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

 

ASX 200 fell 52 points to 6685 as jobs number takes RBA out for November. US Futures drop17 in quiet trade. Iron ore falls set the tone for the day, but banks capitulated after the jobs data. CBA fell 0.4% and WBC down 0.5% not helped by a bad result from BOQ and a dividend cut, the stock fell 2.4%. Major IT outage hits CBA too. SCG down 3.5% was under pressure following the sell down by Sir Frank and reweighting hit the remainder of the sector with GMG down 1.2%. Miners were sloppy on commodity falls and quarterlies. BHP fell 3.27% and RIO down 2.88%. Gold miners also suffered as bullion prices dropped again on a slightly stronger dollar. Consumer stocks saw profit taking with WES down 0.5% and WOW down 1% as rate cut hopes receded. In tech stocks, the ‘BNPL’ sector was suffering from the UBS bearish research on APT down 5.7% and Z1P down 11.1%. In other news, WTC tumbled 10.2% on a Chinese research house short selling report before the stock went into a trading halt as it prepares its’ response.  In corporate news, quarterlies dominated with BHP, S32 up 1.6% and WPL rising 0.7% on its report. On the economic front Deutsche talking negative rates from the RBA, Guy Debelle was speaking housing shortages and the ABS jobs number came in at 5.2% slightly better than expected. 10-year bond yields rose to 1.07%. Asian markets rose modestly with Japan up 0.1% and China up 0.1%

Today’s Highlights

  • ASX 200 down 52 to 6685. The Lord giveth and taketh away.
  • High 6737 Low 6681. Strong volume.
  • Banks and miners sag. WTC hit by short sellers.
  • UBS report kills BNPL sector.
  • SCG fall out from sell out.
  • AUD steady at 67.78c
  • GBP/AUD now 1.89
  • 10-year yields down to 1.01%
  • Aussie gold falls to $2193
  • Bitcoin falls to US$7978
  • US futures down 72.
  • Asian markets mixed with Japan up 1.2% and China down 0.2%

STOCKS

  • WTC -10.18% plummets on short seller research.
  • AVH +13.56% switching form PNV?
  • IFL +10.85% ANZ update
  • CGF +5.01% momentum continues.
  • DTL +2.64% substantial shareholder in CBA.
  • INA +4.03% institutional placement.
  • SCG -3.49% Sir Frank sells out.
  • HVN +2.50% optimism returns.
  • KGN +4.73% still doing well.
  • PET -10.09% guidance fails to lift stock.
  • Z1P -11.11% plummets on UBS research.
  • FXL -2.82% tarred with the BNPL brush.
  • NST -7.99% quarterly report.
  • PNV -6.59% air escaping into AVH.
  • M7T +21.32% great business update.
  • PPS +7.69% rally resumes.
  • PNR -13.89% disappointing quarterly.
  • CYP -5.72% deal off.
  • CIM +2.14% new QLD school contract.
  • JMS -1.45% escrow shares to come.
  • APT -5.72% UBS follow through.
  • Speculative stock of the day: Northern Cobalt (N27) +107.5% binding agreement for 80% of Goodpaster project next door to NST’s Pogo on Alaska.
  • Biggest Risers: AVH, IFL, ECX, CGF, MOE, KGN and CRN
  • Biggest Falls: Z1P, WTC, PET, NST, PNV, IMF

TODAY

  • Bank of Queensland (BOQ) -2.38% report FY earnings. FY cash earnings came in as $320.0m, below the $330.1m expected. EPS of 79.6c on a cash basis is a 16% decrease on last years number, while net interest income fell marginally to $961m. Non-interest income and banking income fell 12% a piece, while insurance income dropped 42%. Net interest margin fell 5bps to 1.93%. The company saw am 80% increase in loan impairment expense, up to $74m. The company expects year-on-year cash earnings to be lower in FY20, with revenue and impairment outcomes to be in line with FY19. A fully franked 31c dividend has been declared.
  • Woodside Petroleum (WPL) +0.66% provide Q3 update. Production of 24.9MMboe is ahead of the 23.0MMboe expected, although the average realized price of $50/boe is down 9.1% from a year ago. Sales revenue matches that from a year ago at $1.16bn despite a 5.7% drop in product sales to 21.7MMboe. Capex is up to $317m from $281m a year ago.
  • Caltex Australia (CTX) +1.46% Q3 refiner margin update. CRM rose to $10.53/bbl, up 41.4% from Q2. CRM sales from production fell 23.2% from Q2, down to 1,055ML. Expectations for FY19 CRM sales from production is reaffirmed at 5.5BL.
  • BHP Group (BHP) -3.27% report Q1 petroleum production of 29.2MMboe, down 11.0% from a year ago. Q1 also saw year-on-year falls in the production of iron ore (-1%), met coal (-10%) and energy coal (-15%). Copper production bucked the trend, rising 5%. FY production and cost guidance is unchanged.
  • Santos (STO) -0.51% Q3 production came in at 19.8MMboe, above the 19.0 expected and up from 18.6 a quarter ago. Sales volume rose 12.5% on last quarter, while sales revenue lifted 7.4% to $1.03bn. Capital expenditure fell marginally for the quarter, down to $268m, and the average realized price dropped 11.4% to $70.20/bbl. FY production guidance has been maintained at 73-77MMboe at a unit cost of $7.25-7.75boe.
  • Northern Star Resources (NST) –7.99% report September quarter gold production of 211.6Koz at an AISC of $1,493/oz. The quarter saw gold sales of 184Koz, $28m of underlying free cash flow and $372m of cash, bullion and investments. The company sees the Pogo growth strategy is on track to meet the increased processing rate of 1.3Mtpa in early 2021.
  • South 32 (S32) +1.63% report Q1 Alumina production of 1,308k, up 12.9% from a year ago. Net cash increased by $163m to $527m in the quarter as the company benefitted from unwinding working capital. FY20 production guidance is maintained for all operations.
  • Insurance Australia Group (IAG) has agreed to sell its 26% stake in SBI General Insurance company for a total consideration of $640m.
  • Whitehaven Coal (WHC) –0.31% repeat FY guidance at their AGM. ROM coal production expected to be 22.0-23.5Mt at $70/t. The company is aiming to return surplus capital to shareholders.
  • IOOF Holdings (IFL) +10.85% the purchase price of the pension arm of Australia and New Zealand Banking Group (ANZ) has been revised down to $825m from $950m. Approval from APRA is still required for a transaction to be completed.
  • WiseTech (WTC) -10.18% Research firm J Capital has released a scathing report on the company, claiming they have been overstating profit and organic growth. The firm is suggesting investors short the company after lengthy analysis led them to conclude that “WiseTech is manipulating its accounts to make growth and profit appear higher than they really are”. WiseTech are yet to respond to the accusations.

ECONOMIC NEWS

  • Headline jobs number drops to 5.2% trend still 5.3% . May take a rate cut off the table before Xmas. AUD has moved higher on the news.
  • In September 2019, trend monthly employment increased by around 20,200 people. Full-time employment increased by about 9,000 people and part-time employment increased by about 11,300 people.
  • The trend monthly hours worked increased by 0.1% in September 2019 and by 1.8% over the past year. This was slightly above the 20-year average year-on-year growth of 1.7%.
  • Seasonally adjusted numbers: Employment increased by 14,700 to 12,944,000 people. Full-time employment increased by 26,200 to 8,847,200 people and part-time employment decreased by 11,400 to 4,096,900 people.
  • The monthly trend underemployment rate remained steady at 8.4%. The monthly underutilisation rate remained steady at 13.7%.
  • NAB’s Quarterly Business Survey has revealed a decline in confidence while conditions remain below average. Conditions pushed a little higher to +1 in the September quarter, but confidence fell sharply, down 7 points to minus 2.

BOND MARKET

  • 2 – year bond yields up 3bps to 0.74%
  • 3 – year bond yields up 3bps to 0.76%
  • 10 – year bond yields up 3bps to 1.07%

ASIAN NEWS

  • Still more big trouble in little China. HK legislature in gridlock.
  • Softbank planning a US$5bn rescue plan for WeWork. Remember the only difference between a Servcorp office and a WeWork one, is a T shirt rather than a tie. And maybe free beer.
  • Contemplate this for a second. One corporate in Japan has issued debt at 0.0000000091%. Well I guess at least it’s not negative. The company? Toyota.
  • Singapore’s non-oil exports fell for a seventh consecutive month in September

EUROPEAN AND US NEWS

  • European markets opening cautiously.
  • Pence goes to Ankara. Erdogan not interested in a ceasefire. Trump says the current situation in Syria is “strategically brilliant for the US”.
  • Boris is about to find out that its one thing to get an agreement with Brussels its quite another to get parliamentary approval. Ask Theresa on that one.
  • General Motors and the United Auto Workers union reached a tentative agreement on a new labour deal.
  • Volvo have launched their first electric car and have told Dyson to stock to vacuum cleaners.
  • Netflix rallied after coming clean on the impact of Disney and Apple on its business. Bring on The Crown.

And finally….with apologies but couldnt resist today….

Welcome to the Sexual Innuendo Club.

Thank you all for coming.

I’ve just started a sexual relationship with a blind woman.

It’s very rewarding, but quite challenging.

It took me ages to get her husband’s voice right.

I asked 100 women which shampoo they preferred.

Almost all of them replied, “How the hell did you get in here?”

The owner of a chemist walked into his shop one day, only to notice a man leaning heavily against a wall.

The owner went over to his staff member behind the counter and asked them, “What’s wrong with that guy over there by the wall?”

The staff member replied, “Oh him – he came in here this morning to get something for his cough. I couldn’t find any cough syrup, so I gave him an entire bottle of laxative instead.”

The owner shouted, “You fool! What were you thinking? You can’t treat a cough with laxatives!”

The staff member said, “Of course I can. Look at him, he’s not coughed once since I gave it to him – he’s too scared!”

Clarence

XXX

mt_tryforfree
Financial Markets and Political Commentary
 

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About the author

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