The Overnight Report: Song Remains The Same

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            [1] => ((STO))
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            [3] => ((WOW))
            [4] => ((COL))
            [5] => ((CTT))
            [6] => ((MGR))
            [7] => ((TCL))
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            [7] => TCL
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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

Let’s call the whole thing off

The futures said up 55 yesterday morning, the ASX200 hit up 64 at lunchtime and then dropped sharply before recovering a little to the close. The volatility of recent sessions continued, but looks like coming to a screaming halt today. The S&P500 was up 0.8% last night and our futures are up 3 points this morning.

There were two notable news items in the market yesterday.

Firstly, the proposed merger between Woodside Energy ((WDS)) and Santos ((STO)) has been abandoned. Sighs of relief at the ACCC. Woodside rose 0.5% and Santos fell -5.8%, so it’s clear who was considered the winner in the deal. The energy sector dropped -1.0% to be the worst performer on the day.

Secondly, former ACCC boss Allan Fels declared supermarkets, banks and AGL Energy ((AGL)) to be hotbeds of price gauging. Woolworths ((WOW)) fell -0.8%, Coles ((COL)) rose 0.4% and staples closed flat. Financials put on 0.3% collectively, and AGL rose 1.8%, leading utilities up 1.7% to be the best performer.

In other news, online luxury goods retailer Cettire ((CTT)) jumped 25.2% on its result. No issue with cossie livs at the Big End of town. Discretionary fell -0.7% to be second worst performer but Cettire is not in the ASX200.

Communication services was the only other sector to close down (-0.4%) while gains were posted in real estate (1.1%), along with technology, industrials and healthcare (+0.6-0.7%). The Aussie ten-year yield fell -4 points.

Materials finally made a comeback (+1.1%). China’s commerce ministry said yesterday it would encourage the New Energy Vehicle (NEV) industry to “actively” respond to foreign trade restrictions and cooperate with overseas firms, amid a European probe into Chinese subsidies for the sector.

Is that stimulus? It might be a way of kicking Tesla while it's down.

Having reached a new all-time high, the index is struggling for direction, currently running from one side of the ferry to the other. The fact the S&P500 was up 0.8% last night and our futures could manage only 3 points likely reflects the fact last night was another Mega Tech session on Wall Street, and Australia is just not in that game, either at all, or in terms of scale.

We sell rocks to China.

At the Gates

As the Mega Techs press ever higher, comparisons are once again being made on Wall Street with the 1999 dotcom bubble. But many scoff at the notion.

The dotcom bubble was driven by a plethora of start-ups with little more than a domain name and dream. PE ratios were in the triple-digits, but most had no E at all. There were bigger names among them, and they too were scuttled in 2000, but they remain familiar – Microsoft, Amazon, Apple, Nvidia.

Today those companies make up four of the Mag7, along with Meta, although Tesla is now being excluded and Apple is dodgy as well, despite being worth around US$3trn. For the remainder, PE ratios are right up there but only in double-digits (except Amazon), and they are cash-generating machines.

They are also leading the AI charge, and analysts agree, most every industry is now preparing to ramp up capex to join the AI world, or perish.

Can Wall Street simply continue to rally on the Mega Techs alone? Lack of breadth is again a concern. Last night the S&P500 knocked at the gates of 5000, coming with -0.1 of a point, before balking.

The S&P bottomed in the GFC at 666. Since then, it’s been all about tech.

Not so surprisingly, cyber security firms were in the spotlight last night on solid earnings results.

Back in the old school, Ford rose 6% on earnings.

Disney has reported earnings after the bell, and is up 7%.

Alas, every silver lining has a cloud. In an all-too familiar result response, Snap fell -34%.

None of the above companies have Australian equivalents.

Commodities

Not much excitement on the news out of China. Let’s see how our lithium stocks go today.

The oils are creeping disturbingly higher.

The Aussie is little changed at US$0.6520.

Today

The SPI Overnight closed up 3 points.

China reports January inflation data today.

AGL Energy, Mirvac Group ((MGR)) and Transurban ((TCL)) are among those companies reporting earnings.

FNArena's Corporate Results Monitor: https://fnarena.com/index.php/reporting_season/ (with calendar).

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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