The ASX 200 is up 15 points in mid morning trade after positive leads from a global markets focused on earnings rather than tweets. Most sectors ok but banks still under pressure, CYB charge for PPI costs, RIO Q prodn and NXT back on line #ausbiz



  • Ex-dividend – Washington H. Soul Pat (SOL) 23.0c
  • China – Industrial Capacity Utilization, House Price Index
  • Japan – Balance of Trade and Imports /Exports


  • European – Inflation Rate, Construction Output
  • UK Inflation Rate
  • US Beige Book
  • US earnings – Morgan Stanley (MS), U.S. Bancorp (USB), After The Close – Alcoa (AA), American Express (AXP), BancorpSouth (BXS), Canadian Pacific (CP)


  • Bank Royal Commission – Today the ofcus will be on “platforms” and the conflict these may cause in the financial advice sector.
  • Rio Tino (RIO) – Quarterly production report. Guidance: Iron ore – Pilbara shipments in 2018 are still expected to be between 330-340mt (100 per cent basis). Aluminium – Rio Tinto’s share of production in 2018 is expected to be between 49-51mt of bauxite and 8.0-8.2mt of alumina. Aluminium guidance of 3.5 to 3.7mt will be adjusted following completion of the sale of the Aluminium Dunkerque and ISAL smelters. Adjustments may also be made as a consequence of the US sanction Share of mined copper production for 2018 is unchanged at between 510-610 thousand tonnes. Refined copper production is expected to be between 225-265 thousand tonnes. Diamond production guidance for 2018 is between 17 and 20 million carats.


  • Credit Corp (CCP) – Market update. Guidance confirmed


  • CYCG Plc (CYB) – Increase in legacy PPI costs. Will increase its provisions for legacy PPI costs by £350 million – the remaining undrawn indemnity amount (from NAB) of £148 million will be fully utilised, with the balance funded by CYBG. There will be a charge of £202 million (pre-tax) in its income statement for the six month period ended 31 March 2018, resulting in a pro forma reduction in CET1 ratio of approximately 100 basis points as at 31 December 2017.
  • Woodside Petroleum (WPL) – Quarterly production. Higher QoQ production of 22.2 MMboe and sales revenue of $1,169m; achieved steady production from Wheatstone Train 1, demonstrating production rates above nameplate capacity; completed the acquisition of an additional 50% interest in Scarborough; nearing completion of Wheatstone Train 2 with first LNG expected in Q2 2018; released invitation to tender packages to pre-qualified contractors for the FPSO facility, supporting subsea infrastructure and drill rig for the SNE Field Development–Phase 1, offshore Senegal; executed LNG sales and purchase agreements for up to 12 cargoes; encountered oil in two exploration wells, offshore Gabon; executed A$2.5 billion entitlement offer
  • Mayne Pharma (MYX) – Has announced the opening of its new US$80m, oral solid-dose commercial manufacturing facility in Greenville, North Carolina. The new 11,700 square metre (126,000 square foot) facility more than quadruples manufacturing capacity for oral solid-dose pharmaceutical products in the US to well over 1 billion doses and introduces significant capacity to manufacture potent compounds and new capability to manufacture modified-release bead/pellet products.
  • Orocobre (ORE) – Cauchari JV Drilling Update. Excellent NW Sector Results Averaging 571 mg/l Li – Hole CAU17
  • Brickworks (BKW) – Presentation at the Credit Suisse conference
  • Nextdc (NXT) – Comes back on line after placement.
  • Link (LNK) – Successful completion of institutional placement
  • Quarterly production reports – Regis Resources (RRL)


  • Oz Mineral (OZL $8.92) – Quarterly production report
    • Citi has a Buy recommendation with a target price of $10.70. The results was below the analyst’s expectations, but they think guidance for FY18 still looks “secure”. They also think costs will fall.
    • Morgans has upgraded to an Add (from Hold) recommendation with a target price of $10.05 (form $9.80). The analyst thinks OZL is on track to meet 2018 guidance amid stable production and has raised its copper price assumptions slightly for 2018-19. This year is considered the peak for construction and expenditure at Carrapateena and the analyst has lowered the risk weighting on Carrapateena to 75%.
  • Oil Search (OSH $7.54) – Production guidance for full year 2018 was downgraded
    • Citi has a Sell recommendation with a target price of $6.53 (from $6.60). The downgrade was not a surprise to Citi analysts due to the earth quake, and they note higher remedial costs post quake. They think expectations for capex seem a bit low and market disappointment is still a possibility. Any update on capex might thus turn into a share price negative event.
    • Morgans rates has an Add recommendation with a target price of $9.95 (from $10.27). 2018 production guidance is lower than Morgans’ analysts’ expected given the earthquake. as they though PNG LNG would bounce back. Despite this, the temporary issue does not undermined the value upside from OSH de-risking its growth profile.
  • Nextdc (NXT $6.81) – NXT has announced a $300m institutional placement as well as a share purchase plan. Funds will be used to buy the land and build new data centre facilities in Perth, Sydney and Melbourne. Morgans has a Hold recommendation with a target price of $7.01 (form $7.01). The analyst believes this capital will place the company in a good position for the next few years and support the business in the event that equity market jitters return and, while it dilutes earnings in the short term, it increases the profit potential.
  • Impedimed (IPD 70c) – Morgans has an Add recommendation with a target price of $1.46. IPD has received FDA clearance to market SOZO as an aid in the clinical assessment of bilateral lymphoedema in adult patient arms and legs. This expands the available market for the technology. The Morgans’ analyst sees the release of the PREVENT study as the next catalyst.
  • Fletcher Building (FBU $6.00) – has announced an NZ$750m capital raising through an entitlement offer at NZ$4.80 a share to pay down debt, and the establishment of a new standby banking facility of NZ$500m. Morgan Stanley has an Overweight recommendation with a target price of NZ$8.00. The analyst didn’t think a capital raising would be required, particularly with asset sales, but note that this move does provide a more direct solution and immediate certainty for investors.





US EQUITIES – S&P500 +29 (+1.07%), Dow Jones +214 (+0.87%), Nasdaq +126 (+1.77%).

Main themes –

  • Geopolitical concerns ease
  • 1Q earnings season dominates market activity – Netflix (+9.19%) rallied after breaking subscriber growth estimates, pushing other FAANG names higher
  • Financials underperforms; Goldman Sachs (-1.68%) down despite beating top and bottom line estimates for the first quarter

EUROPEAN MARKETS – All stronger. STOXX 600 -0.80%, UK FTSE +0.39%, German DAX +1.57%, French CAC +0.76%


  • The US dollar was up a touch at 89.48.
  • The Aussie dollar is a little weaker at US77.70.

BONDS – 2-yr: +2 bps to 2.39%, 5-yr: UNCH at 2.68%, 10-yr: -2 bps to 2.81%, 30-yr: -3 bps to 3.00%


  • WTI oil were up 30c at US$66.52 ahead of the weekly API and EIA stockpile data. IN other oil news, Chinese data yesterday showed it processed a record amount of crude oil in March.
  • Gold futures were down US$1.20 or 0.1% at US$1,349.50 on easing geopolitical tensions.
  • Iron ore was up US$1.00 at US$66.00
  • LME metals were mixed – Copper -0.48%, nickel -0.84%, aluminium +0.25%.


  • US economic data – March Housing Starts 1319K (consensus 1268K, Prior revised to 1295K from 1236K), March Building Permits 1354K (consensus 1315K, Prior revised to 1321K from 1298K), March Industrial Production +0.5% (consensus +0.3%, Prior revised to 1.0% from 0.9%), March Capacity Utilization 78.0% (consensus 77.8%, Prior 77.7%
  • US earnings – Goldman Sachs (-1.68%), Johnson & Johnson (-0.93%), UnitedHealth (+3.57%). After The Close – CSX +4.68%, IBM -5.77%, United Continental (+2.885)
  • Fed Speak – San Francisco Fed President Williams (FOMC voter) says he sees inflation getting to 2.0% this year and staying at, or above, 2.0% for another couple of years. Chicago Fed President Evans (non FOMC voter) says he is okay with raising rates patiently in the absence of inflation
  • NEC Director Kudlow says additional Russia sanctions are still under consideration
  • Press reports suggest North Korea and South Korea could soon announce an official end to their war
  • ECB chief economist Praet said ample degree of policy stimulus still necessary
  • European data – Eurozone ZEW Economic Sentiment 1.9 (expected 7.3; prior 13.4), German April ZEW Economic Sentiment -8.2 (expected -0.8; prior 5.1), Italian March CPI +0.3% (expected +0.4%; prior +0.4%) to be +0.8%yoy (expected +0.9%; prior +0.9%)
  • UK economic data – February unemployment rate 4.2% (expected 4.3%; prior 4.3%); 3M/3M employment change 55.0K (expected 55.0K; prior 168.0K); February average earnings index plus bonus +2.8% (expected +3.0%; prior +2.8%)
  • UK’s March claimant count change 11.6K (expected 13.3K; prior 15.1K)
  • People’s Bank of China announced a 100 basis points cut in required reserve ratio for most commercial banks, effective April 25
  • IMF upgrade – The IMF has upgraded Australia’s economic growth forecasts to 3% in 2018 (up from 2.9% in February) and 3.1% in 2019. But the IMF warned the strengthening world economy faces headwinds from the Trump administration’s trade disputes.
  • B of A Merrill Lynch fund manager survey – 18% of investors thinks equities have already peaked and 40% expect them to peak in the 2H of 2018. The allocation to the tech sector is the lowest since February 2013.
  • Chinese data yesterday – GDP grew in line with expectations at 6.8% in the first quarter, buoyed by strong consumer demand, healthy exports and robust property investment. Other data was mixed – retails sales rose 10.1%, ahead of the 9.7% expected, while industrial production growth was a little disappointing.


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