The ASX is down over 100 points in mid morning trade. Nothing is safe…even Gold is lower. It’s all about tariffs. Tit-for-tat with China now onboard. #ausbiz

Breaking News – China has retaliated with US$3bn tariffs on US imports. 25% tariff on pork imports, 15% tariffs on US steel pipes, 15% on US fruit, 15% on US wine


  • Ex-dividend – AVJennings (AVJ) 2.0c, Briscoe Group Australasia (BGP) 10.7c, Gale Pacific (GAP) 1.0c, IMF Bentham (IMF) 3.0c
  • Japanese inflation



  • UK – CBI Distributive Trades and BoE Quarterly Bulletin
  • US economic data – Durable Orders and New Home Sales
  • Fed Speak – Atlanta Fed President (FOMC voter) Raphael Bostic and Minneapolis Fed President (alternate voter) Neel Kashkari


  • Rio Tinto (RIO) – Has sold 75% interest in Winchester South coking coal project to Whitehaven Coal (WHC) for total cash consideration of US$200 million. US$150 million of the consideration will be payable on completion with US$50 million be payable 12 months post completion. This should be well-received as very little value was being ascribed to the project. It continues the push to streamline the business and exit the coal business. Kestral is the last remaining coal asset and it is alos up fro sale.
  • Galaxy (GXY) – FY17 Results and upgraded mineral resource and ore reserve estimates at the Mt Cattlin project. Gross profit of $33.5m (from zero) on revenue of $125.6m (also from nil!). Upgraded Mt Cattlin operation exhibited a smooth ramp up to annualised run rate of >200ktpa, achieved in Q4 2017 Strong cash flow has seen all debt repaid.


  • Transurban (TCL) – Has acquired the A25 toll road in Montreal from Macquarie Infrastructure Partners for C$840 plus transaction costs of C$18m. The A25 is a 7.2km toll road and bridge connecting Northern Montreal across the Rivière des Prairies to commercial and residential areas. It opened in May 2011 with a concession to September 2042.
  • Qantas (QAN) – The ACCC is granting re-authorisation to an alliance between Qantas Airways Limited (ASX: QAN) and Emirates for a further five years, subject to a condition to address the Sydney-Christchurch route. The agreement allows for an alliance to coordinate their operations, including in relation to: planning, scheduling, operating and capacity, sales, marketing, advertising, promotion, and pricing for passengers, freight customers and agents, connectivity and integration of certain routes, codeshare and interline arrangements, frequent flyer programs and all aspects of customer service (including ground services and lounge access).
  • Fisher & Paykel (FPH) – New research has been published in the prestigious New England Journal of Medicine that shows significant benefits of Optiflow nasal high flow therapy for pediatric patients requiring respiratory support. FPH says ““This study provides further, compelling evidence of the efficacy of our Optiflow nasal high flow therapy. It is encouraging to see such a meaningful improvement to patient care. Having such reputable and robust clinical evidence of the effectiveness of our therapy is very significant and will help to drive change in clinical practice.”
  • Tatts Group (TTS) has priced a new US$1.4 billion issue of longterm notes to investors in the US private placement market.


Sigma Healthcare (SIG 81.5) – FY results yesterday. Underlying NPAT down 10.5% to $59.9 on revenue down 5.4%. Excluding Hep-C sales revenue was steady with growth able to offset other conditions. Operating costs up 4.0%. EBIT margin down from 2.3% to 2.2%. Current guidance confirmed.

Citi has a Sell recommendation and has cut its target price by 5.4% to $70c. The analyst thinks the stock is overvalued due to the structural challenges associated with the base business and the execution of its capital deployment plan. FY19 guidance of around $90m in earnings (EBIT) suggests the base business is going backwards, since acquisitions should contribute over $3m. They see poor prospects for the PBS distribution business because of rising volumes and costs and assumes the company progressively loses Chemist Warehouse as a customer at the end of its current service contract in June 2019.

Credit Suisse has a Neutral recommendation with a target price of 82c (from 84c). The analyst expects PBS revenues to remain under pressure as some manufacturers are choosing to by-pass wholesale distributors and go directly to pharmacies. Higher growth of non-PBS revenue and the potential winding back of the remaining trade discounts to pharmacy should raise gross profits through FY19.

UBS has a Sell recommendation but has raised its target price by 7.1% to 75c.  With operating expenditure running ahead of sales growth, the analyst expects the challenging earnings environment to continue. The current Chemist Warehouse supply deal is set to lapse in June 2019.

Morgan Stanley has an Underweight recommendation but has raised its target price to 80c (from 79c). No growth is expected based on the current guidance. Morgan Stanley observes the second half performance became more challenged as the year progressed, firstly from Chemist Warehouse disruption and subsequently from broader-based industry challenges. The analyst suggests this is not the optimal time to be investing for growth.


Brickworks (BWK $15.91) – Citi has raised its target price by 7.4% to $16.20. Macquarie has raised its target price by 7.9% to $15.60. Bell Potter has downgraded to a Hold (from Buy) recommendation and cut its target price by 2.6% to $15.335


Baby Bunting (BBN $1.38) – Citi has downgraded to a Sell recommendation





US EQUITIES – S&P500 -68 (-2.52%), Dow Jones -724 (-2.93%) near its lows of -744, Nasdaq -179 (-2.43%).

Main themes –

  • President Trump signed an order seeking $60bn in tariffs on Chinese imports as penalty for intellectual property theft. Details will be published within 15 days. President Trump added “this is the first of many [orders].” Selling picked up over the day and the market closed near its lows. (The Dow dropped 250 points in the final hour)
  • Disappointing PMI readings in Europe also weighed
  • Continued focus on Fed rate rise on Wednesday
  • Disappointment regarding Mark Zuckerberg’s “apology” regarding the Cambridge Analitica data breach

EUROPEAN MARKETS – STOXX -1.55%, UK FTSE -1.23%, German Dax -1.70%, French CAC -1.38%.


  • The US dollar is a little stronger at 89.82.
  • The Aussie dollar has reversed the gains of the previous day, down 0.84% to US77.01.

BONDS – 2-yr: -3 bps to 2.28%, 5-yr: -7 bps to 2.63%, 10-yr: -8 bps to 2.83%, 30-yr: -6 bps to 3.07%


  • WTI oil was down 1.3% to US$64.30 a barrel
  • Gold was up 0.5% to US$1,327.40
  • Iron ore was up US50c to US$68.50.
  • LME metals were mostly weaker – copper -1.44%, nickel -2.01%, aluminium +0.63% the exception.


  • Bank of England left interest rates and purchase program at their respective 0.50% and £435bn, but two policymakers voted for a hike, hinting at a higher likelihood of a rate increase in May.
  • US economic data – Weekly Initial Claims 229K (consensus 225K; prior 226K) and Continuing Claims 1.828m (prior 1.885m), January FHFA Housing Price Index 0.8% (consensus 0.4%; prior 0.4%), Leading Indicators 0.6% (consensus 0.5%; prior 1.0%)
  • Eurozone data – March Manufacturing PMI 56.6 (expected 58.1; last 58.6) and Services PMI 55.0 (expected 56.0; last 56.2). January Current Account surplus €37.60bn (expected €30.20 billion; last €31.00 billion); German Manufacturing PMI 58.4 (expected 59.8; last 60.6) and Services PMI 54.2 (expected 55.0; last 55.3). March Ifo Business Climate 114.7, as expected (last 115.4). March Current Assessment 125.9 (expected 125.7; last 126.4) and Business Expectations 104.4, as expected (last 105.4); French March Manufacturing PMI 53.6 (expected 55.6; last 55.9) and Services PMI 56.8 (expected 57.0; last 57.4). March Business Survey 111, as expected (last 112).
  • UK data – February Retail Sales +0.8% (expected 0.4%; last -0.2%) to be +1.5%yoy (expected 1.3%; last 1.5%). February Core Retail Sales +0.6% (expected 0.4%; last -0.2%) to be +1.1%yoy (expected 1.2%; last 1.3%)


“You could arm-wrestle with a T. rex and win, but you shouldn’t because it only makes them mad.” – Robert T. Bakker, American scientist born this day in 1945.


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