The ASX is down 3 points in mid morning trade, having been down as much as 25. Unfranked yield plays outperforming along with miners and consumer stocks. Bank fail (yeah right…it’s all in the price!!!) NCM will miss guidance. #ausbiz
TODAY
- Ex–dividend – Adacel Tech. (ADA) 2.0c, Automotive Holdings Group (AHG) 9.5c, Ausdrill (ASL) 3.5c, Bapcor (BAP) 7.0c, Contact Energy (CEN) 12.1c, DWS (DWS) 5.0c, EBOS Group (EBO) 27.3c, Embelton (EMB) 20.0c, Inghams Group (ING) 9.5c, Lindsay Australia (LAU) 0.8c, Laserbond (LBL) 0.2c, Legend Corporation (LGD) 0.7c, McMillan Shakespeare (MMS) 33.0c, Midway (MWY) 9.0c, Noni B (NBL) 9.0c, Paragon Care (PGC) 1.1c, The PAS Group (PGR) 1.5c, Peet (PPC) 2.0c, Spark New Zealand (SPK) 11.2c,
- Australian economic data – New Motor Vehicle Sales
TONIGHT
- US economic data – Empire Manufacturing, Philadelphia Fed, NAHB Housing Market Index, Net Long-Term TIC Flows
COMPANY NEWS
- Bank Royal Commission continues today – The focus yesterday continued to be NAB’s referrer loan scheme which saw significant loans raised and was very profitable…but which involved fraud at a variety of branches (and is still in existence today). Today the focus moves to the CBA subsidiary Aussie Home Loans. More pressure on the banks is expected.
- Newcrest Mining (NCM) – Update on Cadia and the failure of the tailings dam. Not expected to meet production guidance for 2018 year
- Altura (AJM) – response to market speculation and confirmation that it has been in discussions with Shaanxi J&R Optimum Energy Co Ltd regarding a potential control transaction. AJM says the discussions are confidential, incomplete, indicative and non-binding, and any proposal would be subject to a number of conditions including regulatory approvals in China and Australia.
- St Barbara (SBM) Has bought 10% of ABM Resources NL (ABU) through a share placement at a price of 10cps. The $4.4 million investment by St Barbara represents a shareholding of 10% in ABM. ABM holds a large tenement package in the proven multi-million ounce Tanami Gold district in the Northern Territory, and the investment by St Barbara will provide ABM with additional funding to accelerate targeted exploration activities across its tenement package.
- Aurizon (AZJ) – The ACCC has raised preliminary competition concerns about Pacific National’s proposed acquisitions of Aurizon’s Queensland intermodal freight haulage business and intermodal rail terminal at Acacia Ridge in Brisbane. Pacific National and Aurizon are the only providers of intermodal rail linehaul services in Queensland and compete closely with each other. The ACC said “Aurizon’s decision to sell its Queensland intermodal operations and the Acacia Ridge Terminal to its closest competitor, while shutting down its remaining intermodal business, will fundamentally change this market. We are concerned about the impact on competition in the freight industry.”
BROKER CHANGES
- Smartgroup (SIQ $11.00) – Morgans has lowered its target price to $11.60 from $11.70. With lower gearing after a $75m placement, the analyst thinks SIQ is in a position to make an acquisition in the order of $20-30m. They also see further organic growth through scale benefits.
- TPG Telecom (TPM $6.04) – TPG reports next Tuesday and Macqurie doesn’t expect investors to price in any material upside from its mobile strategies. While fixed line competition remains strong, the analyst thinks any NBN delays are a positive for TPG. Macquarie has a Neutral recommendation with a target price of $6.50
- Webster (WBA) – Bell Potter has upgrade to a Buy (from hold) recommendation and raised its target price by 22% to $1.76
OVERNIGHT
SPI FUTURES -7
US EQUITIES – S&P500 -16 (-0.57%), Dow Jones -249 (-1.00%), Nasdaq -14 (-0.19%)
Main themes –
- Trade war fears the main “theme” – President Trump is now reportedly looking to hit China with steep tariffs and investment restrictions as early as next week. The t$60bn in tariffs would initially be targeted towards information technology, telecoms, and consumer electronics as “punishment” for alleged intellectual property theft, but could eventually be much broader and include visa restriction.
- Boeing -2.48% on trade war fears
- Big range for the Dow of over 460 points.
- Core PPI came in as expected (+0.2%) but retail sales disappointed (-0.1% actual vs +0.3% consensus)
- Flattening yield curve put pressure on financials.
EUROPEAN MARKETS – Mostly lower. STOXX -0.15%, UK FTSE -0.09%, German Dax +0.14% the exception, French CAC -0.18%.
CURRENCIES
- The US dollar was up 0.12% at 89.77.
- The Aussie dollar is up 0.24% to US78.76c.
BONDS – The yield curve flattened. 2-yr: -1 bp to 2.25%, 5-yr: -2 bps to 2.61%, 10-yr: -3 bps to 2.82%, 30-yr: -4 bps to 3.06%
COMMODITIES
- WTI oil was up US25c at US$60.96. EIA US crude stocks rose by 5mb, the biggest jump since late January, higher than the 2mb increase expected.
- Gold futures were down 0.11% at $1325.60.
- Iron ore was unchanged at $70.50.
- LME metals were mixed – copper +0.63%, nickel -0.29%, aluminium -0.67%.
ECONOMIC DATA, NEWS & POLITICS
- US economic data – Weekly MBA Mortgage Index 0.9% (prior 0.3%), February Retail Sales -0.1% (consensus 0.3%; prior -0.1%), Retail Sales ex-auto 0.2% (consensus 0.4%; prior 0.1%), February PPI 0.2% (consensus 0.1%; prior 0.4%), and Core PPI 0.2% (consensus 0.2%; prior 0.4%), January Business Inventories 0.6% (consensus 0.6%; prior 0.6%)
- Longtime CNBC personality Larry Kudlow will replace Gary Cohn as President Trump’s top economic advisor, as expected.
- European data – Q4 Employment Change +0.3% qoq as expected (last 0.4%) to be +1.6% yoy (last 1.7%). January Industrial Production -1.0% (expected -0.4%; last 0.4%) and +2.7%yoy (consensus 4.7%; last 5.3%). German CPI +0.5% as expected (last 0.5%) to be +1.4%yoy as expected (last 1.4%). Italian Retail Sales -0.5% (expected -0.1%; last -0.9%) to be -0.8% yoy (last -0.2%). Spanish Retail Sales +2.2%yoy (last 0.6%)
- Macquarie has pushed back its expectations for a move in interest rates, saying the RBA will be on hold until early 2019. an RBA rate hike. While the economy is improving, the unemployment rate remains too high, and wages and price inflation too low for the 25 basis points increases factored into markets in August and November this year,
- Chinese data yesterday – Retail sales were a slight miss but some great numbers for industrial production. Giving a boost to steel and iron ore futures prices. No hard landing here…move along.
QUOTE OF THE DAY
“Don’t despair too much if you see beautiful things destroyed, if you see them perish. Because the best things are always growing in secret.” – Ben Okri, Nigerina poet born this day in 1959
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