Overnight: Google It

By Greg Peel

Momentum Stalling

A new all-time high on Wall Street had the computers pushing the ASX200 up 21 points in the first fifteen minutes of trade yesterday but yet again the open was swiftly reversed. There followed a choppy session lacking conviction before a flattish close.

The ASX200 has rallied 4% in October, largely following Wall Street confidence in progress on trade. With the month coming to a close we have September quarter CPI data out today which has the capacity to force the RBA into action once more, albeit at this stage “on hold” is the expectation for Cup Day. We then have the Fed decision tonight, which is expected to provide a cut.

And we await any news on trade. All good reasons just to hold fire for the moment. The futures are down -23 this morning despite only a modest fall on Wall Street. The Aussie is up 0.4% despite little movement in the greenback, suggesting short-squaring ahead of the CPI.

Several sectors barely bothered the scorer yesterday by the close. The standout was IT, up 1.0%, but this has little impact on the ASX200. IT followed a strong session overnight for the Nasdaq, and for some reason buyers decided to jump back into Speedcast International ((SDA)) yesterday, which rose 11.2%.

A positive sales update from Coles ((COL)) had that stock rallying back 3.1% to recover what it lost pre-emptively on Monday. Staples managed only a 0.2% gain nonetheless after Bega Cheese ((BGA)) warned of tough trading conditions and fell -12.8%.

The gradual comeback in the iron ore price continues to support the big miners, offsetting falls in gold miners yesterday to send materials up 0.4% — the second best sector performance on the day.

Materials were cancelled out by energy, which fell -0.4% on a lower oil price.

All in all, a bit of a nothing session.

Blind Faith

News on Wall Street last night was that a phase one trade deal may not be signed at the APEC meeting next month. Given Monday night’s all-time high represented a recent run-up on growing trade confidence, as well as earnings results, one might have expected more of a negative reaction.

But the White House was quick to point out that if it is not signed in Chile it’s only because it’s not ready in time – it does not mean there is a problem.

Let’s hope not.

Having reported in the aftermarket on Monday night, Google shares fell -2% last night to drag on the S&P and Nasdaq. It doesn’t seem like much but when you’re a trillion dollar company it moves dial. Trillion dollar comrade Apple (Dow) also fell -2% with its result release pending, but that stock has done nothing but rally since April, unlike Google and Facebook – also yet to report – which have been mired in antitrust, censorship and privacy issues.

The two biggies alone were enough to help the Nasdaq underperform with a -0.6% while the other major indices held up better. Positive results from Dow pharma giants Pfizer and Merck had those stocks up 2.5% and 3.5% respectively.

General Motors rallied 4.3% on its result despite a one-month workers strike while a Senate committee absolutely ripped into the CEO of Boeing (Dow) last night on The Hill, regarding the Max, and Boeing shares rose 2.4%.

But it wasn’t all wine and roses on the earnings front last night.

Online food delivery service GrubHub fell -43% on its result and downbeat outlook. It is this writer’s experience, having worked the New York shift on a trading desk in Sydney in the late ‘80s, that any meal other than Asian and pizza simply does not travel. If you like your food dried out and lukewarm, go for it. The restaurants hate it as well.

If you like your meat, you might take some solace in the fact fake food sensation Beyond Meat fell -22% last night on its result, but also as the lockout ended for pre-IPO investors. That stock closed at US$82, having traded at US$235 in July.

These stocks are relative tiddlers and all up the US earnings season, now half way through in terms of S&P500 stocks reporting, is still providing a 78% beat rate compared to a five-year average of 72%.

Now it’s over to the Fed.

Commodities

Indonesia moved yesterday to temporarily halt all nickel exports ahead of the January ban. The authorities wish to investigate “massive violations” of export rules, which likely relates to shipping as much of the stuff as possible before the ban comes into force. But the nickel price has already adjusted for the ban.

So much for the clawback for iron ore.

The Aussie is up 0.4% at US$0.6864.

Today

The SPI Overnight closed down -23 points or 0.3%, ahead of the local CPI and the Fed decision and with some help from lower commodity prices.

The market is expecting 0.5% September quarter CPI growth for 1.7% annual, up from 1.6% in June.

Ahead of the Fed release, the first estimate of US September quarter GDP will be released. The market expects 1.6%, down from 2.0% in June. Private sector jobs numbers are also out tonight.

It’s Woolworths’ ((WOW)) turn to release sales number today while Janus Henderson ((JHG)) reports quarterly earnings.

Today’s list of AGMs includes those of Charter Hall Retail ((CQR)), Myer ((MYR)), nib Holdings ((NHF)), NextDC ((NXT)) and Regis Healthcare ((REG)).

The Australian share market over the past thirty days…