ASX: A dodgy looking close on residual buying helped save some face. Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT with Henry Jennings.

 

ASX 200 gave up nearly all the gains to finish up 15 to 7103 having been ambushed by new Covid-19 infection rates and deaths mid-morning after an intraday record. A dodgy looking close on residual buying helped save some face. Having been up over 50 points, the latest from Hubei knocked the stuffing out of the buyers’ enthusiasm and Dow futures fell 100 points on the news. One issue seems to be the way the province is now counting infections and getting more people tested. Results occupied most of today as Super Thursday kept investors on their toes. AMP fell 0,55% after reporting a $2.5bn loss, not unexpected. TLS maintained its dividend despite some lacklustre numbers but lost 1.6% on the merger news from TPM/HTA. NAB cheered the market with its 1Q update rising 1.4% following CBA’s good numbers yesterday, although the banking behemoth fell % as brokers downgraded slightly due to price rise. BRG a standout as its numbers came in better than expected, up 27.6%, and GMG showed why it is a top performer rising 5.8% on a good increase in profits. TWE fell again, down 5.7% as the CEO is set to leave earlier in July and the company commented on its exposure to the luxury sector in China. In other corporate news, TPM rose 11.5% after being given the green light to merge with Vodafone, TLS affected on increased competition. Miners held early gains on higher commodity prices. BHP up 0.4% and RIO up 0.5%. WPL reported today and fell 0.35% despite the rising oil price. The AUD gave back some recent strength on its proxy status for Chinese growth back to 67.23c. 10-year yields rose to 1.05% as Asian markets fell slightly on the pandemic news, China down 0.5% and Japan down 0.24%

  • ASX 200 up 3 to 7091. Ambushed.
  • High 7146 Low 7089 Good volume.
  • Banks try hard to hold gains on CBA and NAB results.
  • Insurers and other financials struggle.
  • TLS slips on Vodafail and TPG merger.
  • CSL rock steady. Miners mixed BHP up FMG down.
  • Results the focus across the board.
  • 10-year bond yields up to 1.05%
  • AUD stable at 67.23c.
  • Dow futures down points.
  • Aussie gold rallies to $2340
  • Bitcoin rallies to US$10414
  • Asian markets fell slightly on the pandemic news, China down 0.5% and Japan down 0.24

STOCKS                                               

  • IEL +6.54% broker upgrades.
  • CTX +2.43% revised bid.
  • PME -3.22% illiquid jury out.
  • BAP -4.50% broker upgrades.
  • NSR +1.84% confirms media talk on takeover
  • CKF +2.62% settles Taco Bill.
  • TPM +11.49% HTA +17.86% merger court agreement
  • BKL -1.32% downgrades
  • BRG +27.63% Toast of the day. PMV +2.40%% Solly owns 28%.
  • PBH 7.58 rally back on.
  • GMG +5.84% delivers.
  • LYC +8.06% online speculation on Malaysian licence.
  • MIN +4.72% broker upgrades.
  • SSM +5.29% bargain hunting.
  • PGL -5.94% isn’t today.
  • AEI -5.10% responds to speeding ticket.
  • ING -5.33% change in substantial holding.
  • BAP -4.50% cools after results.
  • TWE -5.73% CEO goes early, China could be a problem.
  • JHX -3.39% broker downgrades.
  • DEG +20.69% drilling results continue to cheer.
  • BYE +8.47% SM71 drill results.
  • NTU +4.88% placement waiver.
  • SM1-18.76% update on infant sales in China.
  • Speculative stock of the day: Micro-X (MX1) +29.03% selling Nano units to Carestream for the early detection of Covid-19 using its X-Ray imaging machines. Production is being ramped up to meet demand.
  • Biggest Risers: BRG, HTA, TPM, MP1, LYC, PBH, IEL and GMG.
  • Biggest Falls: SM1, TWE, FNP, ING, DOW, PAR. BAP and PNI

TODAY

  • NAB (NAB) +1.38% reports Q1 unaudited cash earnings of $1.65bn, up 1% on 1Q19 (ex-items). Revenue rose less than +1% mainly reflecting a slightly higher net interest margin. CET1 ratio came in at 10.6% vs 10.4% at Sep-19. Expenses rose 3% reflecting the timing and nature of technology and investment spend, combined with higher performance-based compensation. Making progress towards a separation of MLC Wealth.
  • AGL Energy (AGL) +3.59% Half-year earnings. Underlying NPAT of $432m beat expectations of $363.5m despite falling 20%. Underlying EBIT of $693.0m beat the $561.4m expected, while revenue fell marginally on last year’s number to $6.31bn. Net cash from operating activities rose 67% to $1.14bn and the 12-month rolling ROE fell to 11.2% from 13.1%. An 80% franked interim dividend of 47c has been declared, down 8c from a year ago. The company expects FY underlying profit after tax to be in the top half of the previously guided range of $780-860m.
  • Telstra (TLS) –1.57% Half-year earnings. Underlying EBITDA came in at $3.88bn, shy of the $4.14bn expected, despite total income of $13.41bn exceeding the $12.68bn expected. FCF rose 36.6% on this time last year, up to $1.01bn, while capex fell 41.5% to $1.37bn. An interim dividend of 8c (made up of a 5c ordinary and 3c special) is in line with a year ago, although it is the first time since 2017 that the interim dividend has not suffered a cut. The company also repeated FY guidance.
  • Goodman Group (GMG) +5.84% Interim operating profit up 14.1% to $530.4m. Assets under management grew 15% to $49.2bn. Development work in progress increased to $4.3bn from $3.6bn. Operating EPS of 29c beating estimates of 26c. Upgrades guidance. Revenue $1.39bn. Statutory profit of $810.6m Distribution of 15c. Upgrades forecast FY20 EPS to 57.3c vs prior guided 56.3c. Market will like that and confirms FY distribution of 30c.
  • AMP –0.55% Reported a $2.5bn loss including $2.4bn in impairments. Challenging year. Understatement of the season. Underlying profit of $464m down from $680m. Financial services earnings fell 25% to $544m. AMP Capital was the jewel, with a 19% rise to $198m. No final dividend but under review following its AMP life business sale.
  • Breville (BRG) +27.63% NPAT $49.7m beating expectations of $43.5m. Adjusted EBITDA $85.2m vs year-ago $70.5m. Guidance is consistent with previous forecasts of $110m with an increased spend on R&D and marketing.
  • Newcrest Mining (NCM) –1.73% Interim profit up 18% on sales of $1.798bn up 3%. AISC was up 18% though to $880oz. Production fell 12% to 1.1m oz. Copper production up 21`% to 62,468 tonnes. cash and cash equivalents on hand of $691m to leave net debt of $1.365bn on 0.8x EBITDA. Interim dividend of US14.5c up 32%.
  • South32 (S32) +1.57% Revenue down 16%. Special dividend US1.1c. Net profit fell to $99m and underlying EBIT down 80% to US$131m. The fully franked special dividend, on top of $US1.1c in ordinary fully franked interim dividends. The Group’s production guidance remains unchanged with the exception of South Africa Energy Coal which has been adjusted to the bottom end of its prior range and remains subject to market conditions.
  • Woodside (WPL) -0.35% NPAT of US$343m down 75% on the US$722m write-down of the Kitimat Assets in Canada. Reported a $US391m fall in sales revenue due to lower realised prices on the previous year, down 7% US55c a share dividend down from US91c.
  • Magellan Financial (MFG) –1.22% Average FUM up 29% to $92.9bn. Adjusted net profit after tax up 23% to $216.8m. Management fee revenue to $285.9m. Interim dividend up 26% to 92.9c. Should be enough to keep the market happy.
  • Pro Medicus (PME) -3.22% reports H1 underlying NPAT $12.1m vs consensus $10.2m. Revenue A$29.3m up 15.7%. Underlying PBT A$14.8m vs last year’s A$10.2m. Interim dividend 6.0c fully franked. The company’s cash reserves at 31 December 2019 were $38.8m, a rise of 20.2%. The company remains debt-free. 2 key contracts announced during the period.
  • Caltex (CTX) +2.43% confirms that it has received a revised, conditional, nonbinding and indicative proposal from Alimentation Couche-Tard to acquire all of the shares in Caltex by way of a scheme of arrangement at an indicative cash price of 3525c cash per share less any dividends declared or paid by Caltex. The Board is currently considering the Revised Proposal, including obtaining advice from its financial and legal advisers.

ECONOMIC NEWS

  • Reserve Bank of Australia chief Philip Lowe has warned the economic impact of climate change will be “profound”, while the coronavirus is having a “major effect” on education, tourism and business deals which will hit the economy in the short term. Lowe was speaking at an Australia-Canada Economic Leadership Forum in Melbourne. He also warned that climate change was affecting insurance costs, the energy sector and consumer confidence. He finished by saying this,“We’re going to be in this (low interest) world for a long period of time”, he said, adding low interest rates could be around “for years, possibly decades”. So, get used to it is the message.

BOND MARKET

ASIAN NEWS

  • Hubei province, which contains Wuhan, the epicentre of the virus outbreak, reported 14,840 new cases on the disease and 242 more deaths, taking the case total globally above 60,000 and the death toll to 1,355.
  • Of 14,840 new cases, 13,332 are from the new category of clinical diagnosis using CT scans, said the statement. The death toll in Hubei rose by 242, of which 135 cases are from the new method of diagnosis, it said.
  • Hong Kong will extend the temporary closure of non-tertiary schools until March 16, Secretary for Education Kevin Yeung said in a briefing. United Airlines said it will extend the suspension of China flights until April 24. Chinese Grand Prix cancelled. Vietnam GP in doubt too.
  • Beijing says it will help prop up business in light of health issues.
  • MGM Resorts withdrew its earnings forecast for 2020, citing the impact of the virus on its casinos in Macau and Las Vegas. Losing US$1.5m a day from closures.
  • SoftBank reported that the Vision Fund had lost money  for the second quarter in a row, reflecting the decreased value of startups it has backed. The Vision Fund lost 225.1bn yen or US$2.05 bn for the three months ended in December, after losing 970.3 billion yen the quarter before including WeWork and Uber Technologies Inc.

EUROPEAN AND US NEWS

  • Cisco Systems registered a 4% slide in revenue in its latest quarter and predicted a further contraction in the current period.
  • BP head pledges zero emissions by 2050.
  • Mobile World conference cancelled in Barcelona.
  • Euro at lowest level since 2017.
  • Ex Goldman chief says that Sanders will ‘wreck the US economy.’
  • Jeff Bezos has paid US$165m for a new Beverly Hills home. Money down back of the sofa?

And finally…

A Priest was about to finish his tour of duty and was  leaving his Mission in the jungle where he had spent years teaching the natives when he realised that the one thing he had never taught them was how to speak English.

So he takes the chief for a walk in the forest. He points to a tree and says to the chief, “This is a tree.”

The chief looks at the tree and says, “Tree.”

The Priest is pleased with the response. They walk a little further and he points to a rock and says, “This is a rock.”

Hearing this, the chief looks and says, “Rock.”

The Priest was really getting enthusiastic about the results when he hears a rustling in the bushes. As they peek over the top, he sees a couple of natives in the midst of heavy sexual activity.  The Priest is flustered and quickly says, “Man riding a bike.”

The chief looks at the couple briefly, pulls out his blowgun and kills them.

The Priest goes ballistic and yells at the chief that he has spent years teaching the tribe how to be civilised and be kind to each other, so how could he kill these people in cold blood that way?

The chief replied, “He’s riding my bike!!”

Clarence

XXX

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