The Overnight Report: All Too Much

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            [3] => ((MFG))
            [4] => ((TLS))
            [5] => ((GMG))
            [6] => ((CTD))
            [7] => ((AZJ))
            [8] => ((GUD))
            [9] => ((PGH))
            [10] => ((AMP))
            [11] => ((WHC))
            [12] => ((ORG))
            [13] => ((NAB))
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            [15] => ((BBN))
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            [11] => WHC
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            [13] => NAB
            [14] => CBA
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            [16] => QBE
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This story features ORORA LIMITED, and other companies.
For more info SHARE ANALYSIS: ORA
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

Just the Job

With Wall Street stalled overnight, the local market was left to concentrate on earnings results yesterday morning in the biggest day of the season so far. With earlier signs of weakness now fading with some more positive results, and beats catching up to misses, it was quite a session for earnings winners.

Among the reporters, Orora ((ORA)) rallied 14.8% to top the index, followed by Sonic Healthcare ((SHL)) on 14.3%. Abacus Property ((ABP)) rose 7.4%, Magellan Financial ((MFG)) 6.4% and Bapcor 5.2%.

Smaller gains, but for bigger companies, included those of Telstra ((TLS)), up 1.9% and Goodman Group ((GMG)), up 2.1%.

Investors also decided to rethink some of Wednesday’s results responses.

Having fallen -8.7% on result, Corporate Travel Management ((CTD)) bounced 10.0%. Aurizon Holdings ((AZJ)), which fell on Monday, rose 6.1%. After gains on result on Wednesday, GUD Holdings ((GUD)) and Pact Group ((PGH)) added 7.5% each.

The only real dud for the day was AMP ((AMP)), down -13.4%.

As excitement steadily built through the morning, the January jobs numbers hit. And they were encouragingly bad.

Following on from -20,000 job losses in December, Australia lost -11,000 jobs in January. The forecast was for 20,000 to be added. (The day economists correctly forecast jobs numbers you may shoot me – I will have seen everything.)

The unemployment rate rose to 3.7% from 3.5%, yet the participation rate fell. Hours worked fell. The underemployment rate was unchanged.

Recovering from his wounds, Philip Lowe would have quietly smiled. This is what we need to see as a step towards a rate hike pause. Notwithstanding individual results, the consumer discretionary sector rose 2.7%, technology 2.7%, real estate 2.2%, communication services 2.1%, and industrials 1.8%.

Yet the bond market wasn’t having a bar of it. The ten-year rose 2 points and the two-year dropped -1 point.

ANZ Bank economists were somewhat confounded by the jobs number, given they had forecast a 40,000 increase. Labour demand remains very strong, they insist. There were 444,200 job vacancies nationally in November (around double pre-pandemic) and almost 90% of firms couldn’t hire enough workers in the December quarter according to the NAB survey.

Wet summer?

One jobs number will not tip the RBA’s balance. We at least need to see evidence of a peak in inflation. And Wall Street is losing faith in that concept.

Among other sectors yesterday, energy fell -0.7% after Whitehaven Coal ((WHC)) disappointed with its dividend, utilities fell -1.4% on Origin Energy’s ((ORG)) numbers, and the banks closed flat out after National Bank’s ((NAB)) quarterly update was better-received (+0.7%) than Commonwealth Bank’s ((CBA)) result on Wednesday. CBA fell another -1.5%.

Three Strikes

The US headline CPI fell to an annual rate of 6.4% in January, we learned on Tuesday night, down from 6.5% in December but well above 6.2% forecasts. Wednesday night brought retail sales, which surged 3.0% when 1.9% was forecast.

Last night revealed the headline PPI fell to 6.0% annual from 6.5%. That’s better isn’t it? The forecast was for 5.4%.

Cleveland Fed president Loretta Mester then rubbed salt into the wound by saying in a speech she had seen a “compelling” case for a 50 point rate hike in February. The FOMC went with 25.

The Dow fell -400 points from the open.

On Tuesday and Wednesday nights the S&P500 had closed flat. Wall Street might have been a bit confused, but it had every excuse to fall on both numbers, and didn’t.

And Wall Street remained defiant again last night. Through to the last hour, the Dow rallied back to be down only -100. But then out came St Louis Fed president James Bullard to say he, too, would have advocated for 50 points in February, and would thus like to see 50 points in March.

While it should be noted neither Mester nor Bullard are currently FOMC voting members, it was the last straw. The indices tumbled again in the final hour.

Wall Street has a long weekend ahead to contemplate just where it wants to be. Next week brings numbers for the PMIs, consumer sentiment and January PCE inflation. The December quarter GDP result will be revised, and the Fed minutes will be released.

Commodities

Nothing to see here.

After jumping on Wednesday night, the US dollar index was largely flat last night. The Aussie is down -0.3% at US$0.6881.

Today

The SPI Overnight closed down -18 points or -0.3%.

Today’s earnings reporters include Baby Bunting ((BBN)) and QBE Insurance ((QBE)) while Westpac ((WBC)) follows up with its own quarterly update.

Lendlease ((LLC)) goes ex.

For a calendar of earnings result releases and a summary of earnings results to date, refer to FNArena's Corporate Results Monitor (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.

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