The Overnight Report: Anticipation

Daily Market Reports | Feb 13 2024

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

World Overnight
SPI Overnight 7584.00 + 20.00 0.26%
S&P ASX 200 7614.90 – 29.90 – 0.39%
S&P500 5021.84 – 4.77 – 0.09%
Nasdaq Comp 15942.55 – 48.12 – 0.30%
DJIA 38797.38 + 125.69 0.33%
S&P500 VIX 13.93 + 1.00 7.73%
US 10-year yield 4.17 – 0.02 – 0.36%
USD Index 104.14 + 0.03 0.03%
FTSE100 7573.69 + 1.11 0.01%
DAX30 17037.35 + 110.85 0.65%

By Greg Peel

Bloodbath

With the local market ignoring the tech-driven, historic new high on Wall Street, and the futures unchanged yesterday morning, the stage was set yesterday to be all about earnings results. There were not a lot of releases, but there were some important ones.

One of Australia’s biggest companies, and at one point the biggest company, CSL ((CSL)), dropped -4.8% yesterday, sending the healthcare sector down a standout -3.2%. It was not about earnings, but a pre-earnings announcement.

CSL’s prospective drug intended to protect heart attack victims from another heart attack has failed its phase III trial. While CSL is involved in a lot more than just heart drugs, the market clearly took the news badly.

CSL’s fall was not the biggest on the day, but the most influential in ASX200 points. Fletcher Building ((FBU)) went into a trading halt pending a profit warning, and fell -6.1% beforehand. Liontown Resources (((LTR)) fell back -8% having jumped 10% on Friday.

On the other side of the ledger however, JB Hi-Fi’s ((JBH)) result was worth a 7.1% pop, suggesting rumours of the death of the Australian consumer are exaggerated. The result lifted spirits among other retailers, such as Lovisa Holdings ((LOV)), up 4.8%, and Super Retail ((SUL)), up 3.1%. The discretionary sector closed up 0.6%.

Beach Energy’s ((BPT)) result was worth 3.3%, but energy fell -1.0% to be the worst performer outside Healthcare as Woodside Energy ((WDS)) continued its slide and strong oil prices are currently being ignored.

Aurizon Holdings ((AZJ)) joined the party with a 3.2% gain on result.

Outside the index, but inside the ASX300, Audinate Group’s ((AD8)) result was worth 20.6%.

The technology sector is not shrugging off Wall Street, or at least the Nasdaq, and it rose 1.0% yesterday. Materials fell -0.6% on weak commodity prices.

The banks held steady, despite a positive response to ANZ Bank’s ((ANZ)) quarterly update, sending those shares up 1.3%.

The lists of daily reporters continues to grow day by day from here. We’ll see today whether Breville Group ((BRG)) sends similar signals to JB Hi-Fi, whether James Hardie ((JHX)) can match Boral’s ((BLD)) result, and whether Seek ((SEK)) has found what it’s looking for. CSL will release interim financials.

Among plenty of other reports.

Meanwhile, Wall Street has closed relatively flat. Our futures are up 20 points this morning. Looking for some more positive results?

Awaiting CPI

The Dow hit a new record close last night. The S&P500 hit a new record intraday before falling back, remaining above 5000. The Nasdaq pushed towards the prior high intraday before it, too, fell back.

Wall Street is poised ahead of tonight’s January CPI numbers.

The market is now paying more heed to the Fed, pulling back its 2024 rate cut expectations from six to four, with the Fed suggesting three. The market is also no longer backing a March rate cut, although there remain a handful who are still in that camp.

The good news is the Fed has indicated it will not need to wait until inflation hits 2% (core PCE) before the first cut can be made. It’s good news because it is agreed the move to 2% from 3% will be a lot harder than the move from the 9% peak down to 3%.

Commentators are asking the question: does it really matter? Does the fate of the US stock market and the US economy hang on whether there are four cuts or three, or inflation is at 3% and not 2%? Surely 3% inflation is not going to make a big difference to earnings in an economy that appears to have achieved a soft landing?

The fact the Fed has not yet cut, and has pushed back against the number and timing expectations previously held by Wall Street, has not stopped the S&P500 from hitting new all-time highs, amidst an earnings result season.

Another point of note last night was that despite the major indices exhibiting caution ahead of the CPI, the Russell small cap index continued its revival with another 1.8% gain. Signs of increasing breadth continue.

It’s a long road, given the cap weight of the Mag7 alone is worth five Russells.

Speaking of comebacks, bitcoin hit US$50,000 last night for the first time in two years.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz) 2018.90 – 5.50 – 0.27%
Silver (oz) 22.67 + 0.08 0.35%
Copper (lb) 3.71 + 0.03 0.82%
Aluminium (lb) 1.00 + 0.01 0.54%
Nickel (lb) 7.23 + 0.06 0.88%
Zinc (lb) 1.05 + 0.02 1.48%
West Texas Crude 76.95 + 0.11 0.14%
Brent Crude 81.99 – 0.20 – 0.24%
Iron Ore (t) 128.87 + 0.12 0.09%

With the Chinese out of action, metals prices looked a little healthier last night.

It looks like gold might also be cautious ahead of the CPI, as US bond yields ticked down last night.

The Aussie is up 0.2% at US$0.6531.

Today

The SPI Overnight closed up 20 points or 0.3%.

Today’s reporting highlights have been noted, otherwise we’ll see the NAB business and Westpac consumer confidence surveys today.

US CPI tonight.

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

The Australian share market over the past thirty days…

Index 12 Feb 2024 Week To Date Month To Date (Feb) Quarter To Date (Jan-Mar) Year To Date (2024)
S&P ASX 200 (ex-div) 7614.90 -0.39% -0.86% 0.32% 0.32%
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
COH Cochlear Downgrade to Hold from Add Morgans
CSR CSR Downgrade to Hold from Add Morgans
IKE ikeGPS Group Upgrade to Buy from Hold Bell Potter
NWS News Corp Upgrade to Outperform from Neutral 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)

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CHARTS

AD8 ANZ AZJ BLD BPT BRG CSL FBU JBH JHX LOV LTR SEK SUL WDS

For more info SHARE ANALYSIS: AD8 - AUDINATE GROUP LIMITED

For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED

For more info SHARE ANALYSIS: AZJ - AURIZON HOLDINGS LIMITED

For more info SHARE ANALYSIS: BLD - BORAL LIMITED

For more info SHARE ANALYSIS: BPT - BEACH ENERGY LIMITED

For more info SHARE ANALYSIS: BRG - BREVILLE GROUP LIMITED

For more info SHARE ANALYSIS: CSL - CSL LIMITED

For more info SHARE ANALYSIS: FBU - FLETCHER BUILDING LIMITED

For more info SHARE ANALYSIS: JBH - JB HI-FI LIMITED

For more info SHARE ANALYSIS: JHX - JAMES HARDIE INDUSTRIES PLC

For more info SHARE ANALYSIS: LOV - LOVISA HOLDINGS LIMITED

For more info SHARE ANALYSIS: LTR - LIONTOWN RESOURCES LIMITED

For more info SHARE ANALYSIS: SEK - SEEK LIMITED

For more info SHARE ANALYSIS: SUL - SUPER RETAIL GROUP LIMITED

For more info SHARE ANALYSIS: WDS - WOODSIDE ENERGY GROUP LIMITED