MID MORNING MARKETS 19-12-17

OVERNIGHT19-12 1

SPI FUTURES +29

US EQUITIES – All reached intra-day highs S&P500 +14 (+0.54%), Dow Jones +140, Nasdaq +58

Main themes

  • Major indices hitting intra-day records
  • Positive day regarding tax bill – House of Representatives expected to hold a tax bill vote on Tuesday, the biggest aspect of which is a cut in the corporate tax rate to 21% from 35%.
  • Corporate activity Campbell Soup (+0.14%) announced it will buy Snyder’s-Lance (+6.95%) for nearly $4.9 billion. Hersheys will buy Amplify Snack for $1.6bn.  In Europe, French aerospace and defense group Thales (+8.2%) announced the purchase of chipmaker Gemalto (+5.6%) for around €4.8bn, to create “a world leader in digital security.”
  • Resources outperform – BMO (Bank of Montreal) raised its price target on Anglo American +5.00% and Glencore +1.89%. Nickel (+2.16%) and lead prices (+1.35%) also posted sharp gains.

EUROPEAN MARKETS – All strong STOXX +1.55%, UK FTSE +0.62%, German Dax +1.59% and French CAC +1.33%.

CURRENCIES

  • The US dollar closed lower, down 0.24% at 93.71.
  • The Aussie dollar rose to US76.67c.

BONDS – US yield curve steepened – 2-yr: -1 bp to 1.83%, 5-yr: +1 bp to 2.17%, 10-yr: +3 bps to 2.39%, 30-yr: +5 bps to 2.74%

COMMODITIES

  • WTI oil down 0.24% or US14c to US$57.16. North Sea pipeline outage continued to underpin oil prices, though operator Ineos says a crack in the line has not spread. In other oil news, Nigerian oil workers went on strike, while the Baker Hughes rig count fell for first week in six despite US production approaching 10mbpd.
  • Gold futures closed up 0.6% or US$8 to US$1,265.50.
  • Iron ore up US$3.70 to US$74.40.
  • LME metals saw big rallies – Copper +28%, nickel +2.16%, aluminium +0.39%.

ECONOMIC DATA, NEWS & POLITICS

US economic data – December NAHB Housing Market Index (actual: 74; Briefing.com consensus: 70; prior: 70)


TODAY

  • RBA Meeting minutes
  • ANZ AGM

TONIGHT

  • European wages data and
  • US data Housing starts, building permit

COMPANY NEWS

  • Retail Food Group (RFG) – Expected impact of persistent challenging domestic retail conditions and other factors on its 1H18 statutory business performance. Domestic revenues tracking lower than expected. Crust and Donut King have continued to perform to expectation, whereas Michel’s Patisserie, Brumby’s and Gloria Jean’s are trading below expectations. Also blamed recent negative media coverage, Associated revenues are now forecast to be below prior expectations and future franchise trading revenues are also likely to be impacted
  • Sirtex (SRX) – New claim against the Company served by Maurice Blackburn for persons who or which acquired an interest in SRX securities during the period from 24 August 2016 to 16 December 2016. It includes allegations of contraventions of the Corporations Act by the Company in relation to misleading and deceptive conduct and breach of continuous disclosure obligations.
  • McMillan Shakespeare (MMS) – Trading update. Expects Underlying NPAT for 1H18 of $44.0m. Based on an expected 1H.2H half split of 47%/53%, FY18 UNPATA will be approximately $93.6m. FY18 performance to date of the Group Remuneration Services segment is exceeding expectations, Asset Management in both Australia and the UK is performing well and in line with expectations, Retail Financial Services (RFS) segment is below expectations. RFS division to be reorganised. Asset impairment change of $9-14m after tax.
  • Beach Energy (BPT) – Awarded PACE gas contract to drill a conventional exploration well in the Otway basin.
  • Fairfax (FXJ) – NZ high court dismisses appeal of NZCC merger decision

MID MORNING MARKETS

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