The Overnight Report: No Result

Array
(
    [0] => Array
        (
            [0] => ((IGO))
            [1] => ((BXB))
            [2] => ((MPL))
            [3] => ((BRG))
            [4] => ((VEA))
            [5] => ((QAN))
            [6] => ((SVW))
            [7] => ((ING))
            [8] => ((FBU))
        )

    [1] => Array
        (
            [0] => IGO
            [1] => BXB
            [2] => MPL
            [3] => BRG
            [4] => VEA
            [5] => QAN
            [6] => SVW
            [7] => ING
            [8] => FBU
        )

)

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

By Greg Peel

Not This Time

In the thick of ex-dividend season for the Australian market, the prior three sessions had seen the ASX200 open lower and continue lower in the morning, only reverse course in the afternoon as the buyers stepped in. But not yesterday.

Yesterday began in the same manner but an attempt to regain at least some ground to the close failed when the index was sold back down in the last hour. It seems investors were not game to take on last night’s US CPI release, critical to whether the Fed needs to do more.

It was notable that as the index fell through the morning the top five losers’ list included IGO Ltd ((IGO)), Brambles ((BXB)) and Medibank Private ((MPL)), all of which went ex. By the close, IGO retained top spot with a -7.6% fall but selling elsewhere had others, including Breville Group ((BRG)), which also went ex, further down the table.

Only energy (+0.1%) and utilities (+0.2%) managed to close in the green on oil price and coal price influence but selling in other sectors ranged from -0.4% for the banks to -1.6% for technology.

Industrials (-1.2%) and materials (-1.1%) included ex-divs while real estate fell -1.2% because it can, with little move in bond yields.

We recall that on Tuesday Viva Energy ((VEA)) fell over -7% after major shareholder Vitol prepared to sell $500m or more of Viva stock in a block trade (ie all in one go, no auction). Yesterday Viva fell another -2.7% as Vitol sold $714m, or 16% of market cap.

Qantas Airways ((QAN)) fell only -0.2% after losing its appeal to the High Court yesterday against a ruling that proved the company’s sacking of ground-workers during lockdowns was illegal. The stock has now fallen -17% since late July, and the bad man is gone now. Chance he’ll hand back his bonus? Feck all.

Last night’s CPI data came in mixed. After a volatile session the S&P500 closed up 0.1%. With the risk of a Wall Street sell-off now abated, buying should be able to resume locally today.

But the futures closed down -5 points this morning.

There is a long list of stocks going ex-div today; most of them are smaller names. The list nevertheless includes South32 ((S32), Seven Group ((SVW)), Inghams Group ((ING)) and Fletcher Building ((FBU)).

The good news is today marks the peak of ex-div season in terms of number of stocks each day. The season extends for another couple of weeks but daily numbers peter out from here.

Hot, But Not

The US headline CPI rose 0.6% in August to mark its biggest increase in 14 months. The annual rate rose to 3.7% from 3.2% in July when 3.6% was forecast. The core rate rose 0.3% in the month when 0.2% was expected. That looks bad.

But the annual core rate fell to 4.3% from 4.7% as forecast.

The Fed focuses on the core PCE inflation data but we get clues from the CPI. The Fed does not totally ignore the headline either, as if the cost of living impact on consumers didn’t matter.

Wall Street wasn’t quite sure how to respond to the numbers. It was up, then it was down, then it recovered to a flattish close. Bond yields fell, but only by a couple of points.

The bottom line is the CPI data have not shifted the balance away from an expectation the Fed will remain on pause next week. But nor has an assumption the November meeting remains “live” at this stage waned.

Following 525 points of the fastest rate hike cycle in history, the Fed now wants to take things slowly. It remains data-dependent, but is also cognisant of the need to allow those hikes to flow though the economy to assess the true impact.

The general view now is the Fed cash rate is at least close to peaking, and if there is another 25 points move coming in November, well it’s really no big deal. What does matter is how long the Fed will keep the rate at its peak before the pain becomes too much, and the first rate cut is needed.

Consensus has the Fed cutting next year. As to when, calls range from first half to mid-year to second half.

One point to note is the Fed’s quarterly projections, last published in June, had inflation (core PCE) not falling to the 2% target until late 2025. A new set of projections is due next week but this timeframe suggests the Fed is not going to rush into rate cuts anytime soon.

Unless something breaks.

Commodities

Nothing to see here.

The Aussie is little changed at US$0.6422.

Today

The SPI Overnight closed down -5 points.

We get August jobs numbers today, which could be keeping futures traders quiet.

The ECB holds a policy meeting tonight.

The US will see August PPI and retail sales data.

Today’s ex-divs as noted.

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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