The ASX is up 59 points in mid-morning trade. All sectors positive. Dearth of news. RBA meeting, retail sales and current account out later. RHC, MPL, NCK BGA ex-div #ausbiz
- RBA Interest Rate Decision – no change is expected
- Domestic economic data – TD-MI Inflation Gauge, Current Account, Retail Sales
- Ex-dividend – Bega Cheese (BGA) 5.5c, CMI 3.0c, Century Australia Investments (CYA) 2.1c, Downer EDI (DOW) 13.0c, Homeloans (HOM) 0.9c, Mayfield Childcare (MFD) 7.7c, Mortgage Choice (MOC) 9.0c, Medibank Private (MPL) 5.5c, Nick Scali (NCK) 16.0c, Nine Entertainment Co. Holdings (NEC) 5.0c, Oil Search (OSH) 6.9c, Ramsay Health Care (RHC) 57.5c, St Barbara (SBM) 4.0c, Sonic Healthcare (SHL) 32.0c, Salmat (SLM) 1.0c
- US Factory orders
- Fairfax (FXJ) – merger agreement between Stuff Limited (FXJ) and NZME has been terminated, with a new agreement with new commercial terms agreed. The Court of Appeal proceeding is continuing.
- Syrah Resources (SYR) – Mining agreement signed with the government of Mozambique
- Telstra (TLS) – News Corp and Telstra sign definitive agreements to combine Foxtel and FOX SPORTS Australia. The key commercial arrangements include: News Corp will have 65% shareholding in the combined entity and Telstra will have 35%; News Corp will appoint four directors (including the Chairman) to the combined entity’s board and the senior executives, and Telstra will appoint two directors; News Corp will consolidate the combined entity into its financial statements. The combined company will: Put greater emphasis on live streaming products and an expanded library, including domestic content; Deliver new and creative products and packages across devices and platforms, with investment in exclusive content and technology, including a focus on high quality FOX SPORTS Australia productions; Expand distribution channels for Foxtel and FOX SPORTS Australia products, along with developing greater operating efficiencies across the combined businesses; and Leverage the benefits of the assets and experience of News Corp in Australia and around the world. TLS will record a one off accounting gain as a result of the fair value of the combined business compared with the book value of $263m. There are no changes to Telstra’s previously stated guidance for financial year 2018.
- TechnologyOne (TNE) – The 1H roadshow presentation is available.
- James Hardie (JHX) – Investor Roadshow presentation
- Vocus (VOC) – Appointment of Bob Mansfield as Independent Chairman
- Crown (CWN) – Announcement regarding media reports of “disciplinary” proceedings by the Victorian Commission for Gambling and Liquor Regulation (the Commission). It relates to the use of blanking buttons on a limited number of electronic gaming machines. Between March and April last year. CPH Group advises sale of Crown shares. CWN says no court proceedings have been issued and no disciplinary action has been taken at this stage.
- Oil Search (OSH) – RBC Capital Markets has cut its target price by 6.7% to $7.00
- Qube (QUB) – Macquarie has cut its target price by 10% to $2.60
- Caltex (CTX) – Citi has upgraded to a Buy (from Neutral ) recommendation.
- Bank of Queensland (BOQ) – Ord Minnett has downgraded to a Lighten (form Hold) recommendation but has raised its target price to $11.20 (form $11.00).
SPI FUTURES +48
US EQUITIES – S&P500 +30 (+1.10%), Dow Jones +337 (+1.37%), Nasdaq +73 (+1.00%)
Main themes –
- Strength was explained by easing trade war concerns, but there are mixed reports here and I’m not sure whether it’s a bargaining chip to gain ground with NAFTA or he is serious.He is ruling out exemptions and expanding the rhetoric, while political support looks to be waning with House Speaker Paul Ryan saying he was “extremely worried” about Trump’s trade plan.
- All sectors finished higher but Energy sector outperforms on higher oil price.
EUROPEAN MARKETS – Mostly higher. STOXX +1.04%, UK FTSE +0.65%, German Dax +1.49%, French CAC +0.60%. Italy -0.42% after the weekend election led to a hung parliament.
- The US dollar was 0.09% higher at 90.02.
- The Aussie dollar is little changed at US77.65c.
BONDS – 2 2-yr: +1 bp to 2.24%, 5-yr: +2 bps to 2.64%, 10-yr: +2 bps to 2.88%, 30-yr: +2 bps to 3.15%
- WTI oil was up US$1.32 or 2.2% at US$62.57. Prices got a boost from positive comments from oil ministers after the CERAWeek conference, the largest energy industry conference, in Houston. The IEA also said it expects oil demand growth to average a fairly robust 1.1%a year to 2023 and noted that OPEC would fail to significantly increase its production capacity.
- Gold futures were down 0.36% to US$1318.70.
- Iron ore was unchanged at $80.00.
- LME metals were mostly weaker – copper +0.17 and exception, nickel -0.15%, aluminium -0.169%.
ECONOMIC DATA, NEWS & POLITICS
- Trade war update – Republican lawmakers are reportedly looking at ways to prevent President Trump from imposing tariffs on imports of metals while President Trump reiterated his support for imposing tariffs unless he is pleased with NAFTA renegotiations.
- US economic data – February ISM Services 59.5 (consensus 58.8; last 59.9)
- Italian general election produced inconclusive results: populist parties secure 60%+ of the vote with the center-right coalition received 37.0% of the vote (a statement against the EU’s immigration policy) and Movimento Cinque Stelle got 31.0% of the vote. Partido Democratico had its worst showing ever after running the government for the past five years. Democratic Party leader Matteo Renzi resigned after the dismal showing. It looks like none of Italy’s three main groups will be able to rule alone and there is little prospect of a return to mainstream, moderate government.
- European data – Eurozone February Services PMI 56.2 (expected 56.7; last 56.7); Retail Sales -0.1% (expected 0.3%; last -1.0%) and +2.3%yoy (consensus 2.1%; last 2.1%). March Sentix Investor Confidence 24.0 (expected 31.1; last 31.9); German February Services PMI 55.3, as expected (last 55.3), French February Services PMI 57.4 (expected 57.9; last 57.9); Italian February Services PMI 55.0 (expected 57.3; last 57.7); Spanish February Services PMI 57.3 (expected 56.5; last 56.9)
- UK February Services PMI 54.5 (expected 53.3; last 53.0)
- China – China’s February Caixin Services PMI 54.2 (expected 54.3; last 54.7). China’s government set a 6.5% growth target for 2018 and also said that it aims to pursue “stable and healthy development” of the property market in 2018 with an increased focus on providing affordable housing and developing the rental market.
QUOTE OF THE DAY
“I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” – Alan Greenspan, American economist born this day in 1926.