Overnight: Anticipation

By Greg Peel

Late Bloomer

The ASX200 began the day rather indecisively yesterday, doing a whole lot of nothing until midday. While the IT sector dutifully rallied on the overnight Nasdaq move, closing up 3.0%, the rest of the market ignored Wall Street.

The spark came in the afternoon, with a late flurry to the death, attributed to Asian markets and particularly China, where Xi announced the further opening up of some parts of the economy.

The bulk of the day’s gains were provided by the banks (+1.2%), with a little help from staples (+0.6%) and healthcare (+0.5%). Energy (-0.7%) and utilities (-0.6%) were the biggest impediments on a lower oil price.

While it was the sixth up-day in a row, conviction appears to be lacking at this stage following the budget rally of last week. That rally occurred during the NSW school holidays so those back at work may have decided the re-rating is sufficient for now, with anything possible on Wall Street in the next couple of weeks.

Among individual stocks, Link Administration ((LNK)) rather stood out with a 25% jump after receiving a takeover offer from private equity, of the usual conditional, non-binding variety.

From the opposite perspective, Bravura Solutions ((BVS)) announced the takeover of UK software company Delta Financial Systems. It rose 8.9%.

Zip Co ((Z1P)) took the bronze, rising 5.7% ahead of today’s update and along with tech strength on Wall Street.

On the downside, the now usual suspect was Whitehaven Coal ((WHC)), faring worst with a -5.7% drop, also China related.

From today we’ll start to see the AGM season ramping up, which will provide trading updates to inform just how everyone’s faring at this stage. Wall Street aside, the season may lead to a bit more local action.

The futures, I think, closed up 17 points, but having been told how to find the prices by the ASX yesterday, I now need to clarify whether I’m interpreting the data correctly.

Retail Riot

The White House has upped the ante, again, to US$1.9trn. Democrats say no. Desperation creeping in? It all seems a bit pointless. Wall Street has now conceded there will be no stimulus package before the election, but a big one come inauguration day.

In other words, Wall Street no longer cares. It will happen eventually.

What it does care about nonetheless is shopping. Tomorrow night brings Apple’s annual product launch day, and this year’s is tipped to be the most important in a decade. The launch of new models of iPhone had lost their thrill in recent years, as there was not much new about them. But this year…this year brings 5G.

Tomorrow night is also Amazon’s Prime Day, which was postponed from its usual summer date. Prime Day is sort of Amazon’s Black Friday as amazing discounts on all sorts of products are on offer. Funnily enough, Black Friday has been losing its importance for years, but tomorrow night will also see Target and Walmart hosting “prime days” of their own.

It looks like becoming the new Black Friday.

Tomorrow night also sees the unofficial beginning of the September quarter earnings result season, kicked off by the banks. Earnings are now expected to be better than expected.

But it was all about Big Tech, again, last night. Apple boosted all three major indices in rising 6%. It was the biggest contributor to the Dow, despite now only offering a quarter of its prior contribution.

Amazon rose 5%, but all of the FAAMGs had a strong session, posting similar gains. At one point the Nasdaq was up a full 3%.

It was, however, Columbus Day, so volumes were thin.

The S&P500 is now within about 1% of its February all-time high, suggesting the covid curse has been lifted. Of course, it’s all to do with the 25% of the S&P we can call “tech”, being technology, communication services and consumer discretionary.

Commodities

Base metals continue to power on despite little movement in the dollar last night.

Gold has eased back after Friday night’s rally while iron ore has all but reversed.

The story for oil is a simple one – production curtailed due to Hurricane Delta is now coming back on line.

The Aussie is down -0.2% at US$0.7211.

Today

The SPI Overnight appears to have closed up 17 points, but don’t hold me to it.

The US will see CPI data tonight.

Commonwealth Bank ((CBA)) Telstra ((TLS)) and Ebos Group ((EBO)) hold AGMs today.

The Australian share market over the past thirty days…