The Overnight Report: Not Good Enough

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With US corporate results failing to fire, the local market is not showing much inspiration either.

World Overnight
SPI Overnight	8194.00	– 19.00	– 0.23%
S&P ASX 200	8180.40	– 68.80	– 0.83%
S&P500	5813.67	– 19.25	– 0.33%
Nasdaq Comp	18607.93	– 104.82	– 0.56%
DJIA	42141.54	– 91.51	– 0.22%
S&P500 VIX	20.35	+ 1.01	5.22%
US 10-year yield	4.27	– 0.01	– 0.19%
USD Index	104.00	– 0.15	– 0.15%
FTSE100	8159.63	– 59.98	– 0.73%
DAX30	19257.34	– 220.73	– 1.13%

Good morning.

Microsoft released a better-than-expected quarterly performance and its shares got rewarded for it, albeit in a modest fashion (1%).

Meta Platforms (you know, Facebook and Instagram) also beat expectations, but a highly critical reception has seen its share price not move at all (flat).

Shares in superstar performer Eli Lilly and in chipmaker AMD suffered losses as weight-loss drug sales missed forecasts and growth in AI-driven chips has slowed.

Microsoft’s cloud computing division posted a 34% revenue gain.

The above examples, all from overnight price action, show how the current quarterly results season in the US is failing to add more oomph to markets in October.

Then there’s still the matter of the US presidential election on Tuesday/Wednesday next week when the RBA is expected to stick with its hawkish script and signal no rate cuts are on the horizon for the time being.

Equities retreated overnight, including in the UK where the new Labour government decided to lift taxes for businesses in order to fix the broken healthcare and education systems in the country.

Yesterday, the local market suffered from more sellers than buyers. SPI futures on Thursday are indicating another uninspiring opening for the day.

The yield on the US 10y note rose 2.6bp to 4.28%. WTI crude oil rose 1.8% to USD68.9/bbl. Gold rose 0.2% to USD2,784.8/oz.

In economic news, US Q3 GDP rose at 2.8% saar (seasonally adjusted annualised rate), led by personal consumption which rose 3.7%.

The first number missed the 3% forecast, but spending turned out much stronger than expected.

Spending on goods rose 6.0%, up from 3.0% in Q2 and spending on services rose 2.6% from 2.7%.

Gross private investment rose a slight 0.3% versus 8.3% in Q2, although spending on equipment remained healthy at 11.1%, which contributed 0.6ppt to GDP.

Within that, expenditure on information processing equipment added 0.24ppt to GDP. Federal spending rose 5.0% up from 3.1% as defence spending surged to 14.9% versus 6.4% in Q2.

Despite the strength in GDP, the GDP price index fell to 1.8% in Q3 versus 2.5% in Q2, and the core GDP price index fell to 2.2% versus 2.8%.

Regarding the US jobs market, ADP data showed a 233k lift in payrolls that it serviced in October, well above expectations of a 111k gain and September’s upwardly revised 159k result.

ANZ Bank economists comment this suggests upside risks to nonfarm payroll data due tomorrow night (the consensus expectation for that stands at 101k according to Bloomberg) but the two measures don’t always track.

Over in Europe, the eurozone GDP rose 0.4% in Q3, beating expectations of a 0.2% rise, rounding out year over year growth of 0.9%.

ANZ Bank also observes the strong US economic data failed to derail gold’s ongoing rise to record highs.

The precious metal continues to find support from investors amid heightened macro risks. The market appears to be positioning for a high level of uncertainty ahead of the US election.

According to the World Gold Council, demand for gold rose by 5% in the third quarter, setting a record for the period. The increase was underpinned by stronger investment flows from the West.

Crude oil futures reversed recent losses as the focus returned to tensions in the Middle East.

Negotiations over a ceasefire agreement in the Middle East continue. Israel is said to be considering a US-led end to the conflict in Lebanon.

The plan, if agreed, would lead to a 60-day suspension of hostilities while mediators craft a lasting peace deal to remove Hezbollah from the border region and bolster US peacekeepers there.

Sentiment in the crude oil market was also supported by an expected drawdown in US inventories. Commercial crude stockpiles fell by -515kbbl last week, according to EIA data. Gasoline and distillate stockpiles also fell by -2,707kbbl and -977kbbl respectively.

Shares in offshore listings (BHP, RIO, etc) mostly closed lower overnight, with exception of Amcor, due to report its quarterly financials today.

On the calendar today:

-New Zealand Oct ANZ business confidence

-Australia 3Q retail sales

-Australia Sept Building approvals

-Australia Sept private sector credit

-Japan BoJ target rate

-China Oct PMI

-Eurozone Oct CPI

-Eurozone Sept Unemployment rate

-US Sept PCE

-Amcor ((AMC)) 1Q25 Earnings

-AMP ((AMP)) AGM

-Autosports Group ((ASG)) ex-div 8c (100%)

-AUB Group ((AUB)) AGM

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

Corporate news in Australia:

-Whitehaven Coal ((WHC)) is reportedly preparing to bid for the $3bn Kestrel coal mine while skipping the $4.5bn Anglo American coal sale

-Southern Cross Austereo ((SXL)) is advancing the sale of regional TV assets to pay down debt

-Flight Centre ((FLT)) is acquiring Cruise Club UK to boost growth in the UK leisure market

-Bowen Coking Coal ((BCB)) struggles to raise $70m as its shares remain suspended, with the settlement date for its shortfall offer extended to November 4

-Burrendong Minerals seeks to raise $5m for a December IPO on the ASX

Spot Metals,Minerals & Energy Futures
Gold (oz)	2798.50	+ 11.50	0.41%
Silver (oz)	33.94	– 0.69	– 1.99%
Copper (lb)	4.36	– 0.00	– 0.10%
Aluminium (lb)	1.18	– 0.02	– 1.69%
Nickel (lb)	7.12	– 0.04	– 0.57%
Zinc (lb)	1.39	– 0.02	– 1.25%
West Texas Crude	69.09	+ 1.63	2.42%
Brent Crude	72.71	+ 1.66	2.34%
Iron Ore (t)	104.08	– 0.01	– 0.01%

The Australian share market over the past thirty days

Index	30 Oct 2024	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2024)
S&P ASX 200 (ex-div)	8180.40	-0.38%	-1.08%	-1.08%	7.77%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
A2M	a2 Milk Co	Upgrade to Hold from Sell	Bell Potter
BSL	BlueScope Steel	Upgrade to Equal-weight from Underweight	Morgan Stanley
CRN	Coronado Global Resources	Downgrade to Hold from Accumulate	Ord Minnett
DRO	DroneShield	Upgrade to Buy from Hold	Bell Potter
IGO	IGO Ltd	Downgrade to Neutral from Outperform	Macquarie
MTS	Metcash	Downgrade to Underperform from Outperform	Macquarie
QAN	Qantas Airways	Downgrade to Hold from Add	Morgans
SFR	Sandfire Resources	Downgrade to Neutral from Outperform	Macquarie
ZIP	Zip Co	Downgrade to Neutral from Buy	Citi

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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