The Overnight Report: Getting Lofty?

Array
(
    [0] => Array
        (
            [0] => ((NAN))
            [1] => ((PLS))
            [2] => ((NST))
            [3] => ((FMG))
            [4] => ((MIN))
            [5] => ((STO))
            [6] => ((RMD))
        )

    [1] => Array
        (
            [0] => NAN
            [1] => PLS
            [2] => NST
            [3] => FMG
            [4] => MIN
            [5] => STO
            [6] => RMD
        )

)

This story features NANOSONICS LIMITED, and other companies.
For more info SHARE ANALYSIS: NAN
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

On the Rocks

After three days of running hard, the ASX200 pulled back yesterday, or at least most of it did. The index managed to close square thanks to a 1.3% gain for the materials sector.

The index opened up 22 points but immediately saw selling, to be down -14 points at lunch. It recovered into the afternoon, having bounced squarely off the 7500 mark. Whether or not the government’s announced stage 3 tax cut expansion had anything to do with it is debatable.

The Aussie bond yield rose 4 points yesterday, as the US equivalent continues to creep back up. This, and the three-day run, were likely sufficient triggers to take profits in the likes of discretionary (-0.7%), staples (-0.7%), banks (-0.4%) healthcare (-0.8%), industrials (-0.2%) and technology (-1.2%).

Healthcare tech company Nanosonics ((NAN)) was the day’s train wreck, down -33.4% on a profit warning.

Real estate and utilities (both +0.9%) bucked the trend, but balancing the market yesterday were the miners. The iron ore price rose on Tuesday and again yesterday following China’s announced stock market support, while traders responded to higher base metals prices overnight.

Even lithium miners found buyers, buoyed by a strong quarterly report from Pilbara Minerals ((PLS)) and, maybe, bold hopes the lithium price may be near a bottom.

Gold miners were also in favour, with Northern Star Resources ((NST)) rising 6.0% on its quarterly report. The gold price is unfortunately down -US$15 overnight.

Energy continues to tread water, actually showing a change of 0.00% yesterday.

If we’re looking to gauge the state of the Australian economy at present, outside of housing a cozzie livs, Judo Bank’s flash estimates of January PMIs yesterday are interesting.

The composite (manufacturing & services) PMI rose to a four-month high; to 48.1 from 46.9, so still in contraction.

The services PMI rose to a five-month high; to 49.2 from 45.5, so ditto.

The manufacturing PMI rose to an eleven-month high, to 50.3 from 47.6, so ray!

Pity we’re a services economy (outside of rocks).

US yields have ticked up again last night but it's not yet upsetting Wall Street again, albeit it's all about tech. Our futures are nevertheless up 18 this morning ahead of the long weekend.

Could be a quiet afternoon.

Upstream

The S&P500 marked its fourth new high last night, modestly, as the Nasdaq continues to surge ahead. Helping to drive sentiment on the day was a 10.7% gain for Netflix on its earnings result.

Microsoft climbed again, and did manage to clip the US$3trn market cap level intraday, but then fell back. This may have been a psychological trigger for stocks, particularly Big Tech, to ease into the close.

Softer demand than expected for an auction of five-year Treasury bonds had the US ten-year yield gaining another 4 points to 4.18%.

Most of the Mega Techs report earnings next week.

Tesla has reported this morning after the bell, and is currently down around -3%.

Also reporting was IBM, which is up 5%.

While we’re talking PMIs, flash estimates of the US versions released last night beat economist expectations.

Manufacturing increased to 50.3 from 47.9, while services rose to 52.9 from 51.4. These moves are also cited as impetus for higher bond yields.

The US is also a services economy, but having sent most of its manufacturing capacity overseas this century (to China, for example), covid supply disruptions, and geopolitical tensions, have led to a desperate race to bring manufacturing back home.

Especially for computer chips.

There are more big name US stocks to report over the next couple of nights, before we get to the Megas next week.

Commodities

I’m still interested to see how stabilising the stock market will boost Chinese steel production, but we’ll take it.

That rise in US bond yields took the wind out of gold.

Oil prices remain the biggest risk to central bank policy this year.

The Aussie is up slightly at US$0.6582.

Today

The SPI Overnight closed up 18 points or 0.2%.

The US will see a first estimate of December quarter GDP tonight, along with numbers for durable goods and new home sales.

Fortescue Metals ((FMG)) provides a quarterly today, as do Mineral Resources ((MIN)) and Santos ((STO)), among others.

ResMed ((RMD)) reported earnings this morning. 

An early response from RBC Capital:

[ResMed] "delivered a good operational result with revenue and gross profit (non-GAAP) coming in 1% and 3% respectively ahead of consensus expectations. Operating expenses came in slightly lower which led to a 6% beat at non-GAAP income from operations.

"Reported earnings were lower than expectations as the company incurred [US]$64m of restructuring costs and [US]$6m of costs associated with the masks & magnets safety notification.

"Device revenues in both the Americas and RoW exceeded consensus numbers, while Masks & Accessories in both the Americas and RoW were a slight miss.

"We expect the stock price to be well supported given the solid sales growth and improvement in gross margins during this quarter."

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.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's – see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms