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

 

Did The Boomtown Rates do a follow up? …I don’t like Tuesdays? Think they must have!

ASX 200 falls another 162 points to 6478 despite Ashes win. RBA left rates unchanged at 1%. US futures rally hard off lows as does Asian markets. Broad based selling again today with banks in the spotlight as resources outperform. CBA dropped 1.7% ahead of results, NAB down 2.3% and MQG joined the fun falling 3%. Insurers fared no better with QBE down 2.9% and SUN down a big 3.6%. FMG had a wild day closing up 2.8% after some serious early weakness but it has fallen 30% from its recent high so maybe enough is enough. BHP down 0.7% and RIO down 0.1% did better than expected on the iron ore price fall. Energy stocks though were hurt on oil price woes led by STO down 3.6%. The real casualties were the high-flyers and high PE stocks like XRO down 6%, WTC down 8% and PME down 14.9%. Some strength in gold miners but the big move seemed to be yesterday and was more measured today. Defensives proved unable to live up to their names with TLS down 2.5% and CSL down 4%. In Asia, all eyes on the yuan fix slightly higher than yesterday but lower than spot yuan. Some stabilisation and buying emerging with European futures not too bad. To be fair they have borne the brunt of the selling. AUD was relatively steady, Asian markets rallied off lows with Japan down % and China down %. Local bond yields sold off with 10-years rallying back above 1%.

Todays Highlights

  • ASX 200 down 159 to 6482
  • High 6599 Low 6444.
  • RBA keeps rates on hold.
  • Record trade surplus.
  • Yuan stabilises.
  • Banks under pressure.
  • Resources find friends. Defensives fail to be that.
  • Gold miners rally again but gains limited.
  • AUD steady at 67.75c
  • Aussie gold rises to $2158.
  • Bitcoin rises to $11704.
  • US futures up 76.
  • Asian markets off early lows, Japan off % and China down %.

STOCKS

  • FMG +2.82% enough is enough buyers back.
  • PME -14.87% smashed as bubble bursts.
  • LYC +7.87% rare earths to be weaponised.
  • NST +1.77% RMS +7.62% golds still in demand.
  • DMP +0.55% when in doubt order pizza.
  • RFF -42.13% trading halt following short selling report from Bonitas.
  • WTC -8.02% high Pes unwind.
  • FXL -6.50% becoming a substantial holder.
  • HM1 -5.21% NTA 309c.
  • XRO -5.99% under pressure with other high PE stocks.
  • FLC +8.24% bucks trend.
  • TLS -2.54% even defensives slip.
  • STO -3.63% struggling to find support.
  • JRV unchanged – drilling begins.
  • PNI +10.34% good results.
  • MFG +1.23% FUM numbers released.
  • MIN +0.41% one of the few positives today.
  • WBC -2.60% broking platform fails.
  • DDR +2.75% finds a floor, finally.
  • WOW -2.47% introduces robots to fulfillment centres.
  • Speculative stock of the day: Australian Mines (AUZ) +16.67% long term off-take arrangement signed with SK Innovation for Sconi project.
  • Biggest Risers: PNI, LYC, RMS, BIN, FMG and DDR.
  • Biggest Falls: RFF, PME, PNV, WTC, EML, NWH and PLS.

TODAY

  • BWP Trust (BWP) –1.83% Full-year results; distributable profit came in ahead of estimates at $116.4m vs consensus of $114.4m, revenue was up 1.9% to $156.3m. Total income beat expectations at $156.3m vs consensus of $153.3m. Like for like rental growth was up 2.3% on year and NTA per unit grew 2% to 292c. A final distribution of 9.15c per unit was declared. FY20 distributions are anticipated to be marginally higher.
  • SCA Property Group (SCP) –0.78% Full-year result; net profit down 37.4% mainly driven by acquisition transaction costs. EBIT down 18.1% to $168.7m, funds from operations (FFO) up 24.1% to $141.8m and net property income was up 25.3% to $179.6m. A final distribution of 7.45c per security was declared. FFO per unit guidance of 16.70cpu is expected in FY20 (2.3% above FY19 actual). Distribution per unit guidance of 15.10cpu is anticipated in FY20 (2.7% above FY19 act).
  • Southern Cross Media (SXL) –5.12% To outsource its TV and radio broadcast transmission services to Broadcast Australia. SCA will transfer transmission assets to BA, and BA will provide SCA with managed and maintenance services for over 500 radio and TV transmission services around Australia. The agreement is for an initial term of 15 years. The transaction is expected to result in a non-cash loss of $9.2m.
  • Magellan Funds Management (MFG) -1.23% Net inflows of $574m over July with $89.7bn in total funds under management (FUM) as of 31 July. Magellan funds paid distributions (net of reinvestment) of $603m in July.
  • Pinnacle Investment Management (PNI) –10.34% Full-year results; net profit up 32% to $30.5m, funds under management (FUM) jumped 43% to $54.3bn at the end of June. Revenue fell short of expectations at $21.1m vs consensus of $26.6m. A final dividend of 9.3cps was declared.

ECONOMIC NEWS

  • RBA leaves rates on hold at record low of 1% -“The Board will continue to monitor developments in the labour market closely and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
  • “The outlook for the global economy remains reasonable. However, the increased uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy remain tilted to the downside. In most advanced economies.” unemployment rates are low and wages growth has picked up, although inflation remains low.
  • ANZ-Roy Morgan Consumer Confidence Index fell 2.3% to 115.8 points.
  • financial conditions were down by 4.3%, while future financial conditions fell 1.9%. Despite the fall, both the components are comfortably above their long-run average.
  • Economic conditions were mixed, with current economic conditions taking a big hit of 6.1% and more than reversing the prior week’s big jump, while future economic conditions gained 3.8%.
  • The ‘time to buy a major household item’ index fell 2.6%. The four-week moving average for inflation expectations was down by 0.1% to 4.0%, and the weekly reading, which was showing signs of stability, tumbling to 3.7%.
  • Australia’s trade surplus widened to $8.04bn in June from an upwardly revised $6.17bn in May, well above market expectations of a $6bn surplus.
  • Talking iron ore now officially a bear market.
  • ANZ Australian Job Ads rose for the second month in a row in July, posting growth of 0.8% m/m after the jump of 4.9% in June.
  • NZ Jobless drops to an 11-year low.

BOND MARKETS

  • 2-Year bond yields down 4bps to 0.75%
  • 5-Year yields down 5bps to 0.72%
  • 10-Year yields down 5bps to 1.04%

ASIAN NEWS

  • North Korea has let off another couple of fireworks. Glad that Trump and Kim are such friends.
  • The PBoC has moved to stabilise the offshore yuan. Confirms it is suspending its purchase of US agricultural products. The big nuclear option is the stash of Treasuries.
  • Who will fund the US government? If it sold US Treasuries that means selling USD making supporting the yuan. Just gets complicated.
  • Hong Kong down for 10th day, worst streak since 1984.

EUROPEAN AND US NEWS

  • US labels China a ‘currency manipulator’. Another election pledge honoured then.
  • Four former Fed chiefs urge Fed Reserve independence in WSJ.
  • German economy June factory orders 2.5% v 0.5% forecast. June Factory orders down 3.6% YoY.
  • How good is Jeff Bezos? He sold more Amazon after all. He has sold around US$3bn in last five days. Biggest ever dollar sale. No recession here.
  • Oz Lotto jackpot tonight $40m. Might be best chance.

And finally……………..

My doctor told me today I was colour blind…well that came right out of the purple.

A doctor accidentally prescribed me a laxative instead of a coughing syrup.

Three days later I went back for a check-up and the doctor asks: “Well? Are you still coughing?”

I told him “No. I’m afraid to.”

Went for a job interview the other day:

The interviewer asked “And where would you see yourself in five years’ time, Clarence”

“Personally I believe my biggest weakness is in listening.”

Clarence

XXXX

mt_tryforfree
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