The Overnight Report: Another New High

This story features PLATINUM ASSET MANAGEMENT LIMITED, and other companies. For more info SHARE ANALYSIS: PTM

World Overnight
SPI Overnight	7930.00	+ 60.00	0.76%
S&P ASX 200	7819.60	+ 39.40	0.51%
S&P500	5248.49	+ 44.91	0.86%
Nasdaq Comp	16399.52	+ 83.82	0.51%
DJIA	39760.08	+ 477.75	1.22%
S&P500 VIX	12.78	– 0.46	– 3.47%
US 10-year yield	4.20	– 0.04	– 0.90%
USD Index	104.29	– 0.03	– 0.03%
FTSE100	7931.98	+ 1.02	0.01%
DAX30	18477.09	+ 92.74	0.50%

By Greg Peel

Inflated

Another soft session on Wall Street led to another soft opening for the ASX200 yesterday but it didn’t last long. The index was a tad higher at 11.30am when we learned headline inflation in February rose at an annualised rate of 3.4%.

That’s the same level as January, and the same level as December, but it is lower than the 3.5% forecast by economists, thus good enough for some end of quarter window-dressing. The 39 point rally by the close left the index still shy of the all time high but we should see a new high today. Wall Street spun around overnight and our futures are up 60 points this morning.

It will all happen this morning, before everyone disappears.

Economists had expected a higher headline CPI last month for a few reasons – one being oil prices, another insurance premiums, and another a jump in air travel/accommodation prices last month due to a particular visiting singer.

Oil prices were higher, premiums did go from exorbitant to crippling, but that last one did not eventuate because the summer holidays were over. Always thought she was rubbish.

The 3.4% was nonetheless split on an increase to 4.2% from 3.7% for services inflation and a decrease to 2.9% for goods inflation. Goods have been the only driver of disinflation to date.

The sector winners on the day were the heavy-hitters of consumer staples (+1.4%), healthcare (+1.3%) and industrials (+1.2%), while the banks added 0.6% and materials spun from an early loss to a 0.2% gain despite another -2% fall in iron ore prices.

Real estate managed to rise 0.2% despite a mass of ex-dividends.

Technology seems to be last year’s story (-0.5%) and utilities were also lower (-0.2%).

Train crash of the day was Platinum Asset Management ((PTM)), which fell -21% on yet another round of fund out-flows and forced cost-cutting.

A train crash in slow motion was APM Human Services ((APM)), which went into a trading halt after its takeover suitor walked away.

We’ll see two more economic indicators today, one being private sector credit and the other being retail sales. Weakness in the latter might spoil the holiday somewhat, but fund managers will no doubt be happy to push the market through new highs for the quarter and boast to their clients.

Unless it’s Platinum Asset Management.

Lovely Displays

After three soggy sessions on Wall Street, and four featuring late sell-offs, last night saw a complete reversal. A late surge in the final hour took the S&P500 to yet another new high.

It seems fund managers were holding off on their end-of-quarter adjustments, although Big Tech has been mostly week in the past several sessions. Nvidia fell -2.5% last night.

Big Tech has been weak not because traders believe the hype is all too much, and not because they think the stocks are way overvalued, but because they need to rein back in their individual stock weightings to their desired portfolio levels. Trim off some Nvidia, for example.

Those funds are then being reallocated both within tech – year-to-date losers Apple and Tesla were up again last night – and anywhere else other than tech – the Dow Jones Industrial Average well-outperformed last night in rising 1.2%, while the Russell small cap jumped 2.1%.

Small caps remain highly vulnerable to interest rate expectations, and it is interesting that in the space of one quarter expectations have ranged from six Fed rate cuts this year to three, and now the debate is as to whether there’ll be any at all. More economists are beginning to suggest there won’t be a Fed rate cut this year, or at the least they’re saying they would not be surprised if there is no rate cut this year.

The reason is inflation still needs to come down further, but the economy is stronger than anyone expected heading into 2024 (or 2023, or 2022), unemployment remains low, and despite the cost of living, consumer spending has not fallen off a cliff.

If nothing breaks, the Fed does not need to rush in.

On a final note, yesterday I suggested Trump Media, owner of Truth Social, made only US$3.5m in the first nine months of 2023. Actually that was the advertising revenue. Earnings were down some -US$50m.

When the stock IPO’d and rose 50%, that put the valuation at over US$8bn. It subsequently rose only 16% on the day, but was up another 14% last night, despite DJT being described as the “meme-ist of all meme stocks”, and commentators suggesting one can only feel sorry for the fools who are buying it.

Commodities

Spot Metals,Minerals & Energy Futures
Gold (oz)	2194.10	+ 18.90	0.87%
Silver (oz)	24.58	+ 0.24	0.99%
Copper (lb)	3.99	+ 0.00	0.02%
Aluminium (lb)	1.04	+ 0.00	0.22%
Nickel (lb)	7.49	– 0.02	– 0.29%
Zinc (lb)	1.10	+ 0.00	0.20%
West Texas Crude	81.72	+ 0.27	0.33%
Brent Crude	86.35	+ 0.33	0.38%
Iron Ore (t)	101.61	– 2.80	– 2.68%

Iron ore looks a sorry sight at the moment but gold has regained its mojo.

The Aussie is steady at US$0.6535, unaffected by the lower than expected CPI.

Today

The SPI Overnight closed up 60 points or 0.8%. If that proves accurate it’s hot-crossed buns all round. The previous intraday high was 7853.

Private sector credit and retail sales today, as noted.

The US will see consumer sentiment and another revision of December quarter GDP.

The Australian share market over the past thirty days…

Index	27 Mar 2024	Week To Date	Month To Date (Mar)	Quarter To Date (Jan-Mar)	Year To Date (2024)
S&P ASX 200 (ex-div)	7819.60	0.63%	1.57%	3.01%	3.01%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
29M	29Metals	Downgrade to Underperform from Neutral	Macquarie
ALL	Aristocrat Leisure	Downgrade to Hold from Accumulate	Ord Minnett
APA	APA Group	Upgrade to Outperform from Neutral	Macquarie
BHP	BHP Group	Upgrade to Add from Hold	Morgans
BPT	Beach Energy	Upgrade to Add from Hold	Morgans
MIN	Mineral Resources	Downgrade to Hold from Add	Morgans
MRM	MMA Offshore	Downgrade to Hold from Buy	Bell Potter
		Downgrade to Hold from Buy	Shaw and Partners
PMV	Premier Investments	Upgrade to Neutral from Sell	UBS
SFR	Sandfire Resources	Downgrade to Sell from Neutral	Citi
SGM	Sims	Upgrade to Buy from Neutral	UBS

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)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms