Overnight: Thanks A Lot

By Greg Peel

Memories

Remember not that long ago when analysts were debating just how far Telstra ((TLS)) would have to cut its once mighty, set-in-concrete dividend? Seems like just yesterday. But as of yesterday, analysts are now discussing whether Telstra might actually be able to put it up.

That was at least the hint from Macquarie, which has upgraded the stock to Outperform. Credit Suisse followed suit, while suggesting Telstra’s dividend is “sustainable”. Stiff competition in mobiles, it appears, is finally fizzling out. That was good for a couple of percent for Telstra after Wednesday’s investor briefing, and another 4.0% yesterday on the broker upgrades.

It’s not often Telstra rallies 4%, taking the telcos sector up 2.9%, and rather stealing the show yesterday. No one much else contributed to a modest gain for the ASX200, although healthcare (+0.8%) continues to flow on a river of blood.

The banks (-0.3%) were again a drag, catching out anyone who thought things couldn’t possibly get any worse and thus it must be time to buy. While Commonwealth Bank’s ((CBA)) -$700,000 fine for unsolicited insurance hawking is a day’s pay for the CEO, just when it appeared Westpac ((WBC)) might be able to get back on its feet, ASIC comes back with another kick to the head.

Apparently there are a few moms and dads pretty ticked off that they applied to participate in the bank’s capital raising in good faith, only to learn of the AUSTRAC scandal the next day. Westpac has agreed to let them off if they want. The stock fell another -0.4%.

Private capital expenditure fell for the third straight quarter, the ABS revealed yesterday, as the rise in non-residential construction, noted in Tuesday’s quarterly construction data, was more than offset by a drop in machinery & equipment investment. Mining capex is on the boil again, but non-mining capex is waning.

Everything old is new again.

Capex intentions in future quarters also fell, but all could change if there is, for example, a trade deal.

The index was up 29 points at its peak at midday, unconcerned over the capex numbers, when news came through President Trump’s Thanksgiving present was to sign a bill supporting the Hong Kong protesters into law.

Not quite sure what this achieves, nor why it is necessary.

It is hardly a shock revelation that a democracy supports democracy. I think the Chinese could have figured that one out for themselves. Surely a White House/Congressional statement of support would be sufficient, without it being a “law”. What does the “law” actually mean? Can it be broken?

And is it wise to rattle Beijing’s cage – which seems about all this “law” could achieve – at this juncture in US-Sino relations? Is this going to fast-track a phase one deal, or potentially de-rail it?

We’ll see what Wall Street thinks about Trump’s law tonight, or at least the half a dozen traders who turn up for the abbreviated NYSE session.

And can somebody please explain to me why we now have Black Friday everywhere in Australia? Halloween is bad enough. Next Australian supermarkets will be pushing turkeys for Thanksgiving and fireworks for the Fourth of July.

Yet while the local market did ease back in the afternoon yesterday, albeit still closing at a new record high, with no lead from Wall Street our futures are up 28 points this morning.

Commodities

Metal traders in London were not enamoured with the new “law”. Signs of a drop-off in demand for nickel from stainless steel producers had an additional impact. Typically when nickel prices run too far, stainless steel producers switch to chromium, or some other substitute.

Looks like iron ore is happy to consolidate around the US$90/t mark for now.

The Aussie is down -0.1% at US$0.6769.

Today

The SPI Overnight closed up 28 points or 0.4%.

We’ll see private sector credit numbers for October today while tomorrow China will release November manufacturing and services PMIs.

It’s Black Friday IN THE US tonight. The NYSE closes at 1.00pm.

We can all go nuts over Select Harvest’s ((SHV)) earnings result today, while Bubs Australia ((BUB)), Premier Investments ((PMV)) and Zip Co ((Z1P)) are among those companies holding AGMs.

Incitec Pivot ((IPL)) goes ex.

The Australian share market over the past thirty days…