The Overnight Report: One More Sleep

Daily Market Reports | Feb 29 2024

This story features LIONTOWN RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: LTR

World Overnight
SPI Overnight 7618.00 – 11.00 – 0.14%
S&P ASX 200 7660.40 – 2.60 – 0.03%
S&P500 5069.76 – 8.42 – 0.17%
Nasdaq Comp 15947.74 – 87.56 – 0.55%
DJIA 38949.02 – 23.39 – 0.06%
S&P500 VIX 13.84 + 0.41 3.05%
US 10-year yield 4.27 – 0.04 – 0.95%
USD Index 103.93 + 0.12 0.12%
FTSE100 7624.98 – 58.04 – 0.76%
DAX30 17601.22 + 44.73 0.25%

By Greg Peel

Groundhog Day

From the close last Thursday to the close yesterday the ASX200 is…drum roll…completely unchanged. In that time over a hundred of the country’s large companies have reported earnings.

Yesterday was no different to the day's preceding – a bit of choppiness intraday, only to close pretty much where it started. At least it has provided the opportunity to assess results for what they are on the day, or the next day, following analyst reviews, without overriding macro influences.

Yesterday’s macro influence was that of the January CPI. It came in at 3.4%, unchanged from December, when 3.6% was expected. So we could call it a “beat”, of sorts, and also note the core rate fell to 3.8% from 4.0%.

The Aussie ten-year yield nevertheless rose 4 points and the stock market did, briefly, fall on the release. But not for long. The Aussie is down -0.7%.

Another factor which impacted yesterday stems from China, and a sudden burst of lithium restocking post the week-long New Year break. Lithium prices are on the move up, having completely crashed in the past several months, and lithium miners are the most shorted stocks on the ASX.

So, the likes of your Liontown Resources ((LTR)), Pilbara Minerals ((PLS)) and IGO Ltd ((IGO)) were up big-time yesterday, and that’s just three. Iron ore was down, hence the materials sector closed “unch”.

It didn’t help that Fortescue Metals ((FMG)) went ex.

The biggest sector winner yesterday by a margin was technology (+2.9%), largely thanks to a follow-on move post Tuesday’s aftermarket result from NextDC ((NXT)), which rose 13.1%.

Tech also muscled its way in among the lithium miners in the ASX300 yesterday, with Appen ((APX)) adding another 19.6% and Brainchip Holdings ((BRN)), which was clobbered on Tuesday on result, bouncing back 18.8%.

Appen was also well-shorted.

That bit of help was needed, because for once, the banks did not prop up the index (-0.5%). Otherwise, energy (+0.8%) and real estate (+0.5%) stepped up.

It was a bad day on the buses for Kelsian Group ((KLC)), which fell -12.0% on result.

Nor was it good for Helia Group ((HLI)) and Helius ((HLS)), which I believe were the brothers that founded Rome. Mortgage insurer Helia (formerly Genworth) fell -10.0% on result, while healthcare services company Helius fell -6.7% in a follow-on from the day before.

Today is, mercifully, officially the last day of the results season. Come tomorrow, maybe the stock market will actually move, one way or the other.

Still Waiting

Wall Street hasn’t done much over the past week either, other than to be a little lower as traders square up ahead of tonight’s PCE release.

What has been most notable is ongoing trimming of Mag7 positions – just a little each day – in favour of a broader range of large caps, many of which have been hitting new 52-week highs largely unnoticed.

Mid and small caps have not missed out either, but then it takes five Russell 2000s to make one Apple.

The US December quarter GDP result was revised down last night to 3.2% growth from a prior estimate of 3.3%. This reportedly led to last night’s weakness. I doubt it. The prior quarter may have seen 4.9% growth but given at the beginning of 2023 the US economy was forecast by most to fall into recession, a “soft landing” 3.2% should be cheered.

The data pale into insignificance against the PCE.

What has not gone unnoticed recently is the fresh bull market in bitcoin. It passed the US$60,000 mark last night for the first time since October 2021 and has been down to US$16,500 in the interim.

The impetus for the revival is the pending “halving” expected by April, which halves the bitcoin reward for equivalent mining. This occurs every four years, and such events in 2012, 2016 and 2020 all preceded bull runs.

Feeling lucky punk?

A similar story can be found in Beyond Meat. The vegetable-based fake meat producer IPO’d in 2019 and soared to nearly US$200 per share. Last night it reported earnings and jumped 30%, to US$9.83.

Fads tend to pass.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz) 2033.50 + 4.70 0.23%
Silver (oz) 22.41 – 0.01 – 0.04%
Copper (lb) 3.81 – 0.01 – 0.39%
Aluminium (lb) 0.99 – 0.00 – 0.36%
Nickel (lb) 7.97 + 0.08 0.97%
Zinc (lb) 1.09 – 0.00 – 0.17%
West Texas Crude 78.37 – 0.29 – 0.37%
Brent Crude 83.46 + 0.02 0.02%
Iron Ore (t) 113.88 – 1.80 – 1.56%

You might ask why we don’t have a lithium price in our table and the reason is there is no one price. There are different forms of lithium compounds trading in different jurisdictions with China being the dominant player.

Same reason we don’t have a “coal price”.

The Aussie is otherwise the standout, down -0.7% to US$0.6498 courtesy of the CPI.

Today

The SPI Overnight fell -11 points.

Today we’ll see January retail sales.

We’ll also see December quarter private sector capex.

China will report February PMIs.

PCE inflation in the US.

Harvey Norman ((HVN)) always wraps up result season on the final day. Ramsay Health Care ((RHC)) likes to bring up the rear as well.

Today’s is the longest list of ex-divs to date. Ampol ((ALD)) is one, Suncorp Group ((SUN)) is another.

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

The Australian share market over the past thirty days…

Index 28 Feb 2024 Week To Date Month To Date (Feb) Quarter To Date (Jan-Mar) Year To Date (2024)
S&P ASX 200 (ex-div) 7660.40 0.22% -0.26% 0.92% 0.92%
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ADH Adairs Upgrade to Add from Hold Morgans
ALU Altium Downgrade to Neutral from Outperform Macquarie
Downgrade to Equal-weight from Overweight Morgan Stanley
APE Eagers Automotive Upgrade to Neutral from Sell Citi
CWP Cedar Woods Properties Upgrade to Add from Hold Morgans
HLS Healius Downgrade to Sell from Neutral Citi
LFS Latitude Group Upgrade to Neutral from Sell Citi
MHJ Michael Hill Upgrade to Buy from Neutral Citi
PLS Pilbara Minerals Downgrade to Sell from Neutral Citi
PNV PolyNovo Upgrade to Add from Hold Morgans
Downgrade to Hold from Buy Bell Potter
PPE PeopleIN Downgrade to Hold from Add Morgans
PWH PWR Holdings Downgrade to Neutral from Buy Citi
REH Reece Upgrade to Neutral from Sell Citi
RMC Resimac Group Upgrade to Neutral from Sell Citi
SUN Suncorp Group Downgrade to Neutral from Buy Citi
TPG TPG Telecom Downgrade to Neutral from Outperform Macquarie
Downgrade to Hold from Add Morgans
WGN Wagners Holding Co Add Morgans
WPR Waypoint REIT Downgrade to Hold from Add Morgans

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

ALD APX BRN FMG HLI HLS HVN IGO LTR NXT PLS RHC SUN

For more info SHARE ANALYSIS: ALD - AMPOL LIMITED

For more info SHARE ANALYSIS: APX - APPEN LIMITED

For more info SHARE ANALYSIS: BRN - BRAINCHIP HOLDINGS LIMITED

For more info SHARE ANALYSIS: FMG - FORTESCUE LIMITED

For more info SHARE ANALYSIS: HLI - HELIA GROUP LIMITED

For more info SHARE ANALYSIS: HLS - HEALIUS LIMITED

For more info SHARE ANALYSIS: HVN - HARVEY NORMAN HOLDINGS LIMITED

For more info SHARE ANALYSIS: IGO - IGO LIMITED

For more info SHARE ANALYSIS: LTR - LIONTOWN RESOURCES LIMITED

For more info SHARE ANALYSIS: NXT - NEXTDC LIMITED

For more info SHARE ANALYSIS: PLS - PILBARA MINERALS LIMITED

For more info SHARE ANALYSIS: RHC - RAMSAY HEALTH CARE LIMITED

For more info SHARE ANALYSIS: SUN - SUNCORP GROUP LIMITED