The Overnight Report: Good Friday

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World Overnight
SPI Overnight	8210.00	+ 73.00	0.90%
S&P ASX 200	8191.90	+ 49.80	0.61%
S&P500	5713.64	+ 95.38	1.70%
Nasdaq Comp	18013.98	+ 440.68	2.51%
DJIA	42025.19	+ 522.09	1.26%
S&P500 VIX	16.33	– 1.90	– 10.42%
US 10-year yield	3.74	+ 0.06	1.49%
USD Index	100.63	– 0.31	– 0.31%
FTSE100	8328.72	+ 75.04	0.91%
DAX30	19002.38	+ 290.89	1.55%

By Chris Weston, Head of Research, Pepperstone

Good morning.

With the market having time to consider the FOMC meeting in its totality and with a more rational mindset, the bulls have stepped up and we’ve been treated to a good old-fashioned risk on rally. New all time-highs have been seen in the S&P500, Dow, DAX30, Spanish IBEX, and as we look towards the Asian open, the ASX200 will break to new highs.

A Fed offering a message of control, married with a convincing appetite to support the US labour market, sent the reassuring message the market craved as a signal to add risk into the portfolio. Add in the opaquer flow-based effects, with momentum-focused players buying equity in alignment with the positive price action, options dealers hedging exposures and active managers fearing underperformance and the result has been some impressive gains in all parts of the risk spectrum.

US big tech, comm services and consumer discretionary dominated the buying flows, with solid gains seen in Nvidia, Meta, Tesla, Microsoft, and Apple. Defensives underperformed, with staples, utilities and REITS lower on a day when 70% of S&P500 stocks closed in the green. Volumes were solid, with S&P500 cash volumes 15% above the 30-day average.  

So, some solid moves played out – however if I had played the pessimist, I would look to Nvidia and the intraday price action. Granted, longs will always take a gain of 4%, but the intraday price action lacked conviction, with the price hitting US$119.66 mid-way through the session, before bleeding -1.5% off the high into the close.

The NAS100 cash hit a high of 19,951 but also tailed off into the back end of trade. And while the S&P500 cash closed at a new all-time high, the session high to low trading range of 47 points was below average, where I would have liked greater range expansion and the index closing closer to the highs to really convince me. S&P500 futures, while also hitting a new all-time high of 5737.50, failed to hold above the former ATH of 5721.25 set in July.

The question then is whether the positive sentiment and feel-good factor can build, especially with triple witching’ the mix in the US session ahead here, talk of over $5trn of single stock, S&P500 futures, and S&P index quarterly options expiring today, and this factor alone can create significant flow based effects, which to those not aware of the event, may find it hard to reconcile the price action relative to the news flow.

The positive flows weren’t just an equity phenomenon, with crude +1.6%, copper +1.1%, gold +1.1%, US HY credit 8bp tighter, Bitcoin and crypto pumping hard, and in FX the USD has been offered.

Turning to Asia our calls look promising as we close out the last trading day of the week. The NKY225 is poised to build on the 2.1% rally we saw yesterday, where both equity and JPY traders will be looking out for national CPI figures (at 09:30 AEST), and BoJ governor Ueda’s speech that follows the BoJ meeting in afternoon trade.

The BoJ meeting will likely be a non-event for markets, but Gov Ueda’s speech could have an impact. The ASX200 is called to open firmly above 8200, so we’ll see if funds and traders look to chase the opening strength, or whether we see sellers offload exposures feeling this move is a little too hot either way, a daily close firmly above 8200 is the clear target.

On the calendar today:

-Japan Aug CPI

-Japan BoJ rate policy

-UK Aug retail sales

-Capitol Health ((CAJ)) ex-div 0.4c (100%)

-Inghams Group ((ING)) ex-div 8c (100%)

-Vita Life Sciences ((VLS)) ex-div 3.50c (100%)

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

Corporate news in Australia:

-Wilson Asset Management and Challenger ((CGF)) might launch rival bids for Platinum Asset Management ((PTM))

-Macquarie Group ((MQG)) hit with $117m bill to settle SEC’s fraud charge accusing it of “taking advantage of retail” clients

-Auckland Council is looking to sell $1bn in Auckland Airport ((AIA)) shares

Spot Metals,Minerals & Energy Futures
Gold (oz)	2611.80	+ 27.00	1.04%
Silver (oz)	31.11	+ 0.70	2.30%
Copper (lb)	4.35	+ 0.08	1.83%
Aluminium (lb)	1.14	+ 0.01	0.71%
Nickel (lb)	7.35	+ 0.05	0.65%
Zinc (lb)	1.32	+ 0.02	1.80%
West Texas Crude	71.14	+ 2.03	2.94%
Brent Crude	74.86	+ 1.97	2.70%
Iron Ore (t)	92.03	+ 0.46	0.50%

The Australian share market over the past thirty days

Index	19 Sep 2024	Week To Date	Month To Date (Sep)	Quarter To Date (Jul-Sep)	Year To Date (2024)
S&P ASX 200 (ex-div)	8191.90	1.14%	1.24%	5.46%	7.92%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
BHP	BHP Group	Upgrade to Overweight from Equal-weight	Morgan Stanley
EVN	Evolution Mining	Downgrade to Equal-weight from Overweight	Morgan Stanley
FMG	Fortescue	Upgrade to Equal-weight from Underweight	Morgan Stanley
NAB	National Australia Bank	Upgrade to Overweight from Equal-weight	Morgan Stanley
NHC	New Hope	Upgrade to Add from Hold	Morgans
NST	Northern Star Resources	Downgrade to Underweight from Equal-weight	Morgan Stanley
ORG	Origin Energy	Upgrade to Outperform from Neutral	Macquarie
PLS	Pilbara Minerals	Upgrade to Equal-weight from Underweight	Morgan Stanley
RRL	Regis Resources	Downgrade to Equal-weight from Overweight	Morgan Stanley
SHV	Select Harvests	Upgrade to Buy from Hold	Bell Potter
WBC	Westpac	Upgrade to Equal-weight from Underweight	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.)

(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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