The Overnight Report: Dovish

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            [0] => ((WDS))
            [1] => ((BHP))
            [2] => ((RIO))
            [3] => ((S32))
            [4] => ((CBA))
            [5] => ((TCL))
            [6] => ((RMD))
            [7] => ((NHF))
            [8] => ((CSL))
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            [0] => WDS
            [1] => BHP
            [2] => RIO
            [3] => S32
            [4] => CBA
            [5] => TCL
            [6] => RMD
            [7] => NHF
            [8] => CSL
        )

)

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

Here We Go Again

Last Friday the ASX200 held 7700 to the downside and on Monday the index hit a new intraday high of 7767, before profits were taken. On Wednesday the index held 7700 again and yesterday closed at 7763.

Wall Street cheered on rhetoric from both Jerome Powell and Christine Lagarde last night and made further new highs, and this morning our futures are up 45 points. You’d have to think we’d be a chance for a new all-time high today.

Yesterday’s performance was actually a lot more impressive than 30 points suggest, given it was Super Thursday on the ex-dividend calendar. The table shows all bar two sectors closed in the green, but a -1.2% fall for energy included a big dividend from sector giant Woodside Energy ((WDS)), while a flat close for materials was very solid considering all of BHP Group ((BHP)), Rio Tinto ((RIO)) and South32 ((S32)) went ex.

China’s February trade data released yesterday showed exports were up 7.1% year on year when a mere 1.9% was forecast, while imports (including from us) were up 3.5% against 1.5%. The numbers are either timely or convenient post the Chinese Forum, but metals prices were all strong last night.

The banks had another solid session in rising 0.6%, and Commonwealth Bank ((CBA)) again hit a new all-time high. FNArena has updated recent research from eight different brokers covering the stock, of which seven have (mostly long-standing) Sell ratings.

When will they ever learn?

It has been highlighted recently on Wall Street that outside of the AI hype, industrials (and banks) have been leading the market. Yesterday our industrials sector rose 1.3% for a rare top sector performance. Transurban ((TCL)) rose 1.0%.

Healthcare appeared to struggle with a 0.2% gain, despite ResMed ((RMD)) rising 5.4%, but nib Holdings ((NHF)) went ex and CSL ((CSL)) didn’t want to play.

The economic news on the day was otherwise not so flash, and apparently ignored by the market.

Housing loans fell -3.9% in January when economists had forecast a bounce-back from December’s -4.1%. Owner occupier loans fell -4.6% and investor loans -2.6%.

Add this to the weak building approval number released earlier and it appears new houses in this country have become too expensive to build and too expensive to buy with a mortgage. When will this impact on prices?

Those hoping for a pullback will need to be wary of pending RBA rate cuts. CBA economists have gone out on a limb and are now predicting as many as three cuts this year. Others are looking at perhaps one in November.

“Not Far Off”

…said Fed chair Jerome Powell last night in response to a question from Congress regarding the first rate cut – this time from a Senate committee.

Just a bit more data is needed for confirmation, and Wall Street continues to believe two more months of inflation, jobs and other data will be sufficient to provide the trigger. The market currently has May at around a 25% chance and June at 75%.

Earlier Christine Lagarde said virtually the same thing following the ECB meeting, specifically referring to a further couple of months of data. It could be shaping up to be a rather pleasant northern summer.

Wall Street subsequently pushed on to ever new highs last night, and the chipmakers were once again at the forefront of gains. That said, Broadcom, which is another popular name albeit not quite as heavily involved in AI chips, has reported after the bell this morning and is currently down -3%.

Broadcom had been priced more expensively (in PE terms) than Nvidia.

While tech stocks might still be leading, investors continue to cheer a broadening of the base of gains across sectors, with each day now seeing a long list of diverse companies hitting new 52-week highs.

Costco is one stock that has had a solid run of late. It has also reported after the bell and is down -4%.

The long tail of the US earnings season is dominated by retailers, and for the most part they have surprised to the upside, despite assumptions of a consumer slowdown. Not all have been winners nonetheless.

Victoria’s Secret got its knickers in a twist last night and fell -30% on result.

Wall Street will be hoping to get through tonight’s jobs numbers without upsetting the mood. The forecast is for 200,000 jobs added in February, down from 353,000 in January.

Commodities

We haven’t seen anything that green for a while. Let’s hope those Chinese numbers are real.

The US dollar has fallen steadily over the course of Powell’s two-day testimony to Congress and is currently down another -0.5%. The Aussie is thus up another 0.9%, for the second day in a row, at US$0.6620.

Today

The SPI Overnight closed up 45 points or 0.6%.

US jobs tonight.

There’s only a couple of ex-divs on the local calendar today but the pace picks up again next week.

There are nevertheless several smaller mining stocks due to report earnings today.

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.

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.)

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