The Overnight Report: Slowing Down

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            [7] => ((APE))
            [8] => ((NEC))
            [9] => ((S32))
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            [9] => S32
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This story features MACQUARIE GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: MQG
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Going Nowhere

Are the technical algos a bit confused by ex-dividends? The fact the ASX200 has been hovering above support at 7500 suggests a breach of that level would kick technical programs into gear, to be potentially joined by momentum algos. In the past few sessions we’ve seen some very sharp early sell-offs, only to spend the rest of the session recovering.

Yesterday the index plunged -54 points in the first ten minutes – far greater than the sum of the morning’s dividends — only to come back 20 points in the next ten minutes. We dropped from yesterday’s close of 7530 to 7476 and back to 7500 before the opening rotation was even complete.

At 4pm the index was still on 7500, after having meandered all day, but market on close orders ensured a little pop to 7512.

So in short, nothing much happened. The market seems to be in a bit of a post result season funk.

Financials was the best performing sector on the day (+0.6%) after Macquarie Group ((MQG)) delivered a positive trading update and rose 4.7% to top the index winners.

Materials was the main counter (-1.0%), led down by gold miners after gold took another price dip overnight. St Barbara ((SBM)) topped the losers’ board with -6.1%, but also went ex-div. Staples fell -1.2%, helped by Blackmores ((BKL)) going ex.

Property was the worst performer on the day (-1.3%) despite no ex-dividends of note, nor any one REIT appearing among the top five losers.

Technology fell -0.9% but in essence the whole sector is following around the US share price of Square via Afterpay ((APT)). This despite TechnologyOne ((TNE)) taking the silver on the day with 4.7% potentially inspired by positive analysts' assessments following its UK acquisition.

On the subject of acquisitions, Qube Holdings ((QUB)) announced it had bought the Newcastle Agri Terminal which it will pay for out of existing debt, and rose 4.6%.

Otherwise Alumina Ltd ((AWC)) continues to ride the aluminium price wave (+4.0%).

Eagers Automotive ((APE)) stood out on the losers’ board by falling -5.9% for no reason other than it hit a new high on Tuesday to be up 80% in 12 months.

Today’s is the longest list of ex-dividend stocks to date but none of them are particularly large. Nine Entertainment’s ((NEC)) in there, as is South32 ((S32)).

Yet with the S&P500 down only -0.1% overnight, our futures are down -0.5% this morning.

Someone’s got it in for this market.

No joy, apparently, that regional Victoria is set to reopen and some parts of regional NSW – confirmation pending – will not have their lockdown extended past this weekend.

Seeing Beige

The Fed Beige Book – an anecdotal survey of activity across the twelve Fed districts – was released last night and noted US economic growth slowed to a more moderate pace through July and August.

Delta was the culprit, impacting both the demand and supply sides.

Demand for hospitality and travel waned during the period while seemingly endless supply shortages hit sales of automobiles and houses. Businesses nevertheless noted they were not finding it hard to pass higher prices on to spend-thirsty consumers.

Inflation, the Fed noted, remains “steady at an elevated pace”.

On the subject of inflation, US government data showed job openings at a record 10.9 million in July to mark the fifth straight monthly record. Job hires fell to 6.7 million. Unless that yawning gap is closed, once covid-related unemployment bonuses end after this week, wage inflation remains a latent threat.

The word “stagflation” has now been bandied about – slowing economy and rising inflation, which was the feature of the 1970s recession.

Wall Street had already been turning more defensive this week post the Labor Day weekend, and the data were more grist for the mill last night. The Jewish holiday was also ongoing so volumes remained light.

The run for defensive growth in the Big Tech names nonetheless came to an end, with this time the Nasdaq underperforming. The market did recover from early losses – the Dow was down -175 points at its nadir – but the tone remains cautious.

The best performing sector on the day was property. The worst was energy, despite a bump up in oil prices. Small caps are now back under pressure, with the Russell index down -1.1%.

And just to add to the gloom, Janet Yellen warned last night the Treasury’s about to run out of money, so it’s best Congress gets the debt ceiling sorted.

Commodities

Inventories were in play last night, in the case of LME nickel and US crude oil. Surprise drawdowns in both sent prices higher.

Aluminium continues its merry march post the coup in Guinea, and in general metal prices ignored the still-rising greenback.

The US ten-year bond yield fell back -4 basis points to 1.33% but was no help for gold.

And iron ore remains volatile. If it drops much further it’s at risk of halving in value from the highs.

The Aussie is down -0.3% at US$0.7369, matching the greenback.

Today

The SPI Overnight closed down -35 points or -0.5%.

Today’s dividends as noted above.

China reports August inflation numbers today.

The ECB holds a policy meeting tonight.

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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