The Overnight Report: Picking Bottoms

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            [1] => ((AMC))
            [2] => ((COL))
            [3] => ((EDV))
            [4] => ((MN))
            [5] => ((WOW))
            [6] => ((BHP))
            [7] => ((CBA))
            [8] => ((FMG))
            [9] => ((STO))
            [10] => ((TLS))
            [11] => ((WDS))
            [12] => ((BEN))
            [13] => ((ORG))
            [14] => ((RHC))
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            [17] => ((BOE))
            [18] => ((SUN))
            [19] => ((NCK))
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            [5] => WOW
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            [7] => CBA
            [8] => FMG
            [9] => STO
            [10] => TLS
            [11] => WDS
            [12] => BEN
            [13] => ORG
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            [19] => NCK
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This story features AMPOL LIMITED, and other companies.
For more info SHARE ANALYSIS: ALD
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Rinse & Repeat

It was only half the magnitude, and a little bit choppier in school holiday-thin trading, but yesterday the ASX200 posted a near perfect repeat performance of Friday’s Lazarus comeback. The index opened down -46 points and tracked a (mostly) direct path to a flat close.

The close included a 10 point kicker after the bell on a market-on-close buy order.

It is clear the buyers are determined the market has seen a near term bottom and all things equal should now track back up again. One factor supporting this possibility is a rush of dividends payable later in the week.

We recall that in early September, general macro weakness was exacerbated each morning by a run of ex-dividends that handicapped the index from the opening bell, which led to particularly weak, if not somewhat misguided, sentiment. But dividends are a zero-sum game, and from tomorrow that money begins to flow back into the market, as the cash is paid and reallocated back into the market.

There have already been a small handful of dividends payable but tomorrow sees cash back from Ampol ((ALD)), Amcor ((AMC)), Coles Group ((COL)), Endeavour Group ((EDV)), Mineral Resources ((MN)) and Woolworths Group ((WOW)), just to name some of them.

Thursday it's BHP Group ((BHP)), Commonwealth Bank ((CBA)), Fortescue Metals ((FMG)), Santos ((STO)), Telstra ((TLS)) and Woodside Energy ((WDS)); all on the same day, and again that’s not all of them.

Friday continues with Bendigo & Adelaide Bank ((BEN)), Origin Energy ((ORG)) and Ramsay Health Care ((RHC)) among the number. There are more to flow in October, but this week – three days – is the real cashback bonanza.

Only two sectors closed not in the green yesterday, being the not insignificant materials (-0.7%) and banks (-0.2%). The fact all other sectors rallied but the index only rose 7 points rather sums up Australia’s lack of large cap diversity.

Materials fell on a weaker iron ore price but less influential in the sector are the uranium hopefuls, which had a solid session as the spot uranium price continues to surge. Deep Yellow ((DYL)) rose 13.2%, Paladin Energy ((PDN)) 6.1% and Boss Energy ((BOE)) 5.1%. Of those, only Paladin is in the ASX200.

Coal prices also led energy higher (+0.8%) as oil prices stall.

Technology won the day (+1.9%) and indeed all rate-sensitive sectors put on good gains after having lagged on Friday, although Aussie yields fell back only -3 points. Communication services rose 1.2%, discretionary, real estate and utilities each rose 0.9%, and staples gained 0.8%.

Healthcare managed 0.2%.

The bad news is the US ten-year jumped 10 points last night. The S&P500 closed up 0.4% nonetheless, but it seems the futures traders don’t share equity investors newfound enthusiasm, down -7 this morning.

Against the Tide

Wall Street, too, appears to be finding a base as investors look through to the end of seasonally weak September. The S&P500 last night posted its first positive session in five.

The rally came despite the US ten-year yield jumping 10 points to 4.54%, confounding commentators who could find no reason to justify such bond selling, and against the usual run of play which has yield spikes prompting equity selling.

And 4.5% had been considered the next line in the sand.

The other factor Wall Street appears to be taking in its stride is the all but inevitable government shutdown from Sunday. The Republicans are yet to agree among themselves let alone negotiate with the Democrats with only five more days to deadline.

Wall Street has seen shutdowns before and has not panicked, but the impact on consumer spending of public servants not being paid is an issue.

Another factor to consider, noted by the Fed, is if the shutdown runs for some time, there will be no data available for a data-dependent FOMC to make its next policy call. At least that’s not until November.

Meanwhile, the Hollywood writers’ strike looks set to end with a deal being struck with the studios, which boosted relevant media stocks last night, although actors are still in the dark.

Otherwise, the autoworkers strike continues to grow as the UAW gradually turns the screws, with auto facilities in 20 different states now shut down, albeit only three are final assembly plants. President Biden is meeting with strikers this week which will be interesting, as workers blame Biden for the cost of living crisis.

Last night brought to an end, for now, the sell-off last week driven by a hawkish Fed, and pundits remain split over whether a recession will soon eventuate, on 525 points of hikes and the lag factor, or whether a landing can be soft, or whether a “rolling recession” has already been in play.

If we get can safely past this week’s economic data, and into October, which despite 1929 and 1987 is seasonally a more positive month, there should be some relief before the September quarter earnings season tells the real tale in a couple of weeks’ time.

Commodities

Chinese property developer Evergrande plunged over -20% yesterday after scrapping its debt restructuring plans, likely weighing on commodity prices.

The Aussie is down -0.3% on US dollar strength at US$0.6425.

Today

The SPI Overnight closed down -7 points.

The US will see data for consumer confidence, house price and new home sales tonight.

Suncorp Group ((SUN)) holds its AGM today.

Nick Scali ((NCK)) goes ex-dividend.

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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