The Overnight Report: Back To Work

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This story features MINERAL RESOURCES LIMITED, and other companies.
For more info SHARE ANALYSIS: MIN
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Happy Days

While the local market has been up in the past couple of sessions, yesterday it really seemed to get its mojo back, opening higher, pausing, and then rising steadily to the close. We have not seen a close on the high for some time.

The ASX200 regained 7200, which is technically positive, and the futures are up a Wall Street-inspired 47 points this morning.

While the general move was positive, earnings results were again a big part of the story. Only two sectors failed to join in, being healthcare (flat) and technology -0.3%.

Technology was down on a chart-topping -6.7% fall for Link Administration ((LNK)) after brokers assessed Monday’s earnings report.

Materials won the day with a 1.6% gain, with Mineral Resources ((MIN)) rising 8.0% on a lower-than-forecast result that also came with a big dividend and management's intention to partially sell off some assets. Having fallen -27.2% on Monday, Sayona Mining ((SYA)) jumped 26.4% yesterday, but it is only an 11c stock.

Discretionary took the silver with 1.4%, after Wesfarmers ((WES)) kicked on 3.0% having reported on Friday.

The banks (+0.5%) and real estate (+0.6%) had good sessions as bond yields fell once more. Utilities also managed 0.6%.

Among other earnings reporters on the day, it was a cracker session for fintech disruptors, with EML Payments ((EML)) up 31.5%, Tyro Payments ((TYR)) up 14.7%, and Zip Co ((ZIP)) up 4.6%.

Disaster reconstruction company Johns Lyng Group ((JLG)) jumped 9.0% on result.

A couple of Monday’s losers posted turnarounds following broker assessments. Codan ((CDA)) rose 8.1% and Imdex ((IMD)) 6.3%.

FNArena has now assessed the results of almost 300 companies and with the last days of earnings season upon us, that will rise to around 350. Currently, beats are running at 32% to 29% misses, which suggests the season has been better than feared.

Furthermore, ratings upgrades have exceeded downgrades (just) and target prices have risen on average, albeit not by much.

Two more days to go.

A couple of biggies reporting today are Brambles ((BXB)) and the most shorted stock on the ASX, Flight Centre ((FLT)).

Jolted into Action

The US Job Openings and Labor Turnover Survey (JOLTS) for July showed job listings dropped to a 28-month low 8.8 million, below a forecast 9.5 million. Meanwhile, 3.5 million people quit their jobs in July, the lowest level in over two and a half years — a sign that job seekers are getting more cautious.

Job openings are falling but unemployment is yet to rise, which is somewhat of a Goldilocks scenario for the Fed, implying a soft landing is possible. We will see August employment numbers this week. While the number of job additions are now trending lower, they’re still additions, not losses.

The Conference Board’s monthly index of consumer confidence has fallen to 106.1 from 114.0 last month. Put these two data points together and expectations the Fed will pause in September are enhanced.

So much so that the US ten-year yield fell -9 points and the two-year fell -13, and is back well under 5%.

That was all the stock market needed to decide the pullback is over and it's back to business to the upside. It’s the Labor Day long weekend ahead which signals the end of summer holidays, back to work and back to school. Volumes will be restored.

Big Tech again led the rally but breadth was still solid last night, unlike earlier in the year when Big Tech was the only mover.

The futures are now pricing in an 86.5% chance the Fed will not hike next month.

We still need to see those jobs numbers, and PCE inflation, before the long weekend.

Commodities

The LME was back last night to little fanfare.

Oil prices responded to a -0.5% fall in the US dollar, and ahead of the impact of Hurricane Idalia hitting the Florida coast, with storm surges in excess of ten feet expected in some low-lying areas.

The storm will likely impact fuel distribution systems and hit fuel consumption in the affected regions just ahead of the Labor Day holiday.

The busiest airport on the Florida Gulf coast – Tampa – has shut down, forcing the cancellation of hundreds of flights and the disruption of hundreds of holiday plans.

With US yields and the dollar down, gold has had a pop and the Aussie is up 0.8% at US$0.6483.

Today

The SPI Overnight closed up 47 points or 0.7%.

Locally we’ll see June quarter construction work done today, along with building approvals and the July CPI.

The US will see private sector jobs and a revision of June quarter GDP.

Along with today’s earnings reports comes a swathe of ex-divs, including those of Telstra ((TLS)) and Wesfarmers.

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.)

(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)

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