The Overnight Report: Thanks

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This story features ORIGIN ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: ORG
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

No Interest

The ASX200 rose during the morning yesterday and fell back in the afternoon, but never really bothered the scorer. Volumes were low ahead of tonight’s US holiday.

Michelle Bullock didn’t exactly inspire investors yesterday when she spoke to a bunch of economists, suggesting, "The remaining inflation challenge we are dealing with is increasingly homegrown and demand-driven".

And that “more substantial monetary policy tightening is the right response to inflation that results from aggregate demand exceeding the economy's potential to meet that demand."

The RBA governor was ignored by the bond market, as yields didn’t move, but real estate was the worst performing sector on the day (-1.5%), followed by technology (-1.1%) and communication services (-1.0%). The consumer sectors were also weak.

The banks closed flat.

Best performer was utilities (+0.9%) as having fallen on Tuesday, Origin Energy ((ORG)) rose 1.7% ahead of today’s shareholder meeting regarding the Brookfield-consortium takeover, which, given AusSuper’s stake, is not expected to succeed.

Materials (+0.3%) and energy (+0.5%) again helped to balance out the index while healthcare (+0.3%) joined in. That despite Healius ((HLS)) falling -33.2% following a share placement intended to fix its balance sheet.

Another casualty on the day was wealth platform Praemium ((PPS)), which fell -35% after cutting earnings guidance by -30%. The stock is only an All Ord.

The winners yesterday were mostly gold miners.

After a brief moment in the sun on Chinese stimulus news, metals prices are all down overnight other than iron ore, which is defying gravity. Gold has also pulled back from the US$2000/oz mark, and the oils are down as well.

That might explain why, with the S&P500 up 0.5% overnight, our futures are down -12 points this morning. It’s not like other sectors are putting up their hands to do the heavy lifting at the moment.

While the ASX will likely again be quiet today ahead of tonight’s US holiday and early close on Friday, it is another Super Thursday for AGMs, thus the micro may dominate the macro.

Buy Anyway

Wall Street was in thankful mood last night despite any good reason to be so, given data releases.

Durable goods orders fell -5.4% in October when -3.1% was expected, although strip out planes and cars and orders were flat.

The Michigan Uni consumer sentiment index edged up to 61.3 from 60.4 but Wall Street was more focused on the inflation expectations number, with respondents suggesting inflation will be 4.5% next year, up from a 3.2% expectation of only a month ago. The current headline CPI is 3.2%.

Weekly new jobless claims fell to a five-week low of 209,000, having recently shown signs that, maybe, the labour market is easing, but it doesn’t look like it.

Having reported in Tuesday night’s aftermarket, Nvidia closed down -2.5% last night. The company substantially beat on revenues and earnings and raised guidance for the third quarter in a row; revenues tripled from the same quarter last year.

But can Nvidia keep it up? Wall Street is not so sure. And there is concern over US government bans on exporting high-level chips to China.

Mind you, -2.5% on a stock up 240% year to date is hardly earth-shattering.

Sam Altman is back at OpenAI, and all his minions are staying put.

The disagreement between Altman and the board is apparently that the board wants to maintain an altruistic bent for OpenAI – providing a service for the good of humanity – while Altman is more commercially-minded.

How could AI possibly harm humanity anyway?

Commodities

Beijing is talking up stimulus but any benefits are yet to be seen, and in the interim base metal spot prices have fallen below futures prices to imply a “contango”.

This occurs when short-term demand fails to match supply, and is currently the case for all the major LME base metals, as the global economy slows.

No problem for iron ore though.

Gold is never going to burst through US$2000/oz without a fight.

There is dissent among OPEC members, it would seem. OPEC-Plus was meant to have a meeting on Sunday to discuss production quotas but smaller members are disgruntled, and the meeting has been delayed for four days.

The Saudis and Russia are taking the brunt of production cuts at present but all members have their quotas (which they rarely stick to anyway). If smaller members are unhappy, the big guns may be forced to cut further to maintain the balance.

The oils were down as much as -4% last night before rebounding.

The Aussie is down -0.2% at US$0.6544.

Today

The SPI Overnight closed down -12 points or -0.2%.

There’s a very long list of AGMs today, including a lot of miners.

Virgin Money UK ((VUK)) reports earnings.

Origin Energy shareholders meet.

ALS Ltd ((ALQ)) goes ex-div.

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…

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