The Overnight Report: Hope Springs Eternal

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            [5] => ((LTR))
            [6] => ((LLL))
            [7] => ((SKT))
            [8] => ((CTD))
            [9] => ((NST))
            [10] => ((ORG))
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This story features BENDIGO & ADELAIDE BANK LIMITED, and other companies.
For more info SHARE ANALYSIS: BEN
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Resourceful

The ASX200 shot out of the blocks yesterday to be up 62 points in the first half hour. No doubt computers followed the momentum and at that stage all sectors were in the green. Cooler heads then prevailed, sending the index back to up 40 by lunchtime, where it remained to the close.

The index still held well above 7300.

By the close, only four sectors closed in the green. It was all about resources, with materials up 2.0% and energy 1.6%. Otherwise, the banks managed 0.2% despite Bendigo & Adelaide Bank ((BEN)) going ex, while real estate strangely rose 0.7%.

I say strangely because the Aussie ten-year yield rose 9 points, and the two-year 5 points.

We can put the surge in resource sectors down to jumps in commodity prices driven by some more incremental Chinese stimulus announced yesterday, which would also inform the rise in bond yields. The Aussie nonetheless only rose 0.3%.

The rise in materials was largely down to the biggies, with the iron ore price moving higher. BHP Group ((BHP)) rose 2.7% and that’s worth 18 index points alone. Fortescue Metals ((FMG)) gained 4.7% despite going ex a rather large dividend. Maybe because no one resigned yesterday.

It was a big day for uranium (soon to be) miners, after major global producer Canada’s Cameco downgraded its production guidance due to issues at its Cigar Lake mine. Boss Energy ((BOE)) led the charge in rising 9.2% while Paladin Energy ((PDN)) gained 6.9%.

Lithium miner Liontown Resources ((LTR)) gained 8.8% after apparently reaching an agreement with suitor Albemarle.

But miners were prominent on both sides of the ledge yesterday.

Leo Lithium ((LLL)) dropped -52.7% on news Mali’s government has suspended direct shipping ore from the Goulamina lithium project.

The worst sector performers, again, were staples (-0.6%) and utilities (-0.5%) with defensives out of favour.

Discretionary managed to fall only -0.1% despite the surge in bond yields. New Zealand’s casino operator Sky City Entertainment ((SKT)) dropped -14.8% after warning it could temporarily lose its licence to operate in NZ over alleged breaches of gambling harm minimisation rules.

Really? A casino doing the wrong thing?

Moves down in other sectors were fairly minimal.

With buying of stocks and selling of bonds all about hopes for the Chinese economy, investors ignored data yesterday showing the Australian economy is not that flash. Corporate profits dropped a surprise -13.1% in the June quarter.

Economists had expected a fall given lower commodity prices, and indeed mining profits fell -21.3%, but the net fall was greater than expected. Non-mining profits fell -5.0%.

If we take bad news as good, these numbers bode well for the RBA remaining on hold today. ANZ Bank’s economists have a June quarter GDP growth forecast of 0.2%, but suggest we may yet see a small negative print on Wednesday.

Today brings the current account, which includes the terms of trade.

Commodities

The action in commodity prices was all on Friday night. Things were quieter last night with the US closed.

The Aussie is up 0.3% at US$0.6462.

Today

With no Wall Street last night, the spoilsport futures traders have the SPI Overnight down -19 points or -0.3%, which implies a test of 7300.

Philip Lowe will deliver his valedictory RBA decision today. He can likely thank Alan Joyce for drawing all the attention away from his departure.

The odds have mounted for a pause.

The June quarter current account is due.

August services PMIs will be out across the globe.

Today’s larger ex-divs include Corporate Travel Management ((CTD)), Northern Star Resources ((NST)), Origin Energy ((ORG)) and Pilbara Minerals ((PLS)).

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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