The Overnight Report: Stall Mode

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            [1] => ((TLS))
            [2] => ((WBC))
            [3] => ((NAB))
            [4] => ((ORI))
            [5] => ((AMC))
            [6] => ((NEC))
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            [1] => TLS
            [2] => WBC
            [3] => NAB
            [4] => ORI
            [5] => AMC
            [6] => NEC
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)

This story features JAMES HARDIE INDUSTRIES PLC, and other companies.
For more info SHARE ANALYSIS: JHX
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Is Today the Day?

6999.5. That’s where the ASX200 peaked yesterday before ultimately closing at 6995, and having been as low as 6967. Twice during the session the index had a go at the 7000 level, only to fall back again, before one final push to the close.

It’s been the theme of this week to date, and is currently feeling like a Ukrainian counteroffensive.

But, metals prices are, for once, up overnight, with the exception of gold. Oil is down again, and Wall Street has, again, provided no incentive. Yet our futures are up 28 points this morning.

Yesterday was a tale of Resources versus The Rest, with all sectors closing in the green bar energy (-0.2%) and materials (-1.1%).

Energy’s performance was relatively solid in the face of a big fall in oil prices, while gold provided the main drag on resources. All five of the top five index losers yesterday were gold miners, and the gold price has taken an even bigger tumble overnight.

It seems the world had become very long gold, as it has fallen precipitously away from US$2000/oz despite big falls in bond yields.

The materials result came even as building materials company James Hardie ((JHX)) knocked it out of the park with its quarterly earnings result plus forward guidance, jumping 13.8%.

Otherwise, the Aussie ten-year yield fell -11 points to 4.58%, and the two-year dropped -8 points to 4.22%, below the RBA’s new cash rate of 4.35%, and suggesting the market does not see the chance of another rate hike in December anymore.

Technology rose 1.9%, real estate 1.2%, industrials 1.1%, utilities 1.0%, and communication services 0.9%. The latter benefited from a 1.3% gain for Telstra ((TLS)), as the market anticipates more disgruntled customers will switch from Optus following yesterday’s nationwide crash.

Not that Telstra is a cleanskin in that department.

The consumer sectors were a little less enthused – discretionary up 0.5% and staples 0.4% — bearing in mind we still had a rate hike, and healthcare was also sedate (+0.4%) following its comeback rally.

The banks provided the anchor with a 0.7% gain, as three of the Big Four passed on the rate hike in full.

One drag from the open today will be Westpac ((WBC)) going ex-dividend. Otherwise, National Bank ((NAB)) reports earnings today.

A break of 7000 (with a close above) could spark a technical comeback rally, if Wall Street continues to behave itself.

Only Just

The S&P500 managed to extend its winning streak to eight days last night and the Nasdaq to nine, but only just, scraping across the line in the final minutes.

Once again it was Big Tech that led the market, while the Dow once again slipped.

Wall Street has clearly gone into stall-mode following last week’s big snap-back rally. Data have been thin on the ground this week and earnings results less influential, although Disney (Dow) has reported this morning in the aftermarket and is currently up 2.2%.

Wall Street awaits next week’s CPI data as being the next potential driver, either way, but before that, Jerome Powell will speak tonight. As to whether he has anything different say than what he said only a week ago is questionable, but we do note the “tight financial conditions” he referred to last week, as the Fed paused again, are now around -50 points less tight in ten-year bond yield terms.

Those tight conditions are behind a widespread belief the Fed is done hiking.

The S&P’s rally from the 4100 low has now extended to 6.3%, closing last night at 4382. The index broke down in a hurry when it fell through longstanding support at 4400, which now becomes resistance.

The Nasdaq is up 8.3% — its best run in two years.

The US ten-year yield fell another -5 points last night to 4.52% even as the Treasury’s sizeable auction of ten-year bonds was met with only average demand. Having closed the yield curve inversion gap into the teens when the ten-year hit 5%, having been -100 points at its peak, that gap has now blown back out to around -40 points.

Must be a recession coming.

Given a lack of other news I’ll note online broker Robinhood, the darling of the young meme stock traders back in the day, fell a not so merry -14% on its earnings result.

And I can’t let this one go unnoticed. Aptly named cloud-based restaurant software company Toast reported, and also fell -14%.

Commodities

Other than the fact base metal prices have been falling quietly for days, talk is Chinese stimulus could soon be making its mark. Yesterday the IMF raised its Chinese growth outlook.

Didn’t help oil.

Gold is now heading back towards US$1900/oz in a hurry and will probably need to consolidate before it finds any new incentive.

Clearly forex traders had also become a bit long Aussie on RBA expectations, as it’s down another -0.5% at US$0.6402 with the US dollar unmoved.

Today

The SPI Overnight closed up 28 points or 0.4%.

China reports inflation numbers today.

Aside from NAB, Orica ((ORI)) reports earnings.

Amcor ((AMC)) and Nine Entertainment ((NEC)) are two companies holding AGMs.

And don’t forget, Westpac goes ex.

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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