The Overnight Report: Mega Rally

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            [8] => ((WDS))
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This story features AGL ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: AGL
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

And Back Again

On Wednesday investors bought most other sectors on the ASX to counter a fall in materials, and yesterday they sold them again. The school holidays ended this week but you wouldn’t know, as trading remains quiet.

The market may be stalled ahead of the RBA meeting next week, while keeping an eye on US banks, but the futures have not ignored a big turnaround on Wall Street last night and show up 55 points today.

Which makes yesterday a bit redundant.

This time materials held its ground (+0.2%) and utilities came back a bit (+0.2%). Today brings the close of AGL Energy’s ((AGL)) ancient Liddell Power station.

Staples were flat and com services a little stronger (+0.2%), while technology (flat) decided Microsoft and Meta really have nothing to do with us.

Everything else fell.

After two days of indecision as First Republic played out, the banks fell -0.5%. Healthcare chimed in with -0.6%. Discretionary was the worst performer (-0.8%), industrials lost -0.7% and with Aussie bond yields rebounding al la the US (up 7 points in tens and twos), real estate lost -0.6%.

The fall in discretionary came despite a takeover bid from Kirin for Blackmores ((BKL)), sending that stock up 23%. We can now look forward to a Tooheys with added vitamin C.

There was a big round of quarterly reports yesterday, particularly for miners, so movements were all over the shop. Syrah Resources ((SYR)) has been having a tough run lately (-9.5%) while otherwise, United Malt ((UMG)) posted a downgrade and fell -4.7% and Megaport’s ((MP1)) update was worth -4.3%.

While the futures might be fired up on the Wall Street rebound, it’s a big day/night otherwise ahead with more quarterlies, the March quarter PPI, China’s PMIs and US PCE inflation all due.

Not Just Meta

Wall Street wasn’t quite sure what to do with a March quarter GDP result (first estimate) that came in at 1.1% growth when 2.0% was forecast. Surely this must confirm recession fears, but then maybe help the Fed to decide one and done next week?

Answering the question is not that straightforward as economists point out the underlying trend of consumer spending is much stronger than is apparent at face value, plus there is the added complication of stronger-than-expected prices increases.

Either way, investors cheered on the earnings result from Meta, and the day’s gains basically reversed all that was lost in the prior two First Republic-impacted sessions.

On that front, First Republic shares actually rose 9% last night as a standoff develops between the US regulators and big banks. The regulators assume the banks will step in and rescue First Republic in order to rescue their US$30bn deposit, while the banks want the regulators to step in lest they end up throwing more good money after bad.

The calm allowed Wall Street to focus on earnings results, and while Meta led the charge (+14%), 80% gainers for the S&P500 last night suggested solid breadth in the rebound, not just a one-trick pony.

Meta’s success has come from abandoning its B Ship – getting rid of all the masseurs, hairdressers and gym instructors that only dragged on the bottom line – and Meta has not been the only company, tech or otherwise, to drastically reduce headcount. If revenues can hold up, then earnings can benefit, and so far that’s largely been the case.

To date, S&P500 earnings have come in 7.9% ahead of expectation when the average is 4.1%.

US bond yields shot back up last night to also recover First Republic losses. The tens gained 9 points and the twos 15, indicating a switch out of bonds and back into stocks.

It’s been a big week for earnings, but next week is the biggest.

Not all reporters have been winners.

Amazon reported last night after the bell and initially shot up 8%. As I write it’s down -3%, bearing in mind it was up 4.6% in the session.

Intel (Dow) has been a serial underperformer of late, but it’s up 5% in the aftermarket on its report.

Not so flash is Snap, down -18%.

During the session there were pleasing results, from a recession or not perspective, from toymaker Hasbro (+14%) and America’s biggest media conglomerate Comcast NBCUniversal (+10%).

Giant diversified technology and manufacturing company Honeywell (Dow) rose 4%.

More results tonight, along with the PCE ahead of the Fed meeting next week.

Commodities

The weak looking US GDP would not have been helpful for commodities prices although the oils managed a bounce.

Despite the jump in bond yields, gold stood still.

The Aussie has recovered 0.4% to US$0.6631.

Today

The SPI Overnight closed up 55 points or 0.8%.

Our March quarter PPI numbers are out today along with monthly private sector credit.

The Bank of Japan holds a policy meeting.

China releases April PMIs.

The eurozone reports March quarter GDP.

The US sees the PCE.

Another round of quarterly reports includes those from Coles Group ((COL)) and Origin Energy ((ORG)).

ResMed ((RMD)) reports quarterly earnings.

Woodside Energy ((WDS)) holds its AGM.

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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