• The ASX 200 is down 25 points at 11am, with most sectors in the red. TWE posts positive result, guidance upgrade for BPT, takeover for SRX and Q reports for ORG, IFN, AWE
  • The focus is on inflation data later today, with consensus for an annual increase of 2%., and the FOMC decision tonight (even though no rate change is expected).



  • Banks in focus after ASIC rate rigging allegations for CBA
  • Inflation data


  • Chinese PMI numbers



  • FOMC decision tonight – Expectations of a rate hike are 4.1%. There is no press conference – just the policy statement – but a more hawkish tone is expected.
  • US data – ADP employment chance
  • European inflation and unemployment


  • Treasury Wine Estates (TWE) – 1H profit up 37% to $187.2 on strong Asian sales. Margin accretion up 4.4ppts to 21.9%. Diageo Wine integration complete. Asia, Europe and ANZ outperforming expectations. Transforming the US route-to-route operations. 15c dividend. TWE aligned with current F18 consensus EBITS forecast of $524m and EBITS growth expected to accelerate to 25% in F19. TWE estimates that the US tax cuts will result in a c.2-4% EPS10 accretion in 2H18. The result is 2 weeks early and the market should be happy.
  • Sirtex (SRX) – Board recommends $1.6bn takeover by Varian Medical Systems. $28 cash offer per share represents a 49% premium to the prior closing price and represents a multiple of approximately 18.6x the mid-point of the forecast FY18 EBITDA contained in Sirtex’s trading update of 17 January 2018. Values SRX in line with global peers.
  • Origin Energy (ORG) – December Q report. Production up 12% in the 1H. 1H revenue up 40% to $1.336bn. 200th LNG cargo loaded on 1 January. 2Q production up 4%
  • Beach Energy (BPT – Revised FY18 guidance and production report. Pro forma production guidance increased to 25.5 – 27.6 MMboe (from 24.9 – 27.2 MMboe); Beach guidance increased to 10.6 – 11.0 MMboe (from 10.0 – 10.6 MMboe); Lattice performing in line with expectations; no change to production outlook. Capital expenditure guidance reduced to $405 – 455 million (previously $425 – 535 million); additional Cooper Basin activity offset by prudent value-based timing deferrals for certain Lattice projects; participation in up to 98 wells (20 well increase from beginning of year outlook).
  • AWE – Update to market. Assessed the Mitsui proposal and leads to a superior proposal and Mineral Resources have been given 3 days to match it. Until then, they remain in favour of the minerals resouces proposal. Also production for the quarter steady at 643,000 barrels. 1H sales revenue up 19%.
  • QBE – S&P has affirmed its rating with stable outlook
  • Independence Gold (IGO) – December Q report
  • Infigen (IFN) – December Q production and revenue
  • Specialty Fashion Group (SFG) – Responded to media speculation about a change in control – discussions are not advanced enough to make an announcement to the market at this stage.
  • GUD – Underlying profit up 14% to $44.7m on revenue up 11%.
  • Coca-cola Amatil (CCL) – Change in management


  • Navitas (NVT) – Macquarie has cut its target price by 2.4% to $4.80. UBS has cut its target price by 5% to $4.75. Citi has raised its target price by 2.1% to $4.90. Credit Suiise cut its target price 8.0% to $4.00
  • Netwealth (NWL) – UBS has initiated coverage with a Sell recommendation and a target price of $5.55.
  • Wesfarmers (WES) – UBS has cut its target price by 3.3% to $41.30
  • Credit Corp (CCP) – Cannacord Genuity has cut its target price by 3.6% to $22.25
  • Nearmap (NEA) – Morgan Stanley has initiated coverage with an Overweight recommendation and a target price of $1.30
  • 3P Learning (3PL) – Morgan Stanley has initiated coverage with an Overweight recommendation and a target price of $2.20
  • Temple & Webster (TWP) – Bell Potter has raised its target price by 5.8% to 55c.
  • Fortescue Metals Group (FMG) – Macquarie cut its share price target by 2.4% to $6.5
  • Incitec Pivot (IPL) – Credit Suisse upgraded to a a Neutral (from Underperform) recommendation and raised its target price 5.2% to $3.67.




US EQUITIES – S&P500 -31 (-1.09%), Dow Jones -363 (-1.37%) and was down 411 at the lows, Nasdaq -64 (-0.86%).

Main themes –

  • Caution ahead of President Trump’s first State of the Union address
  • Health care sector slides after Amazon (AMZN), Berkshire Hathaway (BRK.A), and JPMorgan Chase (JPM) announced they will be partnering to form a health care company to cut costs for their employees. United Health (-4.4%)
  • Treasury yields continue to hover at multi-year highs
  • Basic materials finished lower after Reuters reported that the second-largest province has asked coal miners to shorten or cancel staff holidays during upcoming Spring Festival celebrations in order to avoid a power crisis due to higher-than-usual heating demand.

EUROPEAN MARKETS – Lower across the board. STOXX -0.92%, UK FTSE -1.09%, German Dax -0.95%, French CAC -0.87%.


  • The US dollar closed down 0.13% at 89.19, just marginally above 3 year lows.
  • The Aussie dollar is also a touch lower at US80.87

BONDS – 2-yr: UNCH at 2.12%, 5-yr: +1 bp to 2.51%, 10-yr: +3 bps to 2.73%, 30-yr: +4 bps to 2.98%


  • WTI was US$1.06 or 1.6% lower at US$64.50. Brent was down US45c to US$69.01.
  • Gold futures were down US$4.90 or 0.4% to US$1,345.40
  • Iron ore down US25c to US$73.50.
  • LME metals were all lower – aluminium -81%, nickel -3.30%, copper -0.62%


  • US Economic Data – November S&P Case-Shiller Home Price Index 6.4% (consensus 6.4%; prior 6.4%), January Consumer Confidence 125.4 (consensus 124.0; prior 123.1)
  • US Treasury will make its quarterly refunding announcement tomorrow: increased issuance expected
  • UK – reports point to growing pressure on Prime Minister Theresa May to step down as soon as an outline of a Brexit deal is prepared
  • Eurozone data – Q4 GDP +0.6% as expected (last 0.7%) and +2.7%yoy, as expected (last 2.8%). January Business and Consumer Survey 114.7 (expected 116.3; last 115.3)
  • German January CPI -0.7% (expected -0.5%; last 0.6%) to be up 1.6% over the year (expected 1.7%; last 1.7%)
  • Spain Q4 GDP +0.7% as expected (last 0.8%) to be up 3.1% over the year (expected 3.2%; last 3.1%)

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