The Overnight Report: That Was Quick

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            [1] => ((SQ2))
            [2] => ((EHE))
            [3] => ((ORG))
            [4] => ((CBA))
            [5] => ((JHX))
            [6] => ((CRN))
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            [6] => CRN
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)

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

By Greg Peel

Rinse and Repeat

In another seemingly sluggish session on the ASX yesterday, the sellers dominated the morning before the buyers appeared in the afternoon. The ASX200 was down -30 points at lunchtime, slipping under 7300 as it had done on Friday, sparking buyers into action.

Wall Street has rebounded overnight and our futures are up 29 points this morning.

Healthcare was again the worst performing sector (-1.1%), as ResMed ((RMD)) copped some follow-through selling (-4.3%) in the wake of Friday’s earnings report "miss".

Speaking of follow-through selling, Block ((SQ2)) fell -5% on its result on Friday and yesterday fell -10.1%. Technology lost -0.3%.

Moves in other sectors were mixed and modest, with weakness led by the banks (-0.4%) and materials (-0.3%).

The winners were real estate and discretionary, both up 0.5% on lower bond yields.

The latest takeover story is that of residential aged care services provider Estia Health ((EHE)), which jumped 8.5% after receiving an offer from private equity.

Meanwhile, the ACCC has again delayed its decision on the takeover of Origin Energy ((ORG)).

In economic news, job ads rose 0.4% in July having fallen -2.7% in June. Ads are down -10.4% from their peak last September but remain historically high, ANZ Bank notes, hence no signs yet of trouble in the labour market.

Investors are likely wary of taking too much risk as we head into results season proper. There were a handful of reports out yesterday and another handful today, but things heat up from Wednesday when Commonwealth Bank ((CBA)) reports.

That may explain why Wall Street was up 0.9% but our futures suggest only 0.4% today. Commodity prices were steady last night, other a small drop in oil prices.

Head Fake?

After a four-day losing streak last week, potential buyers appeared to have called time and Wall Street bounced last night, with no obvious impetus. Was that the pullback?

It is not unusual for corrections to see the odd snap-back rally on the way, but nothing is certain.

Wall Street did seem to latch on to comments from the New York Fed president, who suggested “I think we’re pretty close to where a peak rate would be”. John Williams also opined that the Fed could begin cutting rates next year even if a hard landing does not eventuate.

At the same time, the Atlanta Fed president said “I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation”.

So take your pick.

Berkshire Hathaway reported an earnings beat last night, and rose 3.5%. If you’re interested in buying a share in Warren Buffet’s company you’d better first empty the shrapnel jar – one Class A will cost you US$550k.

You can, nonetheless, slum it with a Class B at US$360.

There were other positive results out last night, and with 85% of S&P500 companies now having reported, an 80% beat-rate is being maintained. This hasn’t necessarily translated into share price gains, as last week attests, and only 34 companies report this week.

Guidance has been important, as always, and while the June quarter is still being seen as the earnings trough, forecasts for the September quarter growth have slipped to a mere 0.2% from 0.4% ahead of the season.

The December quarter is otherwise shaping up with a 0.8% growth forecast.

Bond yields were little moved last night, and the VIX volatility index has slipped back after popping up last week, which likely makes those buyers more confident to jump in.

We’ll see how long it lasts. The July CPI is out on Thursday night.

Commodities

Nothing much to see here.

Oil prices slipped for no reason other than they were up 15% in July and another 1% in August to date.

The Aussie is steady at US$0.6575.

Today

The SPI Overnight closed up 29 points or 0.4%.

The NAB business and Westpac consumer confidence surveys are out today.

China will report July trade numbers.

Today’s earnings releases include those of James Hardie ((JHX)) and Coronado Resources ((CRN)).

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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