The Overnight Report: Getting Soggy

Array
(
    [0] => Array
        (
            [0] => ((BOQ))
            [1] => ((CGF))
            [2] => ((RIO))
            [3] => ((BHP))
            [4] => ((AKE))
            [5] => ((LOV))
            [6] => ((CKF))
            [7] => ((GEM))
            [8] => ((BHP))
            [9] => ((WDS))
            [10] => ((WHC))
            [11] => ((LYC))
        )

    [1] => Array
        (
            [0] => BOQ
            [1] => CGF
            [2] => RIO
            [3] => BHP
            [4] => AKE
            [5] => LOV
            [6] => CKF
            [7] => GEM
            [8] => BHP
            [9] => WDS
            [10] => WHC
            [11] => LYC
        )

)

This story features BANK OF QUEENSLAND LIMITED, and other companies.
For more info SHARE ANALYSIS: BOQ
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Rent Asunder

Two boards – one for governance and one for monetary policy, more diverse input into policy settings, meetings reduced from eleven monthly to eight, not sure when, and individual votes on policy disclosed.

All well and good, but the fact remains the RBA has just the one big hammer and that’s all. As for so-called “forward guidance” (when is guidance not forward?), the review could have suggested RBA governors will from now on just please shut up. Whether Lowe survives post the infamous 2024 assurance, I doubt it. But the next governor will be very wary.

While it looked like the ASX had another session yesterday of pure disinterest, there was actually quite a bit going on under the bonnet. Most notably, banks (+1.3%) versus materials (-2.0%).

The banks caught a bid after Bank of Queensland ((BOQ)) surprised with its official earnings report. Having gotten the bad news out of the way last week – write-down, increased capex, lower dividend – the market saw positive numbers.

Bank of Queensland shares rose 1.1% and the majors found buyers as well.

Challenger ((CGF)), on the other hand, provided its quarterly numbers and fell -4.3%.

Materials fell on the back of Rio Tinto’s ((RIO)) quarterly report, down -2.3% despite record iron ore shipments, warning of demand concerns from China. BHP Group ((BHP)) lost -2.6%.

Lithium miners had a bad day too. Allkem’s ((AKE)) quarterly was worth -5.2%.

Consumer discretionary sparked up with a 1.0% gain. Lovisa Holdings ((LOV)) rose 3.6% and Collins Foods ((CKF)), aka KFC, also gained 3.6%.

G8 Education ((GEM)) held its AGM and rose 5.0%.

Aussie bond yields only fell -1-2 points but real estate made a comeback (+0.8%), and thereafter sector moves dwindled.

At yesterday’s close the ASX200 was basically flat for the week, but today might be a different story. The S&P500 fell -0.6% overnight and our futures are down -38 points this morning.

It’s a Friday before what for many will be another four-day long weekend, and the last weekend of school holidays, so it might be a bit thin out there today, particularly after lunch.

Looking Grim

Tesla shares fell around -3% in the aftermarket on Wednesday night after the company reported earnings, with a miss on margins to blame. In the subsequent conference call, Elon Musk said he was prepared to boost market share at the expense of margins, and last night the stock fell -10%.

Telco giant AT&T (Dow) reported during the session and fell -10%.

The Philadelphia Fed activity index has fallen to -31.3 this month from -23.2 last month. The last time it was this low was in 2020, and before that 2008, and before that 2001.

Weekly new jobless claims rose by a higher than expected 245,000 last week.

Existing home sales fell -1.0% year on year last month. Doesn’t seem like much, but it’s the biggest annual fall in over a decade.

The Conference Board’s leading US economic indicator fell for the twelfth straight month last night, signalling recession ahead. The last time the indicator fell for so long was in 2007-09.

Last night the Cleveland Fed president suggested a rate rise is needed to quell inflation.

It’s not adding up to a rosy picture, although Wall Street has already baked in (90%) another 25 points next month. As to what happens after that, there is little agreement. Commentators are split between hard landing and Wall Street pullback and soft landing and Wall Street upside.

Most agree that at on a 20x forward PE, well above average, the S&P500 is overvalued, and many believe earnings forecast are also too high. But take out the Mega Tech’s that have led the rally and the PE of the rest is closer to average.

As for earnings, well so far it looks like many might be right. We find out more when the Mega Techs all report next week.

Meanwhile, American Express (Dow) reported last night and despite falling -1% reported no real signs of a consumer spending slowdown.

Railroad CSX – as a freight mover an economic bellwether – reported in the aftermarket and is up 2.7%.

Economic data, including anecdotal, remain somewhat mixed. It explains why the S&P500 remains firmly stuck in its range for now.

Commodities

Weak economic data, however, are continuing to drive down oil prices. That’s good news on the inflation front.

The Aussie is up 0.5% at US$0.6748.

Today

The SPI Overnight closed down -38 points or -0.5%.

We’ll see more global data today when flash estimates of April PMIs come out across the world.

BHP Group ((BHP)), Woodside Energy ((WDS)), Whitehaven Coal ((WHC)) and Lynas Rare Earths ((LYC)) provide quarterlies today.

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)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms