The Overnight Report: And Breathe

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            [0] => ((LOV))
            [1] => ((ORG))
            [2] => ((IRE))
            [3] => ((ING))
            [4] => ((CSR))
            [5] => ((IVC))
        )

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            [0] => LOV
            [1] => ORG
            [2] => IRE
            [3] => ING
            [4] => CSR
            [5] => IVC
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This story features LOVISA HOLDINGS LIMITED, and other companies.
For more info SHARE ANALYSIS: LOV
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

I Hear You Knocking

The ASX200 spent all day yesterday knocking on the door of resistance at 7000, constantly being sent away, before finally breaking through late afternoon, only to fall back again. The technical level provided an ideal opportunity to take profits after last week’s rebound rally.

The 0.3% move for the index looked underdone compared to 0.9% for the S&P500 on Friday night, but there will have been caution ahead of today’s big event – the rate decision.

With Wall Street flat overnight, thus providing no further impetus today, the question is as to whether confirmation of an RBA hike will send the market spiralling back down again, or whether expectation of another hike is sufficiently priced in to make the decision moot.

There’s no doubt that if the RBA were to pause, we’d be…ah… off to the races.

Movement among sectors yesterday was relatively benign, the one exception being another 1.4% jump for healthcare, as the big names continue to disregard the surge in the Aussie and fight back from a weight-loss scare which analysts saw as overdone.

Energy was the worst performer in falling -1.0% on lower oil prices.

Discretionary fared well (+0.6%), including a 5.1% jump for the ever-popular Lovisa Holdings ((LOV)), and with bond yields steady.

Utilities jumped back (+0.5%). The stand-off between major Origin Energy ((ORG)) shareholder AusSuper and the bidding consortium is becoming "interesting" after media suggestions talks had begun to see AusSuper join the consortium, but it turns out AusSuper continues to lift its equity stake. 

The banks were sturdy (+0.4%) ahead of the RBA and all other sector moves were not worth worrying about.

Winning stock on the day was, unusually, Iress ((IRE)), which rose 8.3% after Ord Minnett put out a positive report on market service providers.

Outside of Lovisa and Iress, the other three top five index winners were gold miners, and unfortunately the gold price has fallen back again overnight.

With no motivation from Wall Street, the market will likely be quiet this morning and up to the RBA release. US bond yields bounced back overnight which might be an issue, hence our futures are down a cautious -11 points this morning.

Consolidation

That Wall Street should take a breather last night following last week’s surge is of little surprise. The only surprise is that indices still closed (modestly) higher despite the US ten-year yield bouncing back 10 points on profit-taking.

The indices opened higher in the morning but soon met stock profit-taking, yet fought back quietly in the afternoon.

With not much of note on the economic calendar this week and the bulk of the earnings season now past, there is little in the way of a catalyst following the rebound.

With 81% of S&P500 companies having now reported, 82% have posted a beat on earnings and 62% on revenues, according to FactSet. However, up to last week, beats were met with little reward. The problem is December quarter guidance.

Some 60% of reporting stocks have seen downward earnings forecast revisions post result.

What will be in focus this week is auctions of all of those Treasury bonds, and how the buyers, with yields now significantly lower than a week ago, will respond to the volume.

Beyond that, next Tuesday’s October CPI release is a potential make-or-break.

Commodities

Not much to see here besides gold slipping faster on a bounce in US bond yields than it rose when yields collapsed, suggesting US$2000/oz is going to be a tough nut to crack.

After its meteoric surge on Friday night, the Aussie has fallen back -0.3% to US$0.6490, after its brief visit to 65.

Today

The SPI Overnight closed down -11 points or -0.2%.

RBA decision at 2.30pm, Victoria is closed.

China reports October trade numbers.

Following its earlier positive trading update, Inghams Group ((ING)) will hold its AGM.

CSR ((CSR)) and InvoCare ((IVC)) go ex-dividend (in the latter case, before bidding farewell).

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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