The Overnight Report: More Bad News

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            [0] => ((WES))
            [1] => ((TLS))
            [2] => ((BXB))
            [3] => ((ABC))
            [4] => ((BLD))
            [5] => ((SVW))
            [6] => ((CHN))
            [7] => ((FLT))
            [8] => ((HVN))
            [9] => ((ALX))
            [10] => ((IGO))
            [11] => ((SFR))
            [12] => ((REA))
            [13] => ((WDS))
            [14] => ((WHC))
            [15] => ((WOW))
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            [2] => BXB
            [3] => ABC
            [4] => BLD
            [5] => SVW
            [6] => CHN
            [7] => FLT
            [8] => HVN
            [9] => ALX
            [10] => IGO
            [11] => SFR
            [12] => REA
            [13] => WDS
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)

This story features WESFARMERS LIMITED, and other companies.
For more info SHARE ANALYSIS: WES
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Deflated

Wall Street plus 4.9% equals 87 points up for the ASX200. With Wall Street back to bull mode following the jobs openings report on Tuesday night, our futures said up 47 yesterday morning. Then came the local inflation data.

Australia’s headline CPI fell to 4.9% annual in July from 5.4% in June when 5.2% was forecast. On the assumption this is enough for the RBA to remain on hold next week, the index jumped over 100 points to over 7300, before settling back a bit in the afternoon to just under 7300.

I noted yesterday Tuesday’s close over 7200 was technically positive, which would have provided a tailwind yesterday as well.

It was a Buy Everything session, except for utilities (flat), as the energy providers sat it out. It appears discretionary (flat) and communication services (-0.2%) did the same, but that’s because Wesfarmers ((WES)) and Telstra ((TLS)) went ex.

Otherwise, sector moves ranged from energy (+0.9%) to industrials (+2.1%).

Industrials starred on a 7.1% jump for Brambles ((BXB)) on its earnings result. Building materials didn’t fare so well, with Adbri ((ABC)) dropping another -6.0% after reporting on Tuesday and Boral ((BLD)) falling -8.0% after Seven Group ((SVW)) sold a whole -1% of its 72.6% stake.

The materials sector nonetheless closed up 1.4% thanks to the miners, although nickel-copper-Platinum Group Element (PGE) miner Chalice Mining ((CHN)) didn’t help by falling -25.2% on disappointing exploration results.

The most shorted stock on the ASX, Flight Centre ((FLT)), fell -2.8% on result. I have long suspected Flight Centre’s 10%-plus short position is half of a long-short play on travel agents, given the position has not changed since covid despite the stock rallying some 150% in the meantime.

In other economic news, building approvals fell -8.1% in July, with houses up -0.1% and apartments down -15.8%, as building companies struggle.

June quarter construction work done rose 0.4%, after rising 3.8% in the March quarter, to be up 9.3% for the year.

Coming back to the CPI, services inflation peaked at 7% in December 2022 versus 5.6% in July, while goods inflation peaked at 9.8% in July 2022 versus 4.4% in July 2023, despite the prices of electricity, rent and food still rising in July, although fresh fruit & veg fell -5.4%.

It appears rising oil prices may not pop up until August.

Wall Street kicked on again, modestly, last night, and bearing in mind it’s the last day of the month today, our futures are up all of 4 points this morning.

It’s also the last day of the results season. Woohoo!

We always go out with the bang of Harvey Norman’s ((HVN)) result. There are also some more sizeable ex-divs to keep things real today.

Data-Dependent

Last night US June quarter GDP growth was revised down to 2.1% from an initial estimate of 2.4%.

The ADP private sector report showed 177,000 jobs added in August, down from 324,000 in July, and below forecasts of 200,000.

Bad news is currently good, so slower-than-first-thought economic growth, and further signs of weakening in the labour market, following Tuesday night’s job openings number, further cement expectations the Fed will pause in September.

And also expectations the Fed may possibly be done altogether.

Wall Street thus kicked on again last night, on top of Tuesday night’s surge, but momentum faded towards the close. The S&P500 regained 4500 which probably brought in some profit-taking ahead of month’s end.

After big falls on Tuesday night, US bond yields remained steady last night.

The last of the US earnings reports are trickling in, and a report in this morning’s aftermarket from customer relationship management software company Salesforce (Dow), which makes a point with its ticker code of CRM, has that stock up 5.8% currently.

Tonight brings the PCE inflation numbers for July. Wall Street is braced for a tick-up from June, mostly due to higher energy prices, so such a result should not cause any plunge.

Non-farm payrolls follow tomorrow night. If recent labour market data are any indication, some weakness should be apparent in that report as well.

The hottest topic on Wall Street right now is can the market buck the seasonal trend, and rally through September?

Commodities

More falls for the US dollar are supporting commodity prices.

The Aussie is steady at US$0.6478.

Today

The SPI Overnight closed up 4 points.

Locally we’ll see June quarter private sector capex today, and monthly private sector credit.

China reports August PMIs.

The US has the PCE numbers.

Aside from Harvey Norman, Atlas Arteria ((ALX)), IGO Ltd ((IGO)) and Sandfire Resources ((SFR)) are the bigger stocks reporting today.

There are some big ex-divs, including those of REA Group ((REA)), Woodside Energy ((WDS)), Whitehaven Coal ((WHC)) and Woolworths ((WOW)).

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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