The Overnight Report: Beginning To Look A Lot Like Christmas

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            [2] => ((VCX))
            [3] => ((MGR))
            [4] => ((ORG))
            [5] => ((PMV))
            [6] => ((TUA))
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            [4] => ORG
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            [6] => TUA
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This story features IRESS LIMITED, and other companies.
For more info SHARE ANALYSIS: IRE
The company is included in ASX200, ASX300, ALL-ORDS and ALL-TECH

Afternoon Delight

Yesterday the ASX200 broke its week-long trend of positive starts and fading afternoons. The index opened up around 10 points, faded through the morning to be down -10 points at lunchtime, then closed up 52.

I suspect some smoke and mirrors. Plus the quarterly rebalancing of MSCI indices would have had an impact too.

18 of those 52 points came after the bell on market-on-close orders. It was the last day of the month.

The S&P500 has closed up 0.4% overnight, yet out futures are down -9 points this morning. The ten-year yield was up 5 points yesterday.

The big mover were the banks, suddenly up 1.2%. Staples were up 1.2% industrials up 1.4%. These aren’t everyday moves outside a raging bull market.

Technology rose 1.3%, but that included a 14.9% pop for market data company Iress ((IRE)), after it upgraded guidance. Given its weak FY23 result in August, this represented a significant turnaround.

Materials rose 0.5% on iron ore coming back. There was also good news for Australian nickel producers after the US rejected a request from Indonesia to access significant subsidies under the Inflation Reduction Act.

Discretionary managed only 0.3% despite Harvey Norman ((HVN)) adding another 4.5% to Wednesday’s gains. Real estate closed flat after a solid week and despite a 4.4% gain for Vicinity Centres ((VCX)) and 4.6% for Mirvac Group ((MGR)). So overall a bit of weakness there.

Energy was one of only two sectors to close lower (-0.3%) ahead of last night’s OPEC meeting while utilities dropped -1.0% after Origin Energy ((ORG)) rejected the Brookfield consortium’s plan B offer.

Adding to the smoke and mirrors argument were China’s November PMIs. Manufacturing slipped further into contraction at 49.4, down from 49.5, while services is under threat at 50.2, down from 50.6.

Locally, the September quarter capex data also disappointed, up a lower than expected 0.6%, to provide a drag on next week’s GDP result.

In other words, there wasn’t really much to cheer about yesterday, although it would appear the market cheered anyway.

We’ll see what happens today. It’s a good day for a Christmas lunch.

See Above

Heading into the final hour of trade on Wall Street this morning, the Dow was up over 300 points, the Nasdaq was down around -0.7% and the S&P500 was flat in the middle. In the last half hour, everything surged. Wall Street had been flat all week.

The bulk of the Dow’s gain was a 9.4% jump for customer relationship management company Salesforce, which had reported earnings in Wednesday night’s aftermarket.

The Nasdaq responded to the bounce-back in yields, with the ten-year up 8 points.

Yet the yield increase seemed incongruous, given core PCE inflation – the Fed’s preferred measure – rose only 0.2% in October to take the annual rate down to 3.5% from 3.7%, providing a further sign of cooling.

And weekly new jobless claims increased last week, including a surge in continuing claims, suggesting some easing in the labour market.

The New York Fed president suggested the central bank has raised interest rates to, or near, their peak.

Clearly the last day of the month brought profit-taking in bonds, after the ten-year had fallen around -75 points from its 5% peak. The Nasdaq had posted its largest monthly gain since July last year, so profit-taking was hardly surprising there either.

Still, there was a rush to window-dress at the death, and prepare for the traditional December Santa Rally (although specifically a Santa Rally starts on December 24).

The Silly Season is upon us.

Commodities

There was a bit of a surge back in the US dollar index last night as well (+0.7%), after a month of weakness due to falling bond yields. This weighed on metals prices.

Iron ore has a habit of ignoring the currency.

At its meeting last night, OPEC-Plus announced production cuts that would total more than -2m barrels a day, although that includes the extension of a -1mbd cut by Saudi Arabia and a -300,000bpd reduction in crude supplies by Russia. Russian fuel exports will also be reduced by -200,000bpd starting in January.

Oil prices initially jumped on the news, until someone pointed out the cuts are “voluntary”.

OPEC members have a history of ignoring agreed production quotas even when they’re mandatory. Thus prices spun around and fell, basically because no one believes the cuts will be adhered to.

Despite the big bounce in the greenback, the Aussie is down only modestly at US$0.6603.

Today

The SPI Overnight closed down -9 points.

Locally we’ll see November house prices today.

The world will reveal November manufacturing PMIs.

Fed chair Jerome Powell will speak tonight.

Premier Investments ((PMV)) and Tuas ((TUA)) hold AGMs.

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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