The Overnight Report: One Bad Apple

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            [5] => ((AUB))
            [6] => ((PPT))
            [7] => ((SUL))
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This story features BHP GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: BHP
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

What Goes Up…

Well, it was nice while it lasted. The ASX200’s foray over 7300 came to an end yesterday as the index reversed Tuesday’s gains, and some, drifting lower all morning before flattening out in the afternoon. This morning the futures are down -35.

It was a Sell Everything session, with the exception of energy (+1.0%), which responded to ever higher oil prices and the government’s attempts to keep the Eraring coal-fired power station chugging along for longer.

Otherwise, materials, healthcare and staples were the better performers in all falling -0.5%, while all other sectors fell in excess of -1%. The session was not helped by the day’s list of ex-divs, and today’s list is by far the longest to date and includes BHP Group ((BHP)).

Investors also shrugged off a better than expected GDP result, or otherwise saw the good news as bad from an RBA rate hike perspective.

The economy grew 0.4% in the June quarter when consensus had 0.3%, to an annual rate of 2.1% against a forecast of 1.8%. The annual rate was helped by March quarter’s growth being revised up to 0.4% from 0.2%, but it’s down from the 2.4% rate seen in March.

And with the per capita GDP again falling -0.3%, and the RBA focused on productivity, maybe it was not such a good result.

The bond market scratched its head, with yields falling one point across the curve.

With the index unable to hold 7300, perhaps the stock market just has the September blues. Not that’s there’s much to provide strength at present now results season is over, and data out of China just get weaker.

Orora ((ORA)) fell -18.2% yesterday to top the index losers, due to an acquisition-related capital raise.

Outside the index, PointsBet Holdings ((PBH)) fell -55%, having sold off its US business.

For some strange reason Domain Holdings Australia ((DHG)) managed to top the winners with a 3.9% gain on no new news.

Today we’ll see trade numbers locally (July) and in China (August) for perhaps some more angst. Otherwise, Wall Street’s brief relief rally appears over as well with indices falling for a second night on strong US data.

At Your Services

The US services PMI rose to 58.9 in August, up from 56.8 in July. With goods inflation on a downward path since last year’s peak, service sector inflation is what has central banks concerned at present. Clearly, the US sector is not seeing any drop-off yet.

Once again, while Wall Street is convinced the Fed will remain on hold this month, it is fretting over a November hike. The US two-year yield rose 5 points to again be back over 5%, which is a bit of a line in the sand.

A Fed Beige Book was released last night showing growth across all districts as “modest,” and signs that wage growth and inflation may soon slow further. The only problem is this anecdotal survey appears to be at odds with recent economic data, such as better than expected manufacturing and services PMIs and jobs growth, and resilient consumer spending.

While Wall Street was generally weaker last night, it would not have been nearly so bad were it not for a -3.6% fall for Apple. America’s biggest company is 7% of the S&P500, more in the Nasdaq, and a Dow component, so even what looks like a smallish fall has significant consequences.

Yesterday, Beijing banned Chinese government officials from using iPhones at work. No coincidence that Huawei has just launched its first new smart phone in years. China provides 20% of Apple’s revenues.

Last night the European Commission named Apple as one of six tech companies acting as "gatekeepers" of online services. The other firms included Alphabet, ByteDance, Meta, Microsoft, and Amazon. Businesses given that label have to make their messaging apps work with rival platforms and allow users to decide which services to pre-install on their smartphones.

The EC is also moving to make phone chargers interchangeable. We all know Apple has constantly changed its charger jack with successive iPhone models, and it plans to do so for the iPhone 15 due to be launched next week.

So it wasn’t a good day for the tech megalith, which is up 40% year to date but has recently been running out of oxygen. Much rests on this new phone, and whether anyone can afford an anticipated price hike.

Commodities

Many an oil analyst had warned months ago the price will head back to US$100/bbl this year. Certainly looks that way.

The Aussie is unmoved at US$0.6383.

Today

The SPI Overnight closed down -35 points or -0.5%.

Trade numbers from Australia and China today, as noted.

Aside from BHP, today’s long ex-div list includes biggies from the ASX ((ASX)), AUB Group ((AUB)), Perpetual ((PPT)) and Super Retail ((SUL)).

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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