The Overnight Report: The Nervous Wait

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World Overnight
SPI Overnight	7963.00	+ 11.00	0.14%
S&P ASX 200	7982.40	+ 31.90	0.40%
S&P500	5503.41	– 16.66	– 0.30%
Nasdaq Comp	17127.66	+ 43.36	0.25%
DJIA	40755.75	– 219.22	– 0.54%
S&P500 VIX	19.90	– 1.42	– 6.66%
US 10-year yield	3.73	– 0.04	– 0.98%
USD Index	101.06	– 0.23	– 0.23%
FTSE100	8241.71	– 27.89	– 0.34%
DAX30	18576.50	– 15.35	– 0.08%

By Chris Weston, Head of Research, Pepperstone

Good morning.

We close out of US trade and roll into Asia with positioning and risk firmly front of mind. Traders will use the time in front of the screens to review, massage and manage positioning and exposures according to their subjective scenarios around the many outcomes, and the possible cross-market volatility that can kick up. As well as the implications the jobs data can offer in evolving sentiment towards the US economy and Fed policy.

Setting the platform On the data side, we saw that the US ADP private payrolls survey was weaker-than-expected at 99k, although this was then offset by a modestly lower weekly jobless claims (at 227k) and a robust ISM Services print (at 51.5 vs 51.4 expected). The various US data points did influence market pricing, and an overview of the intraday tape highlights some whippy rides in US Treasuries, indices, crude, and the USD.

The wash-up of the moves in equity is that the S&P500 closed -0.3% lower, with the NAS100 unchanged, while the DJ30 and Russell 2k cash markets closed -0.5% and -0.6% respectively. Cash volumes were below average, but not terrible, but looking across the S&P500 sectors we see participation was lacking, with 76% of S&P500 companies closing lower on the day.  The MAG7 plays put in the index points and supported the broader indices, with notable gains in Tesla and Amazon, while Nvidia closed +0.9%.

US Treasuries have seen a small net change lower in yield, with some outperformance in the US 10yr (-3bp to 3.72%).

Gold has benefited from the USD flows and US 10-year real rates moving lower on the day and we see the yellow metal looking to revisit the recent range highs of US$2530/oz. The fact we’ve also seen no new significant demand for the JPY is possibly a bullish factor for gold players to consider – if we are moving to a world where the US labour market is an increasing source of concern, then we can think of gold as a currency, and in a world where most G10 central banks are easing, what currency do you really want to own with any conviction the JPY or gold?

Staying in the commodity space, we see a better feel to copper (+1.5%), Nat Gas (+5.5%) and iron ore futures (SGX +1.5%) crude tried to rally but gave up into US$70.82/bbl and closed flat on the day.

Turning to the Asia open, our opening calls suggest a flat opening for the ASX200. There is limited event risk to concern through Asia today, so again the session will be defined by further pre-positioning ahead of US payrolls. If the market is left with any ambiguity as to how the non-farm payrolls and unemployment rate read through to potential Fed policy changes, consider that Fed gov Waller speaks shortly after (01:00 AEST) the data drops – so he’ll give traders some initial steer as to whether the non-farm payrolls print pushes the Fed closer to a -25bp or -50bp cut.

The good news is that next week we all become political risk managers, where the news flow on the US Election beefs up and markets may become more sensitive to headlines from the live debate between Kamala Harris and Donald Trump. Betting markets now have Trump holding an edge in November, but obviously that will be put to review through the performance of the debates and could shift through the week.

On the calendar today:

-Japan 2Q GDP

-China Aug CPI/PPI

-CSL ((CSL)) ex-div 220c

-Hub24 ((HUB)) ex-div 19.50c (100%)

-Objective Corp ((OCL)) ex-div 9c

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Corporate news in Australia:

-Cettire ((CTT)) is putting together a defence team consisting of Arnold Bloch Leibler, Hamilton Locke and Highbury Partnership

-The Australian reports Macquarie Group ((MQG)) may rake in $1.3bn in performance fees from the AirTrunk sale

-Apollo Global Management has halved its stake in Challenger ((CGF))

-Optus and TPG Telecom ((TPG)) have received regulatory approval to proceed with their regional network and spectrum sharing agreements, while keeping separate networks in metropolitan areas

-Atlas Arteria’s ((ALX)) bid to raise tolls on the Dulles Greenway was rejected by regulators

Spot Metals,Minerals & Energy Futures
Gold (oz)	2546.90	+ 20.30	0.80%
Silver (oz)	29.17	+ 0.55	1.92%
Copper (lb)	4.14	+ 0.05	1.28%
Aluminium (lb)	1.07	– 0.01	– 0.80%
Nickel (lb)	7.24	– 0.04	– 0.57%
Zinc (lb)	1.23	– 0.03	– 2.61%
West Texas Crude	69.33	+ 0.10	0.14%
Brent Crude	72.83	+ 0.54	0.75%
Iron Ore (t)	91.30	– 1.63	– 1.75%

The Australian share market over the past thirty days

Index	05 Sep 2024	Week To Date	Month To Date (Sep)	Quarter To Date (Jul-Sep)	Year To Date (2024)
S&P ASX 200 (ex-div)	7982.40	-1.35%	-1.35%	2.77%	5.16%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ALC	Alcidion Group	Downgrade to Hold from Buy	Bell Potter
ALL	Aristocrat Leisure	Upgrade to Accumulate from Hold	Ord Minnett
BGL	Bellevue Gold	Upgrade to Hold from Sell	Ord Minnett
DDR	Dicker Data	Upgrade to Buy from Neutral	UBS
EMR	Emerald Resources	Downgrade to Sell from Hold	Ord Minnett
FPH	Fisher & Paykel Healthcare	Upgrade to Outperform from Neutral	Macquarie
GNC	GrainCorp	Downgrade to Hold from Add	Morgans
GPT	GPT Group	Upgrade to Overweight from Equal-weight	Morgan Stanley
IGO	IGO	Downgrade to Sell from Neutral	UBS
LTR	Liontown Resources	Downgrade to Sell from Neutral	UBS
MIN	Mineral Resources	Downgrade to Hold from Add	Morgans
NWH	NRW Holdings	Initiation of Coverage with Add	Morgans
RHC	Ramsay Health Care	Downgrade to Hold from Add	Morgans
WDS	Woodside Energy	Downgrade to Sell from Neutral	Citi
XRO	Xero	Downgrade to Accumulate from Buy	Ord Minnett

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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