The Overnight Report: Take A Breath

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This story features BABY BUNTING GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: BBN
The company is included in ALL-ORDS

By Rudi Filapek-Vandyck

Today's Overnight Report has been written by a living and breathing human being, not by a sophisticated robot.

I am making the point as the FNArena inbox is literally being flooded these past few weeks with unsolicited emails offering the latest in AI-based applications; a robot that writes reviews, commentary and news summaries on command.

Back in 2015 already I highlighted how international news services had started to experiment using robots for run off the mill news flashes and stories. We all might have been reading robot-originated finance content without knowing it.

As Americans celebrated MLK Jr, not necessarily by sharing The Dream he was chasing, equity markets in Europe posted small gains. The US dollar strengthened a little bit, energy markets retreated and commodities diverged, mostly into small gains and losses.

One exception is the price for European gas which fell sharply on a strong supply outlook. Dutch front month futures were down more than -15% as full stockpiles in China eased concerns of supply tightness in the LNG market. North Asian LNG spot prices reportedly retreated on lacklustre demand from re-opening China.

Yesterday, during the local trading session, the Aussie battler had managed to rise above 70c against the greenback, but it has settled back below that level since. Economists at National Australia Bank believe there is a direct correlation with the strengthening Chinese currency.

The interesting part here is that USD/CNY is back on the rise as I write today's Report. Assuming NAB's observation is accurate, and that correlation holds, AUD/USD might put in another attempt to conquer 0.70 during today's session.

The small advance for the USD Index overnight is apparently related to small retreats for EUR/USD and GBP/USD, but more so from USD/JPY retreating from last week's surge. The Bank of Japan meets this week and speculation is rife the central bank might either widen the targeted range for Japanese bonds, or abandon yield curve control altogether.

If the latter were to happen, this will without the slightest doubt inject a whole lot of volatility into global asset markets. Intrinsic message: don't be unnecessarily alarmed, but it does pay to keep an eye out for this week's BoJ meeting, scheduled for Wednesday (tomorrow).

The Bank of Japan is slated to upgrade its inflation forecast. Do they think core CPI inflation should deflate back below 2% on a year-plus view, or otherwise?

Post-holiday US will keep the focus on corporate earnings from here onwards and tonight's scheduling includes Goldman Sachs and Morgan Stanley.

Locally, Australian investors were once again reminded yesterday not all retailers are the same with Baby Bunting ((BBN)) and Super Retail ((SUL)) releasing two opposing market updates.

Judging from the local SPI futures, the local share market is poised for minor losses at the opening of trade.

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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