The Overnight Report: Still Holding

This story features COLES GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: COL

By Greg Peel

Up, Up

There was no down, down for Coles Group ((COL)) yesterday, with the stock jumping 5.5% and rather silencing the large cohort who had insisted the other mob were a better bet. In a sign of the times, it was Coles’ e-commerce business that really surprised.

There was also clear evidence of a rethink on Endeavour Group ((EDV)), which fell on its result on Monday but yesterday bounced back 5.1%.

The staples sector rose 2.2% in a session which started with a swift -40pts plunge for the ASX200 in the first hour, before all was recovered and more by the close. It was yet another day of choppiness ending in only a modest move, with earnings results dominating.

Technology was next best (+1.3%), helped by a 7.0% pop for WiseTech Global ((WTC)), which had reported last week. But step outside into the ASX300 and things were a little different.

Anything arguably AI-related on the local exchange received a boost last week on Nvidia’s result, but yesterday’s individual results told a different story. Appen ((APX)) fared well, rising 15.5%, but Weebit Nano ((WBT)) fell -11.9% and Brainchip Holdings ((BRN)), -34.7%.

Having risen 7% on Monday, Zip Co ((ZIP)) fell -14.4%. Tyro Payments ((TYR)) missed with its numbers, falling -10.0%. Occupying a similar space, Block ((SQ2)), which rallied hard on Friday on result, fell -4.9% yesterday.

Following on from its weak reception, TPG Telecom ((TPG)) fell another -4.3%.

Within the index, train wreck of the day was Johns Lyng Group ((JLG)), which dropped -13.2% on result. You’d think a company specialising in post-disaster reconstruction would not be lacking in work.

Materials fell -0.4%, and we note Alumina Ltd ((AWC)) shares jumped 6.8% on Monday after Alcoa announced an offer, but fell -5.0% yesterday when it delivered its result.

Healthcare (-0.6%), real estate (-0.8%) and utilities (-0.7%) were all weak yesterday, so once again it was up to the banks to play the Atlas role (+0.5%).

Commonwealth Bank ((CBA)) had made a new 52-week high a while back but yesterday all of ANZ Bank ((ANZ)), National Bank ((NAB)) and Westpac ((WBC)) joined the club.

What could possibly go wrong?

The fat lady maybe warming up, but we still have numerous results to get through over the next two days. It will be a stumbling start today however, given a long list of ex-divs.

The Waiting Game

Another night, another session of not much movement on Wall Street, other than another little burst at the death. The market is on hold ahead of the January PCE release on Thursday night.

There was not much concern that the Conference Board monthly measure of consumer confidence unexpectedly fell to 106.7 from 110.9 last month, with inflation “beginning to weigh”.

It has to be understood “inflation coming down” does not mean “prices coming down”. Some prices may have come down, but on a net basis 4% inflation still means prices rising 4%. It’s a slower pace than 9%, but the trend is still up in price terms. Don’t confuse disinflation with deflation.

Note the Conference Board index is not 100-neutral, which is why it always seems at odds with the Michigan Uni surveys. It simply began its life with a 100 base.

We might also note Lowe’s (Bunnings lookalike) and Macy’s (Myer lookalike) both posted earnings beats last night.

Durable goods orders fell -6.1% in January, which looks bad, but it was mostly to do with commercial aircraft orders which distort the numbers.

The others news last night was Apple is winding down its EV development division, and shifting those workers over to the generative AI department. Another sign of the times. The EV space is becoming ever more crowded just as EV demand wanes. And I’m told this AI thing good be a bit of a goer.

Commodities

After a couple of sessions of sharp falls, iron ore has bounced back a bit.

The oils seem currently stuck in a holding pattern around the US$80/bbk mark, balancing weaker global demand against geopolitics.

The Aussie is steady at US$0.6543.

Today

The SPI Overnight closed up 21 points or 0.3%.

We’ll be the ones with inflation in the spotlight today, as the January CPI is released.

We’ll also see December quarter construction work done, ahead of next week’s GDP release, and January private sector credit.

The RBNZ meets this morning.

The US revises its GDP tonight.

Be warned that Beach Energy ((BPT)), Fortescue Metals ((FMG)), Telstra ((TLS)) and Woolworths Group ((WOW)) all go ex this morning.

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

The Australian share market over the past thirty days…

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