The Overnight Report: Counting Down

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            [5] => ((ORI))
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This story features CREDIT CORP GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: CCP
The company is included in ASX300 and ALL-ORDS

By Greg Peel

Just Buy It

The ASX200 opened up around 30 points yesterday following Wall Street’s, or should that be Google’s, lead but at that point ran into a brick wall. As we approach the all-time high it appears the momentum traders may now have done their dash, happy to take profits ahead of a milestone that typically would take a few attempts to surpass.

The index drifted off to lunchtime as the buying dried up. But at 12.30 – whammo! – in came what was likely a big buy order and the index traded in a straight line up to kiss the milestone before pulling back ever slightly.

Was it a “ring the bell” moment, signifying the goal has been achieved and we can all now take a rest? Well, the S&P closed down -0.16% last night and our futures are suggesting up another 0.5% this morning.

Damn the torpedoes.

It was largely a market-wide buying spree yesterday afternoon, with all sectors closing in the green, albeit materials only just limped over the line. Materials had been the major driver on Friday. No sector particularly stood out, other than IT, which dutifully echoed the Nasdaq in jumping 1.9%.

Indeed the biggest upside mover on the day was Afterpay Touch, with only a 4.0% gain, which underscores just how broad the buying was yesterday. That’s a quiet day for Afterpay, which announced it had appointed an independent auditor to conduct the review ordered by AUSTRAC.

On the downside, Credit Corp ((CCP)) jumped the gun and released its earnings result a day ahead of everyone’s calendar, probably wanting to get the bad news out of the way. The stock fell -6.2%. GUD Holdings ((GUD)), which posted a “miss” on Friday, fell a further -4.3% as three major broking houses downgraded their ratings. UBS went directly from Buy to Sell.

We might also note Crown Resorts ((CWN)) fell -3.2% following a Fairfax/Nine expose with regard Chinese triads published over the weekend.

Otherwise, it was a day of little news and little reason to surge to a new high other than for the sake of it. We now await the Fed, which rather overrides the biggest week of the US earnings season this week, and then next week our own earnings season begins to ramp up.

Only then will we begin to see whether the emperor is wearing any clothes. Whether the “multiple expansion” we’ve seen in recent weeks (PEs rising) can be justified even after adjusting for the lowest interest rates in history.

Just Wait

If there is really not much one could say about the Australian market yesterday, there is even less to say about last night’s trade on Wall Street. It is not unusual for Wall Street to stall ahead of a Fed meeting, never mind that this meeting is the most critical this year.

News of a deal which will see Pfizer (Dow) sell its off-patent drug business to generic drug maker Mylan was about the only cause for excitement.

With the Fed taking centre stage, this week’s US-China trade talks are not generating much anticipation given no one expects any breakthrough. Indeed, the White House commented last night that the fact China is even talking is in itself a success, so don’t expect anything else.

This week is the biggest in the US earnings season with over 140 S&P500 stocks reporting. The trend continues to be a positive one, or more realistically a “not as bad as we’d feared” one, with net earnings gains belying earlier forecasts of an “earnings recession”.

The results will continue to flow but all focus is on the Fed. Are we going to get just the one -25 point “insurance cut”, or will the language hint at this being just the beginning?

Commodities

Gold traders seem a little hyped up ahead of the Fed, and not to mention a Bank of Japan policy meeting today as well, despite the US dollar grinding higher.

Oil prices are also grinding higher as tensions remain high in the Persian Gulf, and on expectations of rate cuts from the Fed and perhaps others that will support global growth and thus demand, or so the story goes. Macquarie analysts are not on board, writing in a note yesterday:

“We believe the window for upward price movement is rapidly closing, and we are lowering our conviction in tandem. While we maintain our positive outlook on oil through September, or $70 Brent, we gross down long exposure.”

With the greenback stalled ahead of the Fed, so too is the Aussie at US$0.6905.

Today

The SPI Overnight closed up 33 points or 0.5%, suggesting today’s the day.

The FOMC will ponder US consumer confidence and PCE inflation tonight.

The BoJ meets today.

Locally we’ll see building approvals numbers.

Alacer Gold ((AQG)) is on the calendar as reporting earnings today and a quarterly is due from CYBG ((CYB)). Orica ((ORI)) will host an investor day.

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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