ASX 200. Henry Jennings, Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News – END of DAY REPORT.

 

ASX 200 up 52 points to 6777 as rates tumble again. Dow Futures down slightly by 1 point. A leap out of the blocks on positive leads continued throughout the day despite UBS downgrading iron ore forecasts and knocking BHP down 0.2% and FMG down 0.5% in the process. Plenty of quarterlies around today with SBM down 2.8% and Z1P up 9%. Banks were in demand as 10-year yields fell to 1.29%, with a solid block of green for WBC up 1.8% and CBA up 1.5%. Telcos also did well, VOC up 4.9% and TLS up 1.3% with bond proxies in demand TCL up 1.3% and ALX up 1.9% after traffic numbers. A2M took a break souring 2.3%. No major economic news, although WBC has forecast 0.5% RBA rates. Asian markets were better with Japan up 0.40% and China strong up 0.72%.

Today’s Highlights

  • ASX 200 up 52 to 6777.
  • High 6783 Low 6730. All Ords hit an all-time high.
  • Miners tip over on UBS downgrade to iron ore.
  • Banks set the pace with telcos doing well too.
  • Bond proxies and healthcare up.
  • Gold miners under a little pressure.
  • 10-year bonds, big day down 4bps to yield 1.29%.
  • First day for Boris.
  • AUD breaks 70c to 69.83c on USD strength.
  • Aussie gold rallies to $2034.
  • Bitcoin falls to $9652.
  • Dow futures down 1.
  • Asian markets were better with Japan up 0.40% and China strong up 0.72%.

STOCKS

  • Z1P +9.12% quarterly report.
  • RMS +7.14% Exploration update.
  • DHG +4.88% good bounce after sell-off yesterday.
  • SIQ +3.37% ECX +7.05% sector sees optimism on consumer sentiment.
  • PGL +3.05% broker upgrade.
  • IVC +2.95% bargain hunting.
  • AMP+3.15% finding support.
  • ILU -10.00%% mineral sands project update.
  • SBM -2.81% quarterly report slightly disappoints.
  • KGN -5.14% rethink after the rally yesterday.
  • A2M -2.27% profit-taking.
  • RRL -11.75% two brokers downgrade.
  • PEA +36.11% takeover offer at 97.5c from QIC.
  • PPS +9.68% gathering momentum.
  • CAT +6.10% tech back.
  • LVH -5.13% quarterly.
  • ADT -10.62% profit-taking.
  • MLX -5.88% disappointing quarterly again.
  • Speculative stock of the Day: Indago Energy (INK) +31.51% moving into Indian oil market with the first trial. Been a string of good announcements and an ASX query today. A new substantial shareholder with one fund moving up the register.
  • Biggest Risers: Z1P, RMS, VOC, DHG, COE, ISX and HSN.
  • Biggest Falls: RRL, ILU, WGX, BUB, KGN, PRU and SFR.

TODAY

  • Sandfire Resources (SFR) -4.03% report Q4 copper production of 18,519t, 15.3% higher than Q3 production. Gold production rose 9.6% from last quarter to 18,519t. Q4 C1 cash costs were $0.74/lb and the company has $247.4m cash on hand. FY20 copper and gold production are 70-75kt and 38-42kt respectively. C1 costs for FY20 are expected to be $0.90-0.95/lb.
  • Iluka Resources (ILU) -10.00% report total Q2 mineral sands production of 251.3kt, 10.7% below Q2 production last year. Total mineral sands revenue for the quarter fell by 14.4% on last year’s number to $295.2m.
  • Evolution Mining (EVN) -1.00% June quarter gold production of 194,886 oz at AISC of $915/oz. FY19 gold production came in at 753k oz, within the guided range of 720-770k oz. FY AISC of $924/oz was above the guided range of $850-900/oz. Production for FY20 is expected to be in the range of 725-775k oz with AISC of $890-940/oz.
  • Beach Energy (BPT) -UNCH- report Q4 production of 6.97MMboe, 3.5% on last year’s number. Revenue for the quarter rose 6.4% to $501.0m. FY19 production guidance has been upgraded to 29.4MMboe, while capital expenditure guidance has been lowered to $447m. Underlying EBITDA is expected to be at the upper end of $1.25-1.35bn, while depreciation, depletion, and amortisation (DD&A) are expected to fall at the upper end of $450-500m.
  • St Barbara (SBM) -2.81% Q4 production down 2.4% on last quarter at 86,197oz, with an AISC of $1,219/oz, 11.0% higher than last quarter. FY production came in at 362,346 oz at AISC $1,080/oz. Through the quarter the company completed its acquisition of Atlantic Gold, and saw record production and cashflow at Simberi.
  • Zip Co (Z1P) +9.12% provide a Q4 update. Revenue rose 17% on last quarter up to $27.0m, while customer numbers increased 14% to 1.3m and merchants rose 13% to 16,249. The number of transactions rose 30% for the quarter, up to 1.6m, while the transaction volume jumped 105% on last year’s number to $351.8m. Net bad debts have fallen from 1.75% last quarter to 1.63%, and the cash EBTDA margin rose from 1.7% to 2.2%.
  • Bellevue Gold (BGL) – is in a trading halt as they launch a fully underwritten $18.5m institutional placement to fund ongoing exploration activities. The price for the capital raise is set at 57c, an 8.8% discount to the last closing price.

ECONOMIC NEWS

  • WBC’s chief economist reckons the RBA will cut to 0.5%. Even worse than the GFC. Crisis what crisis? October and February now likely according to Bill Evans. Traders are pricing in a 75% chance of another rate cut by Xmas.
  • The International Monetary Fund cut its forecast for this year from 3.3% growth to 3.2%, and from 3.6% to 3.5% in 2020.

BOND MARKETS

  • 2-Year bond yields down 4bps to 0.90%
  • 5-Year yields down 4bps to 0.94%
  • 10-Year yields down 3bps to 1.29%

ASIAN NEWS

  • Here is a doozy. China has suggested that the Army could help with the Hong Kong civil unrest. Says the PLA is legally allowed to help HK maintain social order. Course it is legally allowed. It makes the laws.
  • China says the US is ‘undermining global stability’. Good backdrop for fresh talks.
  • Nissan reportedly set to cut 10,000 jobs as part of a restructuring program.

EUROPEAN AND US NEWS

  • This may be the beginning of the end for the tech company dominance or just another storm in a tech teacup but the Department of Justice (DoJ) in the US has opened a review into the dominance of big techs market power. As long as Twitter is available for POTUS, that is all that matters. Interesting that having used social media to get elected it is now trying to crimp its remit.
  • Boris gets keys to No.10. Finds out it has rising damp.
  • Tech companies under assault again from EU as it will force platforms to curb illegal online content under the Digital Services Act.
  • Special Counsel Robert Mueller will begin his testimony. Trump shrugs it off as long as growth is aa record and jobs boom.
  • Deutsche Bank loses even more than some thought. Slate is now clean. Cleanish anyway. Akzo Nobel beats estimates. Revenue Q2 EUR2.45bn. Core profit explodes 36%.

And finally……..

This morning on the way to work I wasn’t really paying attention and I drove into the back of a car at some traffic lights.

The driver got out and it turned out he was a dwarf.

He said, “I’m not happy.”

I said, “Well, which one are you then?”

A man walks into a bar and orders a drink. Then he notices there are pieces of meat nailed to the ceiling of the bar so he asks the barman what they are for. The barman replies, “If you can jump up and pull one of them down you get free beer all night. If you fail, you have to pay the bar $100. Do you want to have a go?”

The man thinks about it for a minute before saying, “Nah, the steaks are too high!”

Bob left work one Friday evening.

But it was payday, so instead of going home, he stayed out the entire weekend partying with his mates and spending his entire wages.

When he finally appeared at home on Sunday night, he was confronted by his angry wife and was barraged for nearly two hours with a tirade befitting his actions. Finally his wife stopped the nagging and said to him, “How would you like it if you didn’t see me for two or three days?”

He replied, “That would be fine with me.”

Monday went by and he didn’t see his wife.

Tuesday and Wednesday came and went with the same results.

But on Thursday, the swelling went down just enough where he could see her a little out of the corner of his left eye.

Clarence

XXX

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Financial Markets and Political Commentary
 

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Henry Jennings Contact: henryjennings@mac.com // @henryj007 Has been involved in Investment Banking and Stockbroking since the early 1980's. Stockbroker - Camerons Stockbroking Macquarie Bank - Equity Capital markets Macquarie Group - Divisional Director