The Overnight Report: In The Blink Of Eye

Daily Market Reports | Feb 09 2024

This story features AGL ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: AGL

World Overnight
SPI Overnight 7595.00 0.00 0.00%
S&P ASX 200 7639.20 + 23.40 0.31%
S&P500 4997.91 + 2.85 0.06%
Nasdaq Comp 15793.72 + 37.07 0.24%
DJIA 38726.33 + 48.97 0.13%
S&P500 VIX 12.79 – 0.04 – 0.31%
US 10-year yield 4.17 + 0.06 1.46%
USD Index 104.14 + 0.08 0.08%
FTSE100 7595.48 – 33.27 – 0.44%
DAX30 16963.83 + 41.87 0.25%

By Greg Peel

The ASX200 shot up from the open yesterday, shot down again, bungled its way higher to be up 47 points at lunchtime, and once again drifted through the afternoon.

Earnings results are beginning to have an impact. Yesterday’s major winner was AGL Energy ((AGL)) which, one day after being accused of price gouging, jumped 10.3% on its result, lifting the utilities sector 1.0%.

Not something you see every quarter was a 6.3% lift for News Corp ((NWS)), despite its majority-owned business REA Group ((REA)) falling -4.2% on its own result, to be the worst index performer on the day. Communication services fell -0.3%.

That puts the News Corp result into perspective, given the drag its chunk of REA would have been on the numbers. Only over the last few quarters has News Corp posted beats from its ex-REA businesses. For years before, REA was about its only earnings driver.

Cochlear ((COH)) issued updated guidance yesterday ahead of its result, and jumped 4.4%. The five brokers monitored daily by FNArena all have Sell or equivalent ratings on the stock, since UBS downgraded on Tuesday (for another matter altogether).

Healthcare nonetheless fell -0.1%.

Mirvac Group ((MGR)) was another winner, rising 4.7% on its result, helping real estate up 0.7%.

The notable driver yesterday were nevertheless the banks, again, up 0.9%. The banks have also been accused of price gouging.

The banks, real estate and technology (+1.2%) all rose despite a tick up in bond yields, which, now that we’re in results season, might take a back seat for a while.

Materials sat it out yesterday, for once, but outside the index Syrah Resources jumped 20% on no news. As of last week the stock was 16% shorted.

The energy sector was down -0.5% yesterday. Oil prices jumped over 3% last night.

The consumer sectors organised a swap, with discretionary up 0.4% and staples down -0.4%.

The first week of February has provided a taste of what’s to come, with the result season set to step up a gear next week. In the meantime, the S&P500 is knocking on the door of yet higher highs, trying to push through 5000.

On yesterday’s close, the ASX200 needs another 0.8% to reach the prior high.

Almost

In the last minute of trading last night, for the blink of an eye, the S&P500 hit 5000. It then closed at 4997.9.

The index traded up to the same level on Wednesday night, and spent all past night trying to penetrate the milestone, but to no avail. Not helping were only minor moves in the Mega Caps, up or down. But with all talk of Wall Street being dangerously concentrated in what is now being called the AI5 (so long Mag7), the Russell 2000 small cap index last night rose 1.4%.

Perhaps 5000 is the point at which traders are deciding the Mega Techs have run far enough for now, bearing in mind all bar Nvidia have reported earnings. It’s an opportunity to trim holdings and switch into “value” elsewhere – the forgotten stocks, and small caps.

Positions no doubt need to be trimmed anyway by portfolio managers as their holdings in the Mega Techs push further above desired weightings. Chip stocks, ex-Nvidia, were on the move up last night.

Among other individual names, Disney jumped 11.5% on an earnings beat and increased guidance.

PayPal fell -11.2% on Its earnings.

BNPL leader Affirm was tipped to have posted a strong holiday quarter, given BNPL activity in general surged over the period. The stock ran up 10% last night ahead of its aftermarket earnings result. It’s currently down -14%.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz) 2033.00 – 0.50 – 0.02%
Silver (oz) 22.54 + 0.38 1.71%
Copper (lb) 3.70 – 0.04 – 0.99%
Aluminium (lb) 1.00 + 0.00 0.13%
Nickel (lb) 7.25 + 0.06 0.82%
Zinc (lb) 1.05 – 0.03 – 3.11%
West Texas Crude 76.46 + 2.43 3.28%
Brent Crude 81.83 + 2.51 3.16%
Iron Ore (t) 129.07 + 2.04 1.61%

Israel has outright rejected Hamas’ ceasefire and hostage swap proposal. A militant leader in Iraq was last night killed by US forces.

These are the reasons given for the pop in oil prices last night.

Meanwhile, yesterday’s Chinese inflation data showed a -0.8% fall in January CPI when -0.5% was forecast. The PPI fell -2.5%, slightly “better” than the forecast -2.7%, but clearly the Chinese economy is in serious retreat. Too much inflation is bad. Outright deflation is worse.

The Aussie is down -0.4% at US$6493.

Today

The SPI Overnight closed unchanged.

The RBA governor will provide a testimony to parliament today.

China begins its week-long Lunar New Year holiday.

Boral ((BLD)) and Megaport ((MP1)) report earnings.

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

The Australian share market over the past thirty days…

Index 08 Feb 2024 Week To Date Month To Date (Feb) Quarter To Date (Jan-Mar) Year To Date (2024)
S&P ASX 200 (ex-div) 7639.20 -0.78% -0.54% 0.64% 0.64%
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
APE Eagers Automotive Downgrade to Neutral from Buy Citi
COH Cochlear Downgrade to Sell from Neutral UBS
CSR CSR Downgrade to Hold from Add Morgans
Downgrade to Sell from Buy UBS
GUD G.U.D. Holdings Downgrade to Neutral from Buy Citi
ING Inghams Group Upgrade to Buy from Hold Bell Potter
LGI LGI Upgrade to Buy from Hold Bell Potter
PPM Pepper Money Downgrade to Neutral from Buy Citi
PWR Peter Warren Automotive Downgrade to Neutral from Buy Citi
SLR Silver Lake Resources Downgrade to Neutral from Outperform Macquarie

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.

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CHARTS

AGL BLD COH MGR MP1 NWS REA

For more info SHARE ANALYSIS: AGL - AGL ENERGY LIMITED

For more info SHARE ANALYSIS: BLD - BORAL LIMITED

For more info SHARE ANALYSIS: COH - COCHLEAR LIMITED

For more info SHARE ANALYSIS: MGR - MIRVAC GROUP

For more info SHARE ANALYSIS: MP1 - MEGAPORT LIMITED

For more info SHARE ANALYSIS: NWS - NEWS CORPORATION

For more info SHARE ANALYSIS: REA - REA GROUP LIMITED