The Overnight Report: Another Down Day Ahead

Daily Market Reports | May 29 2024

This story features FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED, and other companies. For more info SHARE ANALYSIS: FPH

World Overnight
SPI Overnight 7746.00 – 46.00 – 0.59%
S&P ASX 200 7766.70 – 21.60 – 0.28%
S&P500 5306.04 + 1.32 0.02%
Nasdaq Comp 17019.88 + 99.09 0.59%
DJIA 38852.86 – 216.73 – 0.55%
S&P500 VIX 12.92 + 0.56 4.53%
US 10-year yield 4.54 + 0.08 1.68%
USD Index 104.62 + 0.04 0.04%
FTSE100 8254.18 – 63.41 – 0.76%
DAX30 18677.87 – 96.84 – 0.52%

No Chris Weston commentary today.

-AUD/USD spends time in the 0.6660s but struggles to hold gains offshore
-Upside surprise (second in a week) in US Consumer Confidence
-US Treasury yields higher, prices extending losses after weak 2 and 5-year auctions
-WTI oil prices up 3% ahead of weekend OPEC-Plus meet, higher Middle East tensions
-SPI futures locally suggest market to open -0.59% lower

US markets returned from their Memorial Day holiday in a rather lacklustre mood. SPI futures are indicating another negative day for the local market today.

The S&P500 closed virtually unchanged, with the Dow suffering a mild retreat and the Nasdaq (Nvidia & Co) booking a gain of 0.59%.

Most of the action, and talking points, was left to US Treasuries and WTI crude oil.

The market’s focus zoomed in on upside surprises in the Conference Board’s measure of US consumer confidence, and sub-par US 2 and 5-year auction results.

US consumer confidence rebounded in May, after three months of falls, but strictly taken remains in ‘weak’ territory, even if this latest reading adds to the so-called economic surprises.

The Conference Board’s consumer confidence index rose to 102.0 (from 97.5pts) in May, driven by a strong labour market.

Also catching news headlines were the Fed’s Neel Kashkari decalring rates should be held unchanged as long as necessary to gain clarity about the economy and inflation, and the ECB’s Holzmann predicting two rate cuts in 2024, maximum three cuts.

Yesterday, in Australia, the benchmark S&P/ASX200 lost -0.3% (-21.6 points) to finish at 7766.7 points, with 10 of the 11 sectors ending in the red.

Consumer staples was the only sector to climb, with Coles and Woolworths edging higher.

The materials sector finished flat, with gold stocks rallying as gold prices increased by 1.5% to US$2353 an ounce.

Australian retail sales for April rose 0.1% month-on-month, marginally missing expectations.

Commodity markets were in a good mood overnight, with exception of iron ore which looks rather moribund this week.

In crude oil, North-American WTI outperformed European Brent.

On the calendar today:

-Monthly consumer price index (CPI) indicator

-Construction work done data and the Westpac leading index

-Fisher & Paykel Healthcare ((FPH)) has already released FY24 financials and key financials and FY25 guidance seem in line with market forecasts.

-Macquarie Technology ((MAQ)) is hosting an investor meeting

-Nufarm ((NUF)) shares to trade ex-dividend

Later in the US:

-Federal Reserve to issue the Beige Book

-Richmond Fed manufacturing index

-Earnings expected from Abercrombie & Fitch, HP, and Salesforce

Spot Metals,Minerals & Energy Futures
Gold (oz) 2360.90 + 8.50 0.36%
Silver (oz) 32.02 + 0.42 1.33%
Copper (lb) 4.74 + 0.09 1.86%
Aluminium (lb) 1.23 + 0.03 2.78%
Nickel (lb) 9.25 + 0.11 1.15%
Zinc (lb) 1.40 + 0.03 1.83%
West Texas Crude 80.28 + 1.72 2.19%
Brent Crude 84.31 + 1.49 1.80%
Iron Ore (t) 117.68 + 0.02 0.02%

Bas Kooijman, CEO and Asset Manager of DHF Capital, on gold:

Gold prices rebounded slightly today after the important losses recorded last week. Market sentiment could remain cautious as investors anticipate key US inflation data that could provide insights into the Federal Reserve’s timeline for potential interest rate cuts.

The core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, is due on Friday. Market consensus projects an unchanged rate of 0.3% month-on-month for a third consecutive period. Higher-than-expected data could add to the pressures gold is facing, in particular after the Federal Reserve minutes revealed a more hawkish stance from its members.

The latter left the door open for interest rate hikes if necessary. The market sentiment reflects growing skepticism about significant rate cuts this year, with traders pricing in a cut in November. Adding to that, on the demand side, China’s net gold imports via Hong Kong dropped by approximately -38% in April compared to the previous month, which could weigh on prices. This significant decline follows a period of robust import activity earlier in the year.

The Australian share market over the past thirty days…

Index 28 May 2024 Week To Date Month To Date (May) Quarter To Date (Apr-Jun) Year To Date (2024)
S&P ASX 200 (ex-div) 7766.70 0.51% 1.34% -1.65% 2.32%
29M 29Metals Upgrade to Neutral from Underperform Macquarie
A2M a2 Milk Co Buy Citi
AIS Aeris Resources Upgrade to Neutral from Underperform Macquarie
APE Eagers Automotive Downgrade to Sell from Neutral Citi
CGF Challenger Upgrade to Buy from Neutral UBS
CMW Cromwell Property Accumulate Ord Minnett
CWY Cleanaway Waste Management Upgrade to Add from Hold Morgans
HMC HMC Capital Upgrade to Outperform from Neutral Macquarie
KED Keypath Education International Downgrade to Neutral from Outperform Macquarie
NUF Nufarm Downgrade to Neutral from Buy Citi
PDN Paladin Energy Downgrade to Hold from Buy Bell Potter
WES Wesfarmers Downgrade to Underweight from Equal-weight Morgan Stanley

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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