The Overnight Report: Are We There Yet?

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This story features APPEN LIMITED, and other companies.
For more info SHARE ANALYSIS: APX
The company is included in ALL-ORDS and ALL-TECH

By Greg Peel

Lack of Intelligence

The ASX200 opened up 39 points in the first twenty minutes yesterday, doubling the futures’ expectation, and closed up 44. There was a bit of chop in between but largely it was a one step-up session, despite positive macro newsflow through the day.

Australia’s retail sales rose 0.5% in July when 0.2% was forecast. The discretionary sector hence rose 1.4%, pipped only by healthcare (+1.5%), which was suddenly back in favour after a tough month. Staples rose 0.6%.

Sales fell -0.8% in June, so it’s mostly a bit of noise around the reality that consumers have tightened their belts, and will likely continue to do so as more and more fall off the cliff.

An interesting bit of sub-data: dining out/takeaway rose 1.3% in the month to be up 9% year to date. Retail sales ex-dining out/takeaway are up only 1.0% year to date. The ABS acknowledged the WWC helped boost the numbers in July, which would suggest August will be similar, but how long before households stop eating at Aria? Or is it all Scottish dining?

In other news, Beijing announced it will halve the stamp duty on stock trading to boost the struggling stock market and investor confidence, even though there’s little reason to be confident. The CSI300 index of mainland stocks rallied as much as 5.5% early yesterday before paring more than half of the gains by the midday break.

Turning to the micro, there was nothing artificial about a -32.1% fall on result for Appen ((APX)) and a -10.8% fall for Brainchip Holdings ((BRN)), also on result. These stocks fly around all day every day but clearly had become overbought on the AI hype permeating from the US.

The technology sector fell -0.7% to be the only sector to close in the red, when the Nasdaq had shot up again overnight.

Imdex ((IMD)) was another to crash on report, falling -15.8%.

Fortescue Metals ((FMG)) was the big-ticket reporter on the day. It fell -5.1%, with the result clouded by the sudden departure of the CEO after only six months on the job.

Materials managed a 0.2% gain nonetheless. All was not happy in lithium land either, speaking of latest fads. Sayona Mining ((SYA)) fell -27.2%.

The banks provided solid support on the day in rising 0.8%, on top of strong retail sales and little movement in bond yields.

There are three more days of earnings reports to come, and the numbers are falling now in terms of reports per day. The number of larger names has also diminished. Wall Street was positive again overnight, so we should start today to the good with the futures suggesting 25 points.

Be aware that the ex-divs are now coming thick and fast, so we start each session with a handicap.

Afterglow

A funny thing happened on Wall Street last night. The S&P500 put together two consecutive sessions in the same direction for the first time this month.

That about sums up August – a month of summer holiday-thin sessions and seasonal consolidation. We have seen an uncertain -5% pullback in an uncertain bull (for now) market. While -5% pullbacks are seen as healthy –nay, necessary – in a bull market, the jury is still out on whether Wall Street has more to do, with September looming.

CNBC had an interesting straw poll last night, asking viewers whether they expected Wall Street would end higher in September or lower. The result was 50/50. But then that’s what we call a market.

Wall Street is now happy to have Nvidia’s earnings result out of the way – the share price didn’t move but the numbers supported the AI premise – and more so Jackson Hole at which, while Powell was not pleasingly dovish, at least he wasn’t overly hawkish either, so that’s a relief.

There was no obvious impetus for last night’s gains, no data releases to speak of or market-moving earnings results, just a more relaxed mood.

Until we get to PCE inflation and jobs numbers later in the week.

And remember the debt ceiling? The resolution on that front only meant a delay to the next time the budget needed to be settled, and that’s next month. It could very much be a case of here we go again, with the Republican party in disarray.

Commodities

The UK was on holiday last night so no LME trading.

Nothing to see elsewhere either.

The Aussie is up 0.3% at US$0.6431.

Today

The SPI Overnight closed up 25 points or 0.4%.

The US will see monthly consumer confidence tonight along with house prices.

Today’s earnings reports include Adbri ((ABC)), Bubs Australia ((BUB)), Tyro Payments ((TYR)), and Zip Co ((ZIP)).

Ex-divs include Insurance Australia Group ((IAG)), The Lottery Corp ((TLC)) and Worley ((WOR)).

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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