The Overnight Report: Bring It On

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(
    [0] => Array
        (
            [0] => ((WDS))
            [1] => ((STO))
            [2] => ((LOV))
            [3] => ((SIQ))
            [4] => ((MMS))
            [5] => ((BOE))
            [6] => ((HLI))
            [7] => ((CMW))
            [8] => ((GOZ))
            [9] => ((LNK))
            [10] => ((SGR))
            [11] => ((ORG))
            [12] => ((MYR))
            [13] => ((NIC))
        )

    [1] => Array
        (
            [0] => WDS
            [1] => STO
            [2] => LOV
            [3] => SIQ
            [4] => MMS
            [5] => BOE
            [6] => HLI
            [7] => CMW
            [8] => GOZ
            [9] => LNK
            [10] => SGR
            [11] => ORG
            [12] => MYR
            [13] => NIC
        )

)

This story features WOODSIDE ENERGY GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: WDS
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

Cautious

The ASX200 shot up an exuberant 32 points from the open yesterday, punching through the 7200 level, which has been technically significant all year, for the first time since mid-September. The index then became a bit frightened, and chopped its way back down to close at 7199.

It seems a good place to sit ahead of tonight’s US CPI data and Wednesday night’s Fed decision.

The best sector performer was energy, which rose 1.2%. While higher oil prices provided support, brokers pointed out yesterday the advantages for Woodside Energy ((WDS)) if it is to merge with Santos ((STO)), dependent on the price it has to pay. It could be a win-win, thus having fallen on the news on Friday, Woodside yesterday rose 1.5%, while Santos added another 0.6% to its 6% Friday gain.

Consumer discretionary was next best (+0.6%), despite 4 point gains in Aussie bond yields. Could it prove to be a better Christmas than feared as consumers struggle with cozzie livs? Lovisa Holdings ((LOV)) rose 3.0% to make the top-five index winners’ board.

Speaking of index components, yesterday salary packaging & novated leasing company Smartgroup Corp ((SIQ)) was promoted to the ASX200 and celebrated by pinching a South Australian government contract off McMillan Shakespeare ((MMS)). Smartgroup rose 7.4% and McMillan fell -1.0%.

Smartgroup joined uranium miner Boss Energy ((BOE)) and Helia Group ((HLI)), formerly Genworth Mortgage Insurance, in the ASX200 while Cromwell Property ((CMW)), Growthpoint Properties ((GOZ)) and Link Administration ((LNK)) were relegated to the minor leagues.

It has not been the best year for REITs, but 2024 is tipped as a potential comeback year.

Materials was the worst performer (-0.6%) as gold bulls throw in the towel and lithium miners resume their more familiar trend of plummeting. Yesterday’s top-five losers’ board was made up of a combination of gold and lithium names, along with Star Entertainment ((SGR)).

Star is now down -15% since the regulator warned earlier this month it was still at risk of losing its casino licence.

Utilities also fell -0.6%, but has been bouncing around of late on the Origin Energy ((ORG)) takeover-or-not story.

Other sectors were flat to mildly positive, with the banks up 0.2%.

Michele Bullock will speak today. Having left rates on hold this month, let’s hope she doesn’t play the Grinch with warnings about 2024.

Poised

Having decided on Friday night that a slightly stronger than expected jobs report was not such a bad thing after all, Wall Street pushed on again last night ahead of tonight’s CPI release.

There was no great commitment, but all three major indices closed higher, as did the Russell, and the Dow and S&P500 both hit new 52-week highs.

In terms of inflation expectations, it’s a bit of an each-way bet. Economists expect the headline CPI to have been flat in November, as it was in October, with lower oil prices keeping the lid on, while the core CPI is expected to rise by 0.3% in the month compared to 0.2% in October.

The increase is attributed to swings in volatile components such as used car prices and hotels.

Wednesday then brings the Fed decision, which is seen as a definite no-hike, and press conference, at which Jerome Powell will likely continue to fend off notions of rate cuts as early as March. What Wall Street will really be waiting for nonetheless is the quarterly dot plots – member expectations of rate changes ahead. Will we see cuts appear?

It was notable last night that the Nasdaq closed higher despite general selling across the Mega-Techs. It is clear investors are now quietly reducing positions in the runaway big names and switching in the the next tier down, which had mostly been left behind.

Nvidia, for example, tends to suck all of the oxygen out of the room but it’s not the only AI chipmaker in town. Nvidia dropped -1.9% last night but Broadcom rose 9%.

Despite two Treasury bond auctions last night being underwhelming, US bond yields were steady ahead of the CPI.

In an interesting move, department store chain Macy’s jumped 19.5% last night on news of a private equity takeover bid.

We might note that having been returned to the boards by private equity late in 2009, Myer ((MYR)) has fallen -84%.

Commodities

Anglo-American cut its copper production guidance by -20% last night. One would have expected the opposite response in the price. Base metals just cannot gain any traction.

With no move in US yields or the US dollar, it appears, as I suggested, the gold bulls have simply given up.

The Aussie is steady at US$0.6565.

Today

The SPI Overnight closed up 13 points or 0.2%.

The NAB business confidence survey for November is out today along with the Westpac consumer confidence survey for December.

The RBA governor speaks.

US CPI tonight.

Nickel Industries ((NIC)) holds an EGM today.

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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