The Overnight Report: All Over Now?

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            [1] => ((AUB))
            [2] => ((SGR))
            [3] => ((CSR))
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            [1] => AUB
            [2] => SGR
            [3] => CSR
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This story features NEW HOPE CORPORATION LIMITED, and other companies.
For more info SHARE ANALYSIS: NHC
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

It’s beginning to look a lot like Christmas

We take the turn into November, and we’re off and running. The Australian market suffered weak sentiment through October, and Monday night’s bounce on Wall Street was met with a lack of any relief, thanks to China.

Another Wall Street rally on Tuesday night looked like going the same way yesterday when the ASX200 opened above 6800, and faltered yet again. But just before midday the tide turned, and in they came.

Overnight Powell delivered, and another rally on Wall Street has our futures up 52 points this morning, following a similar close yesterday. The July high is now only a little over 600 points away.

With bond yields steady yesterday, only staples (flat) and utilities (-0.1%) missed the boat. Materials bounced back (+1.1%) after being Tuesday’s wet blanket, and the banks helped out (+0.4%).

This allowed real estate to lead off heavily oversold conditions (+1.9%), and the ever-volatile healthcare sector had a good day (+1.5%).

Discretionary (+1.1%) and industrials (+1.1%) chimed in, and despite falling oil prices, and a -4.5% drop in New Hope Corp ((NHC)) to be the worst index performer, energy contributed (+1.1%).

Technology and communication services were both a bit tentative (+0.4%), but it should be their turn today after last night’s Nasdaq move. Tonight’s Apple result might keep buyers on edge nevertheless.

The rally came even as the independent Caixin PMI confirmed the official drop into contraction for China’s manufacturing sector.

Australian dwelling approvals fell a weaker than expected -4.6% in September, following falls of -8.1% in August and -7.2% in July, and a year on year fall of -20.6%.

Is there any chance Bullock might reconsider a rate hike next week? Powell has paused again. Probably not, with the IMF suggesting another hike is needed. Mind you, the way the IMF operates, they probably still think it’s 2022.

We’ll see housing finance and trade data today.

All we need is just a little patience

Ahead of the afternoon Fed release, the US Treasury announced next week it will sell US$48bn of US three-year bonds, US$40bn of tens and US$24bn of thirties for a total of US$112bn, up from US$103bn last quarter.

This is in line with expectations. Sighs of relief all round, and Wall Street resumed its rebound rally ahead of the Fed.

The November policy statement was so similar to September’s that one commentator noted even the commas were in the same place. The Fed paused, again, as expected.

The takeaway from the press conference is the FOMC has now moved to a 50/50 stance. There may be, down the track, a reason to hike again, if inflation doesn’t behave itself. But for now, financial conditions have tightened (higher bond yields), the dollar is stronger, equities are lower, and all “could potentially affect future monetary policy decisions”.

But the tightening must prove to be “persistent”.

This might be a nod to “stronger for longer”, but for once there was no mention of “more work to do”.

The market agrees. This was the most dovish Powell has been since the whole shemozzle kicked off.

Buy.

The ten-year yield fell -9 points to 4.79%. The two-year fell -11 points to below 5%.

Big Tech led the way (Nasdaq up 1.6%), but buying was broad-based.

Wall Street has posted its best three-day gain since April.

We still need Apple to deliver tonight, but arguably Friday’s jobs report is now not quite as critical as it might have been.

Season’s Wishes.

As for the new year well…a recession in the US is still widely assumed. It could still all go horribly wrong.

Commodities

For some reason we did not get a print for November delivery iron ore futures yesterday. All latter months rose by a little over US$2/t.

It is waning global demand, offsetting any war-generated supply concerns, that has oil prices trending downwards.

The Aussie is up 0.9% at US$0.6392. The Fed appears to be done while Bullock has her finger on the trigger.

Today

The SPI Overnight closed up 52 points or 0.8%.

We see numbers today for September housing finance and trade.

AUB Group ((AUB)) and Star Entertainment ((SGR)) are among those holding AGMs today.

CSR ((CSR)) reports earnings.

US earnings season calendar: https://www.ii.co.uk/investing-with-ii/international-investing/us-earnings-season

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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