The Overnight Report: Another Sunny Day

This story features COCHLEAR LIMITED, and other companies. For more info SHARE ANALYSIS: COH

Good morning.

Following a stronger-than-expected CPI reading earlier, overnight the US also saw a higher-than-expected PPI release, but details matter and this time bond yields pulled back.

How come?

The details of the report showed the components that feed into the PCE deflator, the Fed’s preferred inflation gauge released later in the month, were softer than expected.

Lower bond yields means higher share prices.

The yield on the US 10y bond pulled back -9.6bp to 4.52%.

Over in the UK, a whole different dynamic applies, and markets were celebrating the fact Q4 GDP did not print yet another negative.

Q4 grew 0.1% q/q against expectations of a contraction. Services (+0.2%) and construction (+0.5%) were up, while production fell -0.8%. Full-year growth printed 0.9% for 2024.

The little things in life.

Regardless, the FTSE100 closed down -0.5% while the Euro Stoxx 50 gained 1.8%.

As per commentary from ANZ Bank economists this morning, despite the upside growth surprise, UK’s GDP remains far below its potential, implying that cutting rates remains appropriate as long as inflation cools.

Crude oil prices had a whiplash session, first falling on news Trump, Putin and Zelensky are in ceasefire talks (not the same as peace talks), but then rallying on news of a longer-than-expected delay to impose reciprocal tariffs in the US and a more bullish outlook from the IEA.

WTI ended up 1% at US$75.1/bbl. Gold rose 0.3% to US$2,926.5/oz.

As per ANZ Bank, gold climbed toward another record high after the USD pushed lower following Trump’s announcement of reciprocal tariffs, including taking account of VAT regimes.

The new levies will be implemented on a country-by-country basis, a sweeping process that could take weeks or months to complete.

That’s raising the prospect of a global trade war. Gold demand has surged higher as investors look to protect themselves against the impact of such a damaging economic event.

The threat of gold being caught up in the tariffs has also seen physical flows into the US surge higher, boosting premiums and creating lengthy delays at key vaults in Europe.

Locally, the bourse seems intent of putting in another session before the weekend while the earnings season calendar tells investors to look out for releases by Ansell ((ANN), Cochlear ((COH)), and Deterra Royalties ((DRR)), among others.

Unibail-Rodamco-Westfield ((URW)) has increased its distribution by 40%, but is anyone still interested?

FNArena’s February Monitor: https://fnarena.com/index.php/reporting_season/

On the calendar today:

-New Zealand Jan Manufacturing PMI

-Eurozone 4Q GDP

-US Jan retail sales

-Abacus Group ((ABG)) earnings report

-Adrad Holdings ((AHL)) earnings report

-AMP Ltd ((AMP)) earnings report

-Ansell ((ANN)) earnings report

-Centuria Industrial REIT ((CIP)) earnings report

-Cochlear ((COH)) earnings report

-Charter Hall Retail REIT ((CQR)) earnings report

-Cettire ((CTT)) earnings report

-Deterra Royalties ((DRR)) earnings report

-GQG Partners ((GQG)) earnings report

(and more)

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

Corporate news in Australia:

-Healius ((HLS)) and Australian Clinical Labs ((ACL)) revive $2bn merger talks

-Domain Holdings Australia ((DHG)) has reportedly been shopped to private equity firms, but none have shown interest

-Treasury Wine Estates ((TWE)) has canceled the sale of its cheaper brands portfolio due to low offers

The Australian share market over the past thirty days

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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