The Overnight Report: If You’re Not In, You’re Out

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            [4] => ((INR))
            [5] => ((AKE))
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This story features NEUREN PHARMACEUTICALS LIMITED, and other companies.
For more info SHARE ANALYSIS: NEU
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

Wild Old Session

It seems the silly season is well and truly upon us, if yesterday’s action on the ASX is anything to go by.

It was an interesting start yesterday with Wall Street flat overnight but our futures showing down -74 points, suggesting a possible large sell order was going to hit the market. In the first ten minutes the index fell -35 points, but the selling didn’t happen.

So by late morning, we were right back where we started. By 2pm, we were right back at the low. Did the seller hold fire, waiting for the computers to play their games from the open, and a better opportunity later in the session? We can only speculate, and assume the selling was completed, allowing the buyers to step back in for a late run to -16 at the close.

The next piece if “silliness” comes with a look at the top movers to the upside among ASX300 stocks. Adbri ((ABC)), up 31.3%, Neuren Pharmaceuticals ((NEU)), 29.5%, Link Administration ((LNK)), 27.1%, Tabcorp ((TAH)), 23.1%, ioneer ((INR)), 21.7%.

Adbri received a full takeover offer from major shareholder the Barro family. Biotech Neuren posted positive trial results, Link Administration received a takeover offer from Mitsubishi, Tabcorp was granted its Victorian licence, and ioneer, no idea. No announcements, no news.

Has anyone pointed out we all go on holidays next week?

To that point, the next bit of “silliness”. Take out the two big ASX200 movers, Neuren and Tabcorp, and it was basically a “sell everything” day. Aside from healthcare and discretionary both closing up 0.2%, and materials closing flat, all sectors were in the red.

This despite Aussie bond yields falling -8 points across the curve. Real estate was the worst performer (-1.4%). Staples and utilities were down -0.8%. The banks gave back -0.2%.

We might assume, aside from whether there was a big sell order in there or not, that traders are beginning to square up ahead of Christmas, following a solid run-up from November.

Next week the ASX is only open from Wednesday to Friday, and will be attended by three men and a dog. One guy is only there to feed the dog. There follows a four-day week in the new year, and it’s not until the next week that volumes begin to be restored.

So perhaps best to lock in profits and have a relaxing break.

This might be again evident in Wall Street going back into buying mode last night — the S&P500 rose 0.5% — but our futures are up only 6 points this morning.

The last economically influential release ahead of Christmas will be today’s RBA minutes. But being pre-Fed pivot, I’d consider them outdated.

Christmas Rush

What happened last night that would send the S&P500 up 0.5% and the Nasdaq 0.6%?

Nothing.

It’s just a genuine Santa Rally that’s getting more FOMO by the day. In its seven-week run to last Friday, the S&P gas gained 14%.

Over the course of 2023, retail investors withdrew -US$240bn from ETFs and mutual funds, in a year when S&P 500 is now up more than 25%. After being carted in 2022, investors, both retail and institutional, saw short term money market and Treasury bill yields on offer of 5% or more. Looked like a gift.

But now, yields have fallen some -100 points. Consensus has the US economy coming in for a soft landing. The market is pricing in several Fed rate cuts next year. If you’re not in equities, you’re missing out.

And it’s seasonal. Even if there is a blow-off in January, there is still upside on offer.

That’s the thinking anyway.

Consensus also suggests that while gains in the Mega Techs will likely be more muted from here, given 2023 rallies, it doesn’t mean a full-scale switch out of tech and into everything else. The big names drove up the Nasdaq last night. The Russell small cap fell, but only by -0.1%.

Helping to drive Wall Street into the new year is the fact Christmas is but a blip in the calendar in the US. It’s not even a public holiday – simply optional. Thanksgiving is the big holiday. So Wall Street will score a long weekend, but then it’s straight back down to business next week.

Commodities

Alas, our LME price source has been as yet unable to restore its systems post a cyber-attack.

Last night BP became the latest in a line of shipping companies, or companies that do a lot of shipping, to announce it will stop its tankers from entering the Red Sea. In not being able to access the Red Sea and Suez Canal, the trip from the Indian to Atlantic or vice versa will take four times as long, as ships sail around the bottom of Africa.

Hence oil prices are rising again. If the Middle East gets out of hand, the whole inflation narrative could be up-ended.

The US dollar is steady and the Aussie is but a tick higher at US$0.6704 – a four-month high.

Today

The SPI Overnight closed up 6 points.

The RBA minutes are out this morning.

The Bank of Japan holds a policy meeting today.

Allkem ((AKE)) has its first shareholder meeting with regard the Livent merger.

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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