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

 

ASX 200 puts on another 30 points to 6593 in quiet trade ahead of the US/Chin trade talks. US Futures up points. Banks rallied after ANZ revealed more remediation costs. CBA up 0.85% and ANZ up 0.4%. Big miners were slightly higher with BHP up 0.65% and RIO up 1.1%. FMG missed out on the rally falling 1.9% though as it looks at Guinea iron ore. Healthcare stocks rose with CSL up 0.4% leading the way. In corporate news SLK is making a large acquisition and BBN fell 5.9% after a business update. In the energy sector, both STO and CVN had a good day following follow testing for the Dorado 3 well and flows from Caley. In economic news, Consumer sentiment fell again, and Chinee Caixin PMI was slightly disappointing as was Japanese data. The AUD was once again flat lining as were the bonds with 10-year bonds unchanged at 0.89%. Asian markets were back to normal following Golden Week celebrations and holidays elsewhere. Japan up 1.1% and China up 0.8%.

Today’s Highlights

  • ASX 200 up 30 to 6590
  • High 6601 Low 6567. Volumes well below average. School holidays?
  • Banks better today after ANZ clearing the decks.
  • Miners rally led by BHP and RIO.
  • Energy stocks do well. Consumer stocks remain in favour.
  • AUD steady at 67.46c
  • 10-year yields steady at 0.89%
  • Aussie gold slips to $2210
  • Bitcoin rallies hard to US$8272
  • US futures down 95.
  • China back after Golden Week. Japan up % and China up %.

STOCKS

  • MYX +8.04% buyers return.
  • CVN +5.26% flow testing of Caley.
  • Z1P +7.45% uptrend continues.
  • HUB +4.22% broker upgrade.
  • PLS +3.39% SPP coming to a close.
  • IMD +5.05% special dividend on sale of assets.
  • CUV +3.65% brokers like CEO retention.
  • STO +2.04% Dorado 3 flow test.
  • AD8 -4.95% director’s interest.
  • GOR -3.32% gold stocks under pressure.
  • JIN -3.19% media reports on jackpot fatigue.
  • BBN -5.91% market update.
  • DDR -3.73% directors interest.
  • Speculative stock of the day: Konekt (KKT) +67.24% takeover by SoA from Advanced personnel Management (APM) for 49c in cash. Done and dusted. Stavely Minerals (SVY) +13.12% after outstanding thick intercepts in the first step out hole at the Gossan Project in Victoria.
  • Biggest Risers: MYX, Z1P, SXY, SIG,CVN, IMD and CKF.
  • Biggest Falls: BWX, AD8, DDR, SLR, PET and MGX.

TODAY

  • ANZ Bank (ANZ) +0.44 The bank has announced a $651m hit to the bottom line on increased remediation costs and discontinued operations. This has been in the wind for a little while and it may be some clarity helps sentiment.
  • Accent Group (AX1) +0.90% co-founder Michael Hapgood has sold another 530,455 shares between October 2nd and 4th which comes on top of previous sales of around 2.278m shares last month. He still owns 11.7m shares.
  • Isignthis (ISX) – Has confirmed that the CEO’s sister in law is the company secretary of Red 5 Solutions that owns 10% of the company. One of the shareholders of Red 5 is Andrew Karantis is the brother of the CEO. There are eight investors in Red 5, three of which are in dispute with the company over share entitlements. ISX said it welcomed this suspension as it will help clear up rumour and innuendo. It seems that the issues that ASX and ASIC have is with the recent volatility and rumour.
  • Baby Bunting (BBN) -5.91% Trading update at AGM; same store sales growth of 3.1% year to date, skewed by the closure of competitor Babies R us. Expects same store sales growth to be mid-single digits for the year. Q1 FY20 gross profit margin is 36.6% year to date, up 270 basis points on the prior period, a reflection on the growth in private label and exclusive products range. In FY20 Pro forma NPAT is expected in the range of $20.0-22.0m. Pro forma EBITDA is expected to be in the range of $34.0-37.0m.
  • Carnarvon Petroleum (CVN) +5.26% Good flow test report this morning from Dorado 3 – Reservoir flow test has exceeded 11,000 barrels of oil per day plus associated gas. The potential flow rate is even higher but for limits on the capacity of test equipment on the rig. Very significant production rates have now been demonstrated from the reservoir flow test results.
  • Ansell (ANN) +0.94% Is seeking a “refresh” of shareholder approval given at its 2018 AGM to continue an on-market buyback for up to 20% of issued shares. ANN had this to say, “in the absence of appropriate opportunities, and with excess cash on the balance sheet, the board believes continuing our buyback program provides the most beneficial use of this capital for shareholders”.
  • BlueScope (BSL) – unchanged – ACCC decides not to commence criminal cartel proceedings against either BlueScope or former employee Jason Ellis.
  • Sealink Travel Group (SLK) – Trading halt –  To acquire Transit Systems Group for $635m plus an earnout of up to $635m. Proposed transaction expected to be over 20% EPS accretive pre-synergies and before transaction and implementation costs. Current Transit Systems Group CEO, Clint Feuerherdt, to replace Jeff Ellison as SeaLink CEO. SLK is undertaking a $65m placement and a $89m pro-rata entitlement offer to raise a total of $154m to help fund the acquisition. New shares offered under the equity raising will be issued at a price of 350c.

ECONOMIC NEWS

  • ANZ-Roy Morgan consumer sentiment index fell 2.1% to 112.3 points.
  • NAB September business survey: Business conditions lifted 1 point in September to +2 index points, while business confidence edged 1 point lower – now at 0 index points.
  • Job advertisements lifted 0.3 in September, swinging from a downwardly revised 2.6% fall in August, although missing market expectations of a 2.8% advance.

BOND MARKET

  • 2 – year bond yields unchanged at 0.61%
  • 3 – year bond yields unchanged at 0.61%
  • 10 – year bond yields unchanged at 0.89%

ASIAN NEWS

  • HKSE drops bid for the London Stock Exchange. Looks to Asia for growth.
  • US has blacklisted 8 Chinese tech companies on human rights violations.
  • Chinese Caixin Services Index 51.3 lowest in seven months.
  • Carrie Lam (HK CEO) vows to stop violence as protests take their toll on economic activity. Visitors have dropped 50% during Chinese Golden Week.
  • Samsung has beaten forecasts with a mere 56% fall in operating profit.
  • China has bought 100 tonnes of gold in the last ten months.
  • Japanese economic data comes in below forecast as the upcoming sales tax hike is weighing on sentiment.

EUROPEAN AND US NEWS

  • European futures are showing modest gains at the open.
  • The GM strike continues. Four weeks now and costing GM around US$100m a day.
  • The President of the World Bank has suggested global growth could fall short of the 2.6% it forecast in June.
  • Saudi Aramco downgraded to A from A Plus.
  • GM of the Houston Rockets (NBA) has had to aplogise for his tweets supporting the protesters in HK. 490m people in China watch basketball. Its a thing. Rockets no longer searchable in China for merchandise.
  • Greece has set some ambitious growth targets for next year with 2.8% GDP growth now expected. Yeah right.

And finally…jokes always appreciated no matter how Un PS they are…

There is a story about a monastery in Europe perched high on a cliff several hundred feet in the air.

The only way to reach the monastery was to be suspended in a basket which was pulled to the top by several monks who pulled and tugged with all their strength.

Obviously the ride up the steep cliff in that basket was terrifying. One tourist got exceedingly nervous about half-way up as he noticed that the rope by which he was suspended was old and frayed.

With a trembling voice he asked the monk who was riding with him in the basket how often they changed the rope. The monk thought for a moment and answered brusquely, “Whenever it breaks.”

At the zoo I noticed a slice of toast in one of the enclosures.
I asked the keeper, “How did that toast get into the cage?”
“It was bread in captivity,” she replied.

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