The Overnight Report: Not Over Yet

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(
    [0] => Array
        (
            [0] => ((ING))
            [1] => ((IPH))
            [2] => ((MGH))
            [3] => ((RIC))
            [4] => ((GMG))
            [5] => ((HDN))
            [6] => ((ORA))
            [7] => ((SUL))
            [8] => ((PWH))
            [9] => ((SVW))
            [10] => ((HPI))
            [11] => ((TCL))
            [12] => ((TLS))
            [13] => ((RMD))
            [14] => ((ANZ))
            [15] => ((WBC))
            [16] => ((DHG))
            [17] => ((CXO))
            [18] => ((ANN))
            [19] => ((NCM))
            [20] => ((AKE))
            [21] => ((MFG))
        )

    [1] => Array
        (
            [0] => ING
            [1] => IPH
            [2] => MGH
            [3] => RIC
            [4] => GMG
            [5] => HDN
            [6] => ORA
            [7] => SUL
            [8] => PWH
            [9] => SVW
            [10] => HPI
            [11] => TCL
            [12] => TLS
            [13] => RMD
            [14] => ANZ
            [15] => WBC
            [16] => DHG
            [17] => CXO
            [18] => ANN
            [19] => NCM
            [20] => AKE
            [21] => MFG
        )

)

This story features INGHAMS GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: ING
The company is included in ASX300 and ALL-ORDS

By Greg Peel

Macro versus Micro

The futures said -23 but when the ASX opened yesterday, following another weak night on Wall Street, a “just get me out” attitude pervaded among investors. The ASX200 was down -89 points in a heartbeat.

That took it to just above 7100, where some technical buying emerged, and traders began to respond to the day’s wealth of earnings results – a lot of them positive.

Late morning, the ABS revealed Australia lost -14,600 jobs in July, having surprised in job additions in the prior two months. The unemployment rate rose to 3.7% from 3.5% in June, confirming a turning point the RBA has been expecting.

That said, there were turning points in January and April as well when the unemployment rate also hit 3.7% before falling back again, although these were school holiday months. But don’t count your chickens just yet.

Inghams Group ((ING)) is allowed to nonetheless, as it topped the boards with a 14.8% earnings response. Also in the winners’ circle were IPH Ltd ((IPH)), up 10.8%, Maas Group ((MGH)), up 10.5%, Ridley Corp ((RIC)), up 7.5%, Goodman Group ((GMG)), up 5.7%, and HomeCo Daily Needs REIT ((HDN)), up 5.4%. And that’s just the 5%-plus club.

There were also positive responses to results from Orora ((ORA)), Super Retail ((SUL)), PWR Holdings ((PWH)), Seven Group ((SVW)), and Hotel Properties ((HPI)).

Despite the weaker jobs numbers, which suggest the RBA can remain on hold, Aussie bond yields shot up again. The two-year rose 5 points and the 10 year rose 11. Thanks to Goodman Group, real estate was the star sector yesterday, gaining 1.1%.

Energy rose by 0.4%, despite lower oil prices, and utilities just scraped into the green. All other sectors closed lower.

Industrials fell -1.3%, after underwhelming assessments of Transurban’s ((TCL)) result had that stock down -4.9%. Communication services fell -1.1% because Telstra ((TLS)) fell -2.8%, after announcing it will abandon the sale of its infrastructure business.

Wednesday’s defensive winners turned into losers yesterday. Healthcare fell -1.2% as selling in ResMed ((RMD)) resumed, and staples fell -1.1%, not saved by the chooks.

Both ANZ Bank ((ANZ)) and Westpac ((WBC)) provided quarterly updates yesterday and the banks fell -1.0%, although we can lay blame on bond yields.

Another big loser on results was Domain Group ((DHG)), down -7.8%, while biggest loser on the day was Core Lithium ((CXO)), falling -25.5% on a heavily discounted capital raise.

Today’s earnings calendar is a lot lighter, before we move into monster week next week. There are nevertheless some ex-divs to watch out for – Ansell ((ANN)), Lendlease ((LLC) and Newcrest Mining ((NCM)) among them.

With Wall Street still falling, our futures are down only -28 points or -0.4% to the S&P500’s -0.8%, bearing in mind it was the same scenario yesterday morning.

Day Three

Wall Street posted solid falls for the third straight session last night, driven by ever-rising bond yields forcing a reversal from overbought conditions, particularly in Big Tech. The biggest company, Apple, is now down -11% from its high. It’s 7% of the S&P500, which is now down -5%.

The US ten-year rose 5 points to 4.31% last night. Meanwhile, the two-year yield is falling, gradually reversing the inverted yield curve. Inversion rose to over -100 points but is now around -65, as traders price out the risk of a hard landing.

The ten-year also got a kicker in its recent rally after the Bank of Japan widened its bond rate cap, making the yen carry trade (buy US bonds) less attractive.

Bullish sentiment on Wall Street is rapidly diminishing. In the latest American Association of Individual Investors weekly survey, sentiment dropped to 35.9% looking out across the next six months, from 44.7% last week and 49.0% two weeks ago.

In a sign of the times, WalMart (Dow) reported earnings last night, beat on revenues and earnings and raised guidance. The stock fell -2.2%.

Half the problem is seasonal. Commentators continue to point to August typically being a consolidation month on low summer volumes, and September is the weakest month. Sentiment feeds on itself.

There is also a diminishing expectation the Fed will hike its cash rate in September. But while this might be a positive for Wall Street, there is growing speculation the Fed will go again in November or December, given strong economic data.

There are also technical issues at play. The S&P500 has broken down through its 50-day moving average.

The signs are this is not over yet. But then that’s usually when it is.

Commodities

Rising bond yields are not doing gold any favours.

Weaker US crude supply has finally topped China worries.

The Aussie is down -0.2% at US$0.6404.

Today

The SPI Overnight closed down -28 points or -0.4%.

Allkem ((AKE)) and Magellan Financial ((MFG)) are the bigger names into today’s smaller list of reporters.

I have noted today’s ex-divs.

For all company reporting dates, please refer to the FNArena Calendar (https://www.fnarena.com/index.php/financial-news/calendar/) or the Corporate Results Monitor (https://www.fnarena.com/index.php/reporting_season/). The latter summarises result responses from brokers following each day’s result releases.

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.)

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