The Overnight Report: Not Fussed

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This story features APPEN LIMITED, and other companies.
For more info SHARE ANALYSIS: APX
The company is included in ALL-ORDS and ALL-TECH

By Greg Peel

Dead Cat

The futures were not confident yesterday morning of any sort of bounce out of Monday’s shellacking, suggesting up only 5. Last morning the ASX200 was up 28 but that was just a spike – blink and you’d have missed it.

Wall Street provided no impetus on Monday night ahead of the US CPI but post that release, has bounced hard last night. Yet still our market is not enthusiastic – the futures are up only 14 this morning. If we’re going to get back to the high, it will be a graft.

Technology nonetheless had a solid session (+1.2%), spurred on by Appen ((APX)), after it received a take-over proposal from the US and jumped 30.1%. Appen is nowadays an ASX300 stock, but the sentiment carried.

The banks scraped back 0.2%, while materials was flat, balancing out an up-day for lithium stocks and a move up for gold stocks, helped by the Aussie drifting lower, while iron ore remained stagnant.

Energy was the worst performer (-0.8%), after a fall in coal prices left the top five losers’ board littered with coal miners. Coronado Resources ((CRN)) fell -3.9%, Whitehaven Coal ((WHC)) -3.5%, and New Hope Corp ((NHC)) -2.5%.

Good news if you burn the stuff – utilities rose 0.9%.

Staples was the “outperformer” in Monday’s rout in falling only -0.4%, but fell -0.4% again yesterday, while discretionary rose 0.6%.

That could have been as a result of the Westpac consumer confidence survey, but there wasn’t one. It has for some time now been on the same Tuesday as the NAB business survey but this month, for some reason, it’s on March 25.

My guess, and it’s only that, is Westpac wants to now capture the RBA meeting (March 19) which is no longer early in the month.

The NAB survey showed business conditions brightened last month, rising 3 points to +10. Confidence, however, fell -1 point to zero.

We’ll need to see that first RBA rate cut to move that dial, one assumes.

Didn’t Take Long

US headline CPI inflation came in a little stronger than expected in February, up 0.4% compared to 0.3% in January, to an annual rate of 3.2%, up from 3.1%. The core rate also rose 0.4%, to 3.8%.

While “hot”, the numbers were not so hot to upset Wall Street. The monthly rise in the headline was actually 0.36%, and it has long been assumed the “last mile” of disinflation will be a slow and likely bumped trek.

Clearly, Wall Street shrugged.

I suggested yesterday downside for Nvidia, which had posted a couple of -5% drops in a row, would be limited, if those who missed out on the way up took any opportunity to get in at a lower price.

Nvidia rose 7.2%.

Most of the big names had solid sessions, but Apple lagged again, and you can forget Tesla.

Providing further tech impetus was Oracle, which jumped 11.7% after having reported earnings in Monday night’s aftermarket. Oracle is one those tech stocks from back in prehistoric times, alongside the likes of IBM and Intel, that tend to be left behind.

The bounce across the board ignored a 5 point jump in the US ten-year yield, driven by both the CPI and a weak bond auction.

As 2024 to date has proven, Fed policy is not the driver of the stock market at present, as long as it remains consistent, given higher rates have not sounded the death knell for the market as many had expected they would.

So traders were happy to go back into buying mode last night.

Commodities

Strength continues for base metals, which appear to have a new lease of life.

Gold has finally succumbed after going nowhere but up for days, even if US bond yields had risen. But last night’s jump in yields was a bridge too far.

The Aussie continues to slip back from its recent peak, down -0.3% to US$0.6606.

Today

The SPI Overnight closed up 14 points or 0.2%.

Brambles ((BXB)) and Perpetual ((PPT)) are the bigger names going ex-div 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.

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