The Overnight Report: Waiting Mode

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(
    [0] => Array
        (
            [0] => ((EML))
            [1] => ((ZIP))
            [2] => ((TLS))
            [3] => ((SEK))
            [4] => ((REA))
            [5] => ((DHG))
            [6] => ((PNV))
            [7] => ((IMU))
            [8] => ((URW))
            [9] => ((ORG))
            [10] => ((AGL))
            [11] => ((IAG))
            [12] => ((PRU))
            [13] => ((RRL))
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    [1] => Array
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            [1] => ZIP
            [2] => TLS
            [3] => SEK
            [4] => REA
            [5] => DHG
            [6] => PNV
            [7] => IMU
            [8] => URW
            [9] => ORG
            [10] => AGL
            [11] => IAG
            [12] => PRU
            [13] => RRL
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)

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

By Greg Peel

Monkey See

It wasn’t exactly thrill-a-minute stuff on the ASX yesterday, with the ASX200 trading in a range of between up 12 points and down -28 to ultimately close flat. But there were some notable moves among sectors.

On Wall Street on Friday night, anything “tech” responded poorly to the shock result from Snap, meaning the technology sector (Apple, Microsoft) and communication services (Facebook, Google) and consumer discretionary (Amazon) led the indices down.

So yesterday on the ASX we saw technology down -1.5%, communication services -1.2% and discretionary -0.9%. I did suggest yesterday that “Maybe the local market has finally woken up to the fact we don’t have any social media stocks,” but it seems I was premature.

Technology does mostly follow the Nasdaq but there was the small matter of EML Payments ((EML)) falling -22.2% as it turns out the card solutions company had not fully satisfied the Irish central bank’s demands.

And having rallied 50% off its near-death low, Zip Co ((ZIP)) finally saw some “profit-taking” yesterday (-2.8%), or maybe it was just revenge of the shorts.

We do arguably have enough online retail stocks to mimic Wall Street but communication services is a bit of a stretch.

Admittedly, a connection could possibly be made between two big US telcos (AT&T, Verizon) posting earnings misses and Telstra ((TLS)) falling -1.0%, but in fishing around for something else in the sector, traders chose “old world” online classifieds companies Seek ((SEK)), down -2.3%, REA Group ((REA)), down -1.3% and Domain Group ((DHG)), down -6.1%.

Healthcare also took a hit (-1.0%), likely as the Aussie ticks back up a bit. Polynovo ((PNV)) fell -13.6% and Imugene ((IMU)) -9.8% but they can do that any day.

So who would save the day?

Real estate didn’t quite have the clout, up 0.1%, with UR Westfield ((URW)) up 5.2%. Industrials had a swing (+0.7%), but really it was about materials and utilities, each up 1.1%, countering the falls.

Utilities did well considering energy was down -0.8% but both Origin Energy ((ORG)) and AGL Energy ((AGL)) found support.

Financials sat it out, which required a bit of bank weakness to counter a 5.9% rally for Insurance Australia Group ((IAG)), after brokers expressed their disappointment at Friday’s preliminary result release but remained largely circumspect.

Wall Street had seen a similarly flat session overnight but our futures are up a more positive 24 points this morning. As to whether we’ll see much movement ahead of major US earnings releases, the local CPI, the Fed decision and US GDP, is questionable.

Yawn

Which is why Wall Street also did little more than bungle about to a flattish close last night. There was still some lingering fallout from Snap, but otherwise the S&P500 reflected caution.

Microsoft’s earnings release tonight will be the first biggie of the week but ahead of that, some facts from FactSet.

With 21% of S&P 500 companies having reported, the June quarter average earnings growth rate is 4.8%, thus tracking the lowest growth rate since December 2020’s 4.0%. But 68% of S&P companies have reported a positive earnings surprise and 65% a positive revenue surprise.

The market’s forward 12-month PE ratio (supported by fresh guidance) is 16.7x, below the 10-year average of 17.0x.

The jury remains out on Wall Street on three counts at present, being recession or not (GDP on Thursday night), whether the Fed will go 75 or 100 (decision on Wednesday night) and whether a bottom is in or not. The latter debate will depend a lot on how that other 79% of earnings results fare.

Until then, there’s not much more to say.

Commodities

Not much to say here either other than to note oil prices rallied again due to the gas situation in Europe.

Having completed maintenance and turned the Nord Stream 1 pipeline back on to Europe, via Germany, Russia’s state-owned Gazprom cited “problems with a turbine” as to why the flow of gas will be halved.

Damned turbines.

It was only running at 40% capacity anyway, so that means 20%, as Europe struggles to build up gas reserves ahead of an inevitable winter.

The US dollar continues to struggle at its recent peak, falling -0.2%, and the Aussie is up 0.5% at US$0.6961.

Today

The SPI Overnight closed up 24 points or 0.4%.

The US will see monthly consumer confidence tonight, along with data for home sales and house prices.

Perseus Mining ((PRU)) and Regis Resources ((RRL)) provide quarterlies today.

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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