The Overnight Report: Turning A Blind Eye

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies. For more info SHARE ANALYSIS: CBA

By Greg Peel

Bonanza

The futures showed up 71 points yesterday morning, following the Wall Street relief rally, and indeed the ASX200 closed up 78. But it was not Russia’s (apparently ghost) withdrawal that provided the impetus. The index opened up 60 but within the hour had given most of that back.

It didn’t help that Commonwealth Bank ((CBA)) went ex-dividend. That alone was worth -9 points. But what really set the cat among the pigeons was CSL’s ((CSL)) earnings result.

CSL had been gradually sold down every day for days leading into its result release yesterday, as investors responded to weak plasma collection in the US. Yesterday it jumped 8.5%. Pity there’s no longer a trading floor. CSL could have collected all the blood it needed.

That’s a big move for what was, for a time, Australia’s biggest company, and the healthcare sector jumped a whopping 6.2%, but CSL could still only place fifth on the index leaders’ board.

Retail REITs have been on the nose since covid kicked off, but Vicinity Centres ((VCX)) reported yesterday and jumped 11.0%, taking the property sector up 3.1%. China favourite Treasury Wine Estates’ ((TWE)) result was worth 11.7%.

Wine is, of course, a staple. That sector rose 1.7%.

We’ll ignore a 12.7% gain for Imugene ((IMU)). The biotech has been in either top five for days now and it did not report, nor even was there any news. We can’t ignore the day’s winner however. Lithium hopeful Liontown Resources ((LTR)) jumped 18.0% on news of a supply agreement with Tesla.

It can’t all be beer and skittles nonetheless. Funds management platform Netwealth ((NWL)) reported and dropped -9.8% and topped the losers’ board, dragging peer Hub24 ((HUB)) down with it (-8.0%).

Santos ((STO)) picked a bad day to report given the pullback in the oil price. It fell -2.8%. Ditto Fortescue Metals ((FMG)) vis a vis the iron ore price. But a -2.0% fall was not too bad really, for an iron ore miner that cuts its dividend.

The positive tenor of the day is best indicated by Fortecue’s -2.0% drop making it the fifth worst index performer, whereas CSL needed 8.5% to get into fifth.

On that note, there were plenty of other positive share price responses to the day’s earnings results.

Orora ((ORA)) rose 7.6%, SG Fleet ((SGF)) 14.1% and Prospa Group ((PGL)) 12.0%.

With Wall Street relatively flat overnight today’s even longer list of result releases will have a free ride to impress or otherwise, without macro interference.

Choose what you want to believe

On Tuesday night Moscow released video of Russian tanks withdrawing from the Ukraine border, sparking a relief rally on Wall Street. Last night NATO confirmed that satellite imagery showed no such withdrawal. What it did appear to show was more troops arriving. Perhaps someone put the video in back to front.

By rights one would assume Wall Street would thus go straight back down again, and indeed the Dow was down -350 points early in the session. But in closing down only -40, the implication is Wall Street would rather maintain a positive mood, and close its eyes.

The US bond market also stood still. Oil prices ticked up a tad. Only gold, back up twenty dollars, reversed its move from Tuesday night.

If geopolitics weren’t enough, surely the release of the minutes of a hawkish Fed meeting would send stock markets scurrying. But talk that it would “soon be appropriate” to raise rates, that the Fed might start running down its balance sheet as early as the September quarter, and that the S&P500 is at its most expensive level in history, in relation to corporate profits, received no response.

We knew that.

The positive news is that despite weak consumer sentiment, US retail sales jumped 3.8% in January –twice the rate economists had expected. It’s the biggest monthly gain since March last year, when Americans were receiving their stimulus cheques. But is the result misleading?

Sales are measured as volume times price. Was it greater volumes that led to the 3.8% surge, or 7.5% inflation?

Let us not forget that while our own result season is only just ramping up, the US season is continuing its long tail. Last night e-commerce platform Shopify fell -16%. Gaming platform and metaverse resident Roblox fell -27%. Bit of an echo.

Commodities

As noted, gold was about the only thing to move last night.

As to why the Aussie has shot up 0.7% to US72c on the dot is unclear, given the greenback fell only -0.3% and we had no economic releases yesterday.

Maybe it was the Yanks piling into CSL.

Today

The SPI Overnight closed up 3 points.

Josh has his fingers desperately crossed for a good local January jobs report today.

Today’s list of reporting companies is the longest in the season to date. Reporters include Newcrest Mining ((NCM)), South32 ((S32)), Transurban ((TCL)), Telstra ((TLS)), Wesfarmers ((WES)) and Woodside Petroleum ((WPL)).

GrainCorp ((GNC)) and Virgin Money UK ((VUK)) hold AGMs.

For upcoming earnings result dates, and a summary of results to date, please refer to the FNArena Corporate Results Monitor.

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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