The Overnight Report: Moody Blues

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            [1] => ((WGO))
            [2] => ((STX))
            [3] => ((BPT))
            [4] => ((MTS))
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This story features STAR ENTERTAINMENT GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: SGR
The company is included in ALL-ORDS

By Greg Peel

Same Old Song

Well, I said volumes would thin out on the ASX this week and yesterday we were off to a flying start. The ASX200 fell a mere -25 points from the open despite a -1.1% drop for the S&P500 on Friday night, rallied a bit and then went to sleep.

Once again it was the resource sectors making the difference on a global comparison, with energy and materials both up 0.5%. All other sectors closed in the red, but only one in excess of -1%.

Bond yields have been creeping up again here and in the US on the back of Fed hawkishness. The Aussie ten-year rose 8 points to 3.53% yesterday, and real estate fell -1.1%.

Defensives were all lower, with utilities down -0.8%, industrials -0.9% and healthcare down -0.8%, although staples were flat.

A -0.6% drop for discretionary included a -17.8% plunge for Star Entertainment ((SGR)) after the NSW Treasurer yesterday proposed a tax increase on gaming tables and pokies to bring the casino into line with that paid by pubs and clubs. Star management spat the dummy.

Diddums.

Sticking with discretionary, but not listed, David Jones was sold again yesterday to a private equity firm for an undisclosed sum, assumed to be a mere fraction of the $2bn paid by South Africa’s Woolworths (no relation) in 2014.

Over in the gas sector, the leap-frogging continues for Warrego Energy ((WGO)) with Strike Energy ((STX)) elbowing aside Gina Rinehart with an increased bid. Beach Energy ((BPT)) has already fallen by the wayside.

So there’s a bit going on as we head towards the holidays, but not a lot of action at the index level.

ANZ Bank yesterday lowered its 2023 GDP forecast for Australia to 1.5% from a prior 1.8% to reflect weaker household consumption than previously assumed. The economists are sticking with a forecast 3.85% peak RBA cash rate, implying another 100 points of hikes next year. But the economy will not go into recession, ANZ believes, due to the tailwind of renewed migration.

The minutes of the RBA’s December meeting are out today.

So yesterday we saw the ASX mostly shrug at a big fall on Wall Street, and this morning, with the S&P500 down another -0.9% overnight, our futures are actually up 27 points, without any real support from commodity prices.

Slippery Slope

An index of US housing market sentiment last night showed a reading of 31 for this month, which on a 100-neutral index is a tad pessimistic. It’s the twelfth month in a row the index has fallen and it’s now at a decade low.

This is not specifically what had the Dow down over -300 points heading into the last hour of trade on Wall Street last night, just part of the overall picture.

US bond yields were higher again, with the ten-year rising 10 points to 3.58%, caught between Fed hawkishness and recession expectations. It should be noted the biggest seller in the market is actually the Fed itself, as it quantitatively tightens (supporting yields).

The Nasdaq was subsequently back to its old self, underperforming on the day with Big Tech selling back in fashion.

Last night the EU accused Meta of breaching antitrust rules by allegedly distorting competition in the markets for online classified ads, and it fell -4%.

Otherwise the pattern remained the same from the past week post Fed meeting, with Wall Street hitting its lows during the session but clawing back some ground to the close.

The trend remains very much down, vindicating all those who have insisted the latest rally was yet again of the bear market variety.

In other news, it looks like Elon Musk will be sacking himself as CEO of Twitter, along with everyone else he’s sacked, after his own Twitter poll voted him out. This didn’t spur a rally for Tesla nonetheless, although it might have if market sentiment were not so weak.

There are more US housing data out during the week before we get to Friday’s PCE inflation numbers, but under the circumstances even a great result is unlikely to change the solemn mood.

Commodities

Not much going on in commodities at present.

Putin has rather ominously visited Belarus, just as Ukraine warns of Russia having another go at Kyiv. The original, failed, advance began in Belarus.

The US dollar is steady despite higher bond yields, and so is the Aussie, at US$0.6702.

Today

The SPI Overnight closed up 27 points or 0.4%.

RBA minutes today.

The Bank of Japan meets.

The US sees numbers for housing starts.

Metcash ((MTS)) goes ex-div.

The Australian share market over the past thirty days…

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