The Overnight Report: Bring It On

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            [6] => ((QAN))
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            [7] => CHC
            [8] => WOW
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            [11] => RHC
            [12] => WES
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This story features CITY CHIC COLLECTIVE LIMITED, and other companies.
For more info SHARE ANALYSIS: CCX

By Greg Peel

Rinse & Repeat

For the second of the two biggest days in the local earnings season, ASX300 stocks rising by 5% or more well outstripped those falling -5%, yesterday by 19 to 7. Not all moves were result-based of course, but a lot were, including delayed reactions and rethinks off the back of next-day broker assessments.

Interestingly, as we move past the two-thirds mark in terms of number of stocks reporting, beats and misses (by FNArena’s assessment) are still running neck and neck, at around 30% each. This would suggest market sentiment had become too bearish leading into the season, and, as had been the case during the earlier US result season, there’s been a not-as-bad-as feared theme running.

Not that there weren’t some Barry Crockers yesterday. City Chic Collective ((CCX)) lost a good deal of weight, down -19.1%. Kelsian ((KLS)) missed the bus, down -12.3% having reported on Wednesday.

Domino’s Pizza ((DMP)) rose 7.6% on result on Wednesday and fell -9.6% yesterday.

In a tale of two wealth managers, Insignia Financial ((IFL)) topped the list yesterday with an 11.4% gain, while Perpetual ((PPT)) fell -9.4%.

Nine Entertainment ((NEC)) showed it's Still Number One, rising 9.0%.

Qantas Airways ((QAN)) will take the JobKeeper funds it got from the government, before sacking everyone, and use it for a share buyback. It rose 7.1%.

Among the sectors, real estate won the day with a 2.2% increase, despite another tick up in bond yields. Charter Hall ((CHC)) rose 6.5% on result.

Energy rose 1.6% on higher oil prices, while staples fell -1.6%. Woolworths ((WOW)) fell -3.2% on result.

Industrials gained 1.3%, with Qube Holdings ((QUB)) up 8.5% on its numbers.

Moves in other sectors were more muted, but utilities was the only other sector to close in the red (-0.6%).

On Wednesday the index closed just under 7000, having recovered from Monday night’s dip on Wall Street. Yesterday it flew past 7000, and that level continues to suggest good support.

Results continue to take focus, but there were a couple of positive pieces of news yesterday for our materials sector (+0.7%).

While still not having switched back on all its nuclear reactors post-Fukushima, Japan is now talking about building new ones. Paladin Energy ((PDN)) rose 11.6% yesterday.

And in the wake of two PBoC rate cuts, Beijing yesterday announced a one trillion yuan stimulus package with a focus on infrastructure.

The daily numbers of reporting stocks mercifully get shorter from here as we head towards the end of the month. Today’s list is still a long one nonetheless.

Despite strength on Wall Street last night our futures are only up 9 points this morning.

But don’t relax just yet. Tonight we’ll get US July PCE inflation, and the Fed chair will speak.

Don’t worry, be bullish

Wall Street liked the China stimulus news.

It also liked that the US June quarter GDP was revised to only -0.6% contraction from an earlier -0.9%.

It also liked, or at least paid little heed to, a number of interviews of Fed presidents now gathered in Jackson Hole.

The standout was that of St Louis president James Bullard. He said the Fed needs to front-load rate hikes to get on top of inflation, and that high inflation will linger for a lot longer than Wall Street currently appreciates. He’s targeting a 3.75-4.00% funds rate by year-end.

Currently it’s 2.00-2.25%, so that implies 175 points of hikes in the next four meetings, and likely assumes the first of those will be 75.

But Bullard is the known uber-hawk on the FOMC. The Philadelphia Fed president also spoke last night, and said he could see either 50 or 75, depending on the August inflation data.

And therein lies the key to Powell’s speech tonight. He is not going to confirm either 50 or 75 – the Fed is “data-dependent”. He might offer a hint through his rhetoric, but he’ll probably leave Wall Street hanging for another month.

Is Wall Street ready for 75? Many say yes. But again, anything can change in that timeframe.

Incidentally, last night and Wednesday night both saw very low volumes on Wall Street – even for summer.

Commodities

For metals price increases, see: China stimulus.

The oils nevertheless dipped, with market attention swinging back to the prospect of an Iranian nuclear deal.

Chinese stimulus is also good for the Aussie. It’s up 1.1% at US$0.6982.

Today

The SPI Overnight closed up 9 points.

The US July PCE data and a Michigan Uni consumer confidence survey will come out about the same time as Powell takes the stage tonight.

While today’s list of reporting stocks is still a long one, most are smaller names. The exceptions are Ramsay Health Care ((RHC)), which is being stalked by private equity, and Wesfarmers ((WES)).

FNArena’s Corporate Results Monitor provides both a calendar of upcoming result releases and a summary of all reports to date: https://www.fnarena.com/index.php/reporting_season/

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.

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.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)

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