The Overnight Report: Bring It On

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This story features SCENTRE GROUP, and other companies.
For more info SHARE ANALYSIS: SCG
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Losing Steam

The ASX200 rose 30 points in the morning yesterday, was almost back to square with an hour to go, before a late kicker to the close. After a solid rally through April to date, momentum has slowed. The index closed up 19 points yesterday and with the S&P500 up 0.3% overnight, our futures are down -17 this morning.

Aussie bond rates continue to creep higher, following US rates, but real estate continues to make a comeback from the scares brought about by the SVB collapse, regarding commercial real estate, and from a long running rate-based sell-down. The sector topped the boards yesterday with a 1.32% gain.

Scentre Group ((SCG)), which is planning an entertainment precinct upgrade for the Penrith Westfield, rose 2.6% and European counterpart UR Westfield ((URW)) gained 3.5%.

Consumer discretionary was next best (+0.7%) on a 4.9% pop for beleaguered Star Entertainment ((SGR)), as the new NSW treasurer looks to readdress the prior government’s casino tax model.

Technology rose 0.7%.

Industrials followed with 0.5% and the banks 0.4%, after which it was basically thanks for playing.

All the action in the top and bottom index winners/losers was once again in miners, cancelling out materials to a flat close. Lithium stocks had another up day, while gold stocks took a hit on a big fall in the gold price overnight.

Regis Resources ((RRL)) made it worse by downgrading production guidance, and fell -11.2%, while coal miner New Hope Corp ((NHC)) fell -9.50% after going ex-div.

The energy sector thus fell -0.3%.

Oil prices are down overnight and gold has fallen further, but most metal prices are steady.

The -17 point fall in the futures looks like squaring ahead of the release today of the minutes of the RBA April meeting and China’s March quarter GDP result.

Bing It

The big news on Wall Street last night is that Samsung is considering switching from Google as the installed search engine in its smart phones to Microsoft’s Bing – a reflection of Microsoft’s advances in AI (chat GPT).

Google pays billions to Samsung to be the installed search engine and even more billions to Apple, to the point searching the web is to “google it” no matter what search engine one uses. Like we used to xerox a few copies, hoover the floor and then take the esky to the park.

Google shares fell -2.7% while Microsoft (Dow) rose 0.9%.

Otherwise, Wall Street meandered around last night before a late kick to a uniform 0.3% gain across the indices, as investors await a build-up of major earnings reports as the week progresses.

Goldman Sachs (Dow) reports tonight, later followed by Morgan Stanley, Bank of America, Netflix, Tesla and IBM (Dow), among others.

Those others include closely watched regional banks.

Custodial banks have not fared well. Last night State Street fell -9.2% and Bank of New York Mellon -4.6% on weak results.

Meanwhile, US bonds rates continue to creep back up, rising 7-8 points last night. Once upon a time these were biggish moves, but the index of bond market volatility has now fallen to pre-SVB levels, while at 17, the VIX volatility index on the S&P500 is drifting towards complacency levels.

In economic news, the Empire State (New York) activity index has risen 35.4 points this month to +10.8 – the first positive reading in five months. Economists had forecast -15.

The housing market confidence index ticked up to 45 to mark the fourth monthly rise in a row. Mind you, this is a 100-neutral index.

If the US economy is looking resilient under the circumstances then it wasn’t reflected last night in results for trucking company JB Hunt, which has been hit by excess capacity in moving containers of mostly consumer goods from west coast ports across the country.

Citing a balance of lower e-commerce demand post-covid, and rising costs, JB Hunt fell -2.4% after hours.

Commodities

The US dollar index rose another 0.5% last night as US bond rates continue to recover post-SVB. While this didn’t much impact on metals, except maybe for gold, the oils took a hit.

Yet the Aussie is relatively steady at US$0.6607.

Today

The SPI Overnight closed down -17 points or -0.2%.

The RBA minutes are out this morning.

China reports GDP and March retail sales, industrial production and fixed asset investment.

The US sees housing starts.

Auckland International Airport ((AIA)) and Hub24 ((HUB)) provide quarterly updates.

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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