Overnight: All Quiet

By Greg Peel

Unsurprising

After rising almost 100 points on Friday to end the month of August and result season, the ASX200 unsurprisingly eased off yesterday to start the new month. We must also take into account that each day now will begin with a points handicap as we work through ex-dividends during the month.

Fortescue Metals ((FMG)) made the big hand-out yesterday but that didn’t stop materials being the only sector to finish in the green (+0.4%), other than a slight tick up for utilities. It was all about the nickel price, of course, which had jumped 11% overnight on news of Indonesian export bans.

Western Areas ((WSA)) dutifully jumped 14.1% yesterday and Independence Group ((IGO)) 10.3%.

Those two stocks led the index leaders, but for Speedcast International ((SDA)), which did a bit of a Phoenix in rebounding 24%.

Otherwise, all other sectors gave back some of Friday’s surge. Telcos (-1.3%) was the worst performer after Telstra ((TLS)) suggested the NBN headwind it hoped would abate in FY20 will probably now last until FY21.

Among the individual losers, Nearmap ((NEA)) fell -6.6% for reasons unclear while Incitec Pivot ((IPL)) issued a drought-related profit warning and fell -4.4%.

More informative on the day were various economic data releases.

Australian company profits rose 4.5% in the June quarter, after rising 2.6% in March. The “two-speed” economy is nevertheless upon us again, with mining rising 11% and 32% year on year while non-mining rose 0.3% for 1.5%.

ANZ’s job ad series showed a -2.8% fall in August, for a year on year decline of -11.2%. Ad numbers had risen in June and July but the ANZ economists had suspected this was just a post-election blip, while a sharp downturn in building construction should be making its mark. The outlook for the labour market, says ANZ, is softening.

Look out for an RBA rate cut next month, if not today.

Caixin’s take on China’s manufacturing PMI rose to 50.4 from 49.9 in contrast to Beijing’s numbers.

Commodities

Beijing was talking up the stimulus yesterday as the tit-for-tat round of tariffs came into effect. The State Council’s financial stability and development committee described risks to the economy as manageable and said the state wanted to keep “reasonably ample” liquidity as it faced the brunt of the trade war.

Such talk has proven a boon for the iron ore price, which has reignited after coming off around -30% in recent weeks.

Nickel was again marginally stronger.

The US dollar index has cracked 99 with a 0.1% gain, sending the Aussie down -0.2% to US$0.6714. En route for 66.

Today

Hurricane Dorian has smashed the Bahamas and is set to hit the US Atlantic coast. Wall Street has become used to such disasters and now anticipates a typical drop in economic activity followed by a recovery in the rebuilding phase, if that’s what it comes to. Wall Street reopens tonight, with the August manufacturing PMI in the frame.

Locally we’ll see the June quarter current account numbers today, including the terms of trade, which no doubt will be somewhat spectacular.

The RBA is expected to hold fast today but the market will be looking for clues.

We’ll also see July retail sales figures.

Eighteen stocks go ex-div today, including Woolworths ((WOW)).

The Australian share market over the past thirty days…