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

 

ASX 200 slips from early rally to close up 1.5 to 6741 in a quiet nervous day. Bank results proving reasons to stand aside. US futures down points. After a promising opening, bank shares dragged the market back to earth on fears of dividend cuts and media commentary about results. CBA down 0.3% and WBC down 0.2%. Insurers too felt the pressure with QBE down 1.2% and IAG down 1.1%. Miners were firm led by BHP up 1.1% and FMG up 2.1% though golds wilted in the sun with NCM down 0.8%. Healthcare stocks continue to bubble higher as COH up 1.4% and RMD up 2.2% lead the way. In corporate news, SGM fell 8.8% after a market downgrade. Another one. Two in 6 weeks. In other news, BPT rose 2.1% after a gas discovery, VEA up 3.5% on a quarterly update and in Asia HSBC comes in below estimates for its profit results. China and HK surprisingly ok up 5%. Europe the problem child.. 10-year bond yields rose again to 1.10%. The AUD was steady at 68.15c and Asian markets better with Japan up 0.4% and China up 0.7%

Today’s Highlights

  • ASX 200 up 1.5 points to 6741 as bank rally fades. Low volume.
  • High 6766 Low 6740. Narrow range. Waiting for Jezza.
  • Banks sag ahead of numbers this week.
  • Miners push ahead. Consumer stocks weaken.
  • Healthcare stocks in the pink.
  • Insurers under pressure.
  • AUD steady at 68.15c
  • GBP/AUD still 1.88c
  • 10-year yields up to 1.10
  • Aussie gold rises to $2207
  • Bitcoin shows huge volatility falls then rallies on Chinese news US$9674
  • US futures down 23.
  • Asian markets firm with Japan up 0.4% and China up 0.7%

STOCKS

  • PLS +10.71% rock bottom? Lithium improves.
  • BPT +2.13% quarterly and gas discovery.
  • SGM -8.82% another downgrade on scrap prices.
  • PET -4.95% Chinese subscidary granted High Tech Status.
  • MSB -4.95% profit taking.
  • JMS -3.03% Manganese price falls.
  • RFF +2.25% chicken has crossed the road. Buys cows instead.
  • SYR -2.53% issues a $55m convertible note.
  • VEA +3.55% quarterly update
  • TTT +14.58% ASTM standards achieved.
  • CYP +10.00% coronary treatment grant.
  • WZR +12.00% NAB offers line of credit.
  • WEB +1.85% gaining friends.
  • RMD +2.18% broker upgrades.
  • D2O -5.23% profit taking.
  • ISX – response to ASX query and its not looking great.
  • LLC +1.71% rallying hard still as property picks up. Broker upgrade helps.
  • CWY -3.78% brokers weigh in and sell.
  • Speculative stock of the day: Nothing on any volume.
  • Biggest Risers: PLS. PAR, PRU, ORE, CDA and AFG.
  • Biggest Falls: SGM, IFT, PET, MSB, OPT, GOR and CWY.

TODAY

  • Phoslock Environmental Technologies’ (PET) -4.95% Chinese subsidiary granted National High-Tech Enterprise Status by the Chinese government. PET’s corporate tax rate will be reduced from 25% to 15% for an initial period of three years and is able to apply the lower tax rate retrospectively for FY19. At the end of the initial period, the company can apply for a continuation of this status.
  • Sims Metal (SGM) –8.82% Now expects an Underlying EBIT loss for the first half of FY20 in the range of $20m- $30m, reflecting a downturn in scrap metals prices. Full-year Underlying EBIT is anticipated to be between $20-50m.
  • Beach Energy (BPT) +2.13% Q1 production down 6% on the June quarter to 6.55MMboe following the sale of its 40% stake in the Victorian Otway assets. After adjusting for the Otway sale (a pro forma basis) quarterly production was 1% higher than the prior quarter. Sales volumes and revenue were down 12% and 13% respectively on the June quarter. FY20 guidance was unchanged. BPT also announced Beharra Springs Deep gas discovery in the Perth Basin, Western Australia.
  • Dacian Gold (DCN) – Reaffirms full-year production guidance of 150,000 to 170,000 ounces of gold from its Mt Morgans operations, slightly weighted to the second half. Production came in at 42,002 ounces over the three months.
  • Viva Energy (VEA) +3.55% Refining margin down to US$8.8/barrel in the September quarter, reflecting higher crude premiums and the planned maintenance of the Platformer in August.
  • Eclipx Group (ECX) -0.58% Expects to recognise a non-cash impairment charge between $95m -$100m after tax in FY19. The charges relate to Group’s remaining non-core businesses, Right2Drive and CarLoans, and carrying value of software.
  • Rural Funds Group (RFF) +2.25% To sell its poultry assets to ProTen Investment Management for $72.0m, the funds from the sale will be initially used to repay debt. Rural Funds Management (RFM) has also entered into options to acquire three cattle properties: Petro, High Hill and Willara, for $22.6m. FY20 guidance unchanged.
  • Helloworld Travel Limited (HLO) – CFO, Michael Burnett, to leave the business in January 2020. An executive search is currently being undertaken.

ECONOMIC NEWS

  • First home buyers scheme is being thrashed out to support struggling property developers. The FHLDS will guarantee eligible buyers the ability to buy a property in Sydney of up to $700,000 with a 5% deposit. The scheme is limited to the first 10,000 with rich parents. The median value of a Sydney home is $1.4m. So a shoebox on the edge of town.

BOND MARKET

ASIAN NEWS

  • HSBC misses the mark with a 12% fall in pre-tax profits. Revenue fell 2% amidst HK protests.
  • Chinese slowdown continues. Bloomberg Economics’ gauge aggregating the earliest available indicators from financial markets and businesses showed the economy cooling for a sixth month.
  • Vietnam has levied Chinese and South Korean steel makers with duties. Five-year tariffs on colour coated products amidst dumping locally.
  • The Chinese Central Committee convenes today behind closed doors. First time since February 2018. Hopes are slim for a decisive outcome from this Plenum.
  • South Korean exports in the first 20 days of October, a leading indicator for intra-Asian trade and for the tech cycle, dropped almost 20%, extending their decline to 10 months.
  • The wholesale pork price in China is up 154%.
  • EUROPEAN AND US NEWS
  • US Budget deficit is now nearly US$1 trillion. A trillion here, a trillion there, pretty soon you are talking real money. Something the US is sadly lacking. Real money.
  • Government spending is now the highest in sevek years. So much foir Trump cutting government spending.
  • Prologis will buy Liberty in a US$12.6bn industrial warehouse deal. No breakfast at Tiffany’s as LVMH’s bid gets rejected.
  • Brexit extension to be announced by Brussels.
  • Microsoft wins a USA$10bn cloud contract.
  • Morgan Stanley favors an overweight position in financials, consumer staples and utilities in the US and says growth stocks will underperform.
  • Big week for Brexit. Needless to say the French are a problem again. Aren’t they always.

RWC odds.

Get in.

And finally………………….

A man on a desert island…been there a while…Out of nowhere, he sees a speck on the horizon.

“It’s too small to be a ship,” he thinks to himself. As the speck gets closer, he rules out the possibility of it being a small boat, then a raft. Suddenly, a gorgeous blonde woman emerges from the surf wearing a wet suit and scuba gear.

She approaches the stunned man and asks, “How long has it been since you’ve had a cigarette?”

“Ten years!” he says. She unzips a waterproof pocket on her left sleeve and pulls out a pack of fresh cigarettes.

He takes one, lights it, takes a long drag, and says, “Man, is that ever good!”

Then she asks him, “How long has it been since you’ve had a sip of bourbon?”

Trembling, he replies, “Ten years!”

She unzips a waterproof pocket on her right sleeve, pulls out a flask, and gives it to him.

He opens it, takes a long swig, and says, “That’s fantastic!”

Then she starts slowly unzipping the long zipper down the front of her suit, looks at him seductively, and asks, “And how long has it been since you’ve played around?”

The man, with tears in his eyes, replies, “Don’t tell me you’ve got golf clubs in there!”

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