the New Zealand massacre, which was broadcast live on Facebook despite attempts by the company to ultimately block the stream, the social media giant will be the subject of specific discussions among members at the upcoming G20 summit.

And that’s on top of all the scrutiny Facebook is under across the globe with regard privacy. Facebook shares fell -3.2% last night.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	1303.30	+ 1.00	0.08%
Silver (oz)	15.32	+ 0.06	0.39%
Copper (lb)	2.94	+ 0.01	0.33%
Aluminium (lb)	0.85	+ 0.01	0.79%
Lead (lb)	0.92	– 0.01	– 1.15%
Nickel (lb)	5.85	– 0.01	– 0.18%
Zinc (lb)	1.29	– 0.00	– 0.34%
West Texas Crude	58.95	+ 0.55	0.94%
Brent Crude	67.42	+ 0.43	0.64%
Iron Ore (t) futures	87.80	+ 1.60	1.86%

Not much further to report here, other than spot iron ore did not seem to reflect strength yesterday in iron ore futures.

With the US dollar index continuing to dip, and ahead of the release of today’s RBA minutes, the Aussie is up another 0.3% at US$0.7104.

Today

The SPI Overnight closed up 20 points or 0.3%.

The RBA minutes are due out this morning while catch-up data is due tonight in the US, I believe, for January durable goods and factory orders.

TPG Telecom ((TPM)) and New Hope Corp ((NHC)) report earnings today while Carsales ((CAR)) is among today’s list of stocks going ex-dividend.

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ANZ	ANZ BANKING GROUP	Downgrade to Underweight from Equal-weight	Morgan Stanley
AST	AUSNET SERVICES	Downgrade to Hold from Add	Morgans
CBA	COMMBANK	Downgrade to Underperform from Neutral	Macquarie
ELD	ELDERS	Upgrade to Hold from Reduce	Morgans
HPI	HOTEL PROPERTY INVESTMENTS	Downgrade to Hold from Accumulate	Ord Minnett
MPL	MEDIBANK PRIVATE	Downgrade to Underperform from Neutral	Credit Suisse
ORG	ORIGIN ENERGY	Downgrade to Equal-weight from Overweight	Morgan Stanley
RHL	RURALCO	Downgrade to Hold from Add	Morgans

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

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

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