MID MORNING MARKETS 28-6-18

The ASX200 is flat in mid-morning trading after another volatile night in offshore markets. Energy and Materials leading, banks mostly lower and AREITs all go ex-div along with TCL and SYD. PME contract, NHF and CSR upgraded by Deutsche A$ at 73.40. #ausbiz

MMM2MMM3MMM4

 


TODAY

  • Japanese data – Retail Sales
  • Exdividend – A bunch of property trusts as well as Sydney Airport (SYC) and Transurban (TCL) Abacus (ABP) 9.0c, Aurora Absolute Return Fund (ABW) 0.3c, Aurora Global Income (AIB) 0.2c, Asia Pacific Data Centre (AJD) 2.5c, Aurora Dividend Income Trust (AOD) 0.3c, Australian Unity Office Property Fund (AOF) 3.9c, Aveo (AOG) 9.0c. APA Group (APA) 24.0c, Aims Property Securities (APW) 0.4c, Aspen Group (APZ) 2.1c, Arena REIT (ARF) 3.2c, Aurora Property Buy-Write Income Trust (AUP) 4.0c, Aventus Retail Property Fund (AVN) 4.1c, Australian Enhanced Income Fund (AYF) 8.8c, BWP Trust (BWP) 9.0c, Carindale Property Trust (CDP) 20.1c, Charter Hall (CHC) 16.2c, Centuria Industrial REIT (CIP) 4.9c, Charter Hall Long Wale REIT (CLW) 6.8c, Centuria Metropolitan Reit (CMA) 4.5c, Cromwell Property (CMW) 2.1c. Centuria Capital (CNI) 4.1c, Charter Hall Retail (CQR) 14.2c, Convenience Retail REIT (CRR) 5.0c, Capilano Honey (CZZ) 42.0c, UBS IQ Morningstar Australia Dividend Yield ETF (DIV) 0.0c, Dexus (DXS) 24.1c, Evans & Partners Asia Fund (EAF) 2.6c, Evans & Partners Global Disruption Fund (EGD) 4.0c, Emerging Markets Fund (EMF) 49.2c, Elanor Investor (ENN) 8.4c, Elanor Retail Property Fund (ERF) 5.2c, UBS IQ Morningstar Australia Quality ETF (ETF) 0.0c, Folkestone Education Trust (FET) 3.8c, Forager Australian Shares Fund (FOR) 21.5c, Gryphon Capital Income Trust (GCI) 0.5c, Garda Capital Group (GCM) 2.1c, Garda Diversified Property Fund (GDF) 2.3c, GDI Property (GDI) 3.9c, Goodman Gp (GMG) 14.3c, Growthpoint Properties Australia (GOZ) 11.2c, GPT Group (GPT) 12.6c, Gateway Lifestyle (GTY) 5.4c, Hotel Property Investments (HPI) 9.8c, Industria REIT (IDR) 4.2c, Investa Office Fund (IOF) 10.2c, Kirkland Lake Gold (KLA) 2.3c, K2 Australian Small Cap Fund (Hedge Fund) (KSM) 0.0c, ALE Property (LEP) 10.5c, Magellan Global Equities Fund (Managed Fund) (MGE) 9.5c, Magellan Global (MGG) 3.0c, Mirvac Group (MGR) 6.0c, Magellan Global Equities Fund (Currency Hedged) (MHG) 12.0c, New Energy (NEW) 3.8c, National Storage REIT (NSR) 4.9c, SPDR Financials ex-REIT Fund (OZF) 20.4c, SPDR Resources Fund (OZR) 15.0c, Propertylink Group (PLG) 3.7c, Reef Casino Trust (RCT) 9.6c, Rural Funds (RFF) 2.5c, Shopping Centres Australasia Property (SCP) 7.1c, SPDR S&P/ASX 50 (SFY) 53.0c, Stockland (SGP) 13.5c, SPDR S&P/ASX 200 Listed Property Fund (SLF) 78.3c, SPDR Small Ords Fund (SSO)18.2c. SPDR S&P/ASX 200 Fund (STW) 40.3c, Sydney Airport (SYD) 18.5c, SPDR MSCI Australia Select High Dividend Yield Fund (SYI) 0.0c, Transurban Group (TCL) 28.0c, Tegel Group Holdings (TGH) 3.8c, 360 Capital (TGP) 2.0c, 360 Capital Total Return Fund (TOT)2.3c, UBS IQ MSCI Australia Ethical ETF (UBA)0.0c, UBS IQ MSCI Europe Ethical ETF (UBE) 0.0c, UBS IQ MSCI Japan Ethical ETF (UBJ) 0.0c, UBS IQ MSCI Asia Apex 50 Ethical ETF (UBP) 0.0c, UBS IQ MSCI USA Ethical ETF (UBU) 0.0c, UBS IQ MSCI World Ex Australia Ethical ETF (UBW) 0.0c, US Masters Residential Property (URF) 5.0c, Vicinity Centres (VCX) 8.2c,

TONIGHT

  • European – Business Confidence, Services Sentiment, Consumer Confidence, Consumer Inflation Expectations, Economic Sentiment, Industrial Sentiment
  • UK data – Nationwide Housing Prices, Gfk Consumer Confidence
  • US economic data – GDP (Third Estimate)
  • Fed Speak – St. Louis Fed President (alternate voter) James Bullard, Atlanta Fed President (FOMC voter) Raphael Bostic

COMPANY NEWS

  • AMP – ASIC will launch civil proceedings.
  • Pro Medicus (PME) – Has signed an AUD $15 million, 7 year contract with the US based Mercy health system for Visage 7 Open Archive. It will see Pro Medicus’ Visage 7 Open Archive implemented across the Mercy healthcare enterprise, which is the fifth largest Catholic health system in the US, spanning 4 states.
  • Santos (STO) – New dividend policy. STO will target a range of 10-30% payout of free cash flow. Given the cyclical nature of the industry, the Board will also consider additional returns to shareholders above the ordinary dividend when business conditions permit.
  • Atlas Iron (AGO) – Response to FMG’s media release yesterday, which said further clarity is needed on the position of Atlas in relation to its Port Hedland assets (Point Berths 3 & 4 at South West Creek) and it was continuing to assess our strategic options regarding our shareholding in Atlas. While the Minister for Transoprt, Planning and Lands has said that “exclusivity has been taken away” from NWI in respect of the evelopment of Stanley Point Berths 3 and 4, Atlas notes today that media comments attributed to the Western Australian Premier Mark McGowan indicate that the State Government has not ruled out a compromise on its “junior miner” policy if an iron ore major emerges as an owner of Atlas.
  • APN Outdoor (APO) – Commuter technology company XTD Limited (XTD) has signed a renewal to the existing APO sales agreements until 30 June 2021. APO will continue to market Digital Out of Home (DOOH) content and advertising for distribution onto XTD’s digital screen networks in Melbourne and Brisbane which form part of APN Outdoor Limited’s national XTrackTV network.
  • Oz Minerals (OZL) – Presentation to Macquarie Melbourne Mining Forum

MMM1


ANALYST CHANGES

  • Aurizon (AZJ $4.29) – Investor Day. Has confirmed FY2018 guidance for EBIT ($900–$960 million) and above-rail coal volumes (210–220 million tonnes) but said a number of matters are expected to impact earnings in FY19.
    • Deutsche Bank has upgraded to a Hold (from Sell) recommendation with a target price of $4.25 (from $4.10). The analyst has upgraded fourth quarter coal volumes and adjusted longer-term expectations based on the latest Wood McKenzie production forecasts.
    • Macquarie has an Outperform recommendation with a target price of $4.70 (from $4.84). The analyst notes the pace of cost reductions declines to around $70m over the next two years ex productivity. They highlight the core value of below-rail is unchanged. Management has set expectations low with upside bias in near term.
    • Morgan Stanley has an Underweight recommendation with a target price of $4.00. Above-rail coal volumes will increase by around 2% for the foreseeable future, in line with the analyst’s estimates. Their main concerns are that one-off additional costs will offset the volume uplift.

CHT1

  • CSR ($4.61) – Deutsche Bank has upgraded to a Hold (from Sell) recommendation with a target price of $4.88 (from $4.68). Additional guidance for net profit of $176-204m was given at yesterday’s AGM. Recent strength in building approvals is expected to support volumes in FY19 and the analyst notes that the performance of Viridian continues to improve, albeit from a small base.

CHT2

  • CSL – Morgan Stanley has an Equal-weight recommendation with a target price of $175 (from $166). The analyst has increases estimates by around 1% and updates FX assumptions. Forecasts for immunoglobulin and Idelvion are increased and expectations for Seqirus are also increased. They say shares aren’t cheap though and the upside is currently priced in.

CHT3

  • Ingenia Communities (INA $3.11) – Morgans has downgraded to a Hold (form Add) recommendation with a target price of $3.28 (from $3.28). INA upgraded FY18 guidance for EBITDA to $48.5m from $45-47m amid higher settlements. The analyst notes progress in the sale of non-core assets, which enhances its ability to organically fund the extensive development pipeline, but has downgraded as the share price incorporates the valuation upside.

CHT4

  • Nib Holdings (NHF $5.50) – Deutsche Bank has upgraded to a Buy (from Hold) recommendation with a target price of $6.55 (from $6.80). The upgrade is due to weaker claims trends given RHC commentary, which noted weaker growth in procedural work and inpatient admissions in its Australian operations. The analyst notes that industry data suggests claims growth has slowed to 3%.

CHT5

  • QBE – Deutsche Bank has upgraded to a Hold (from Sell) recommendation with a target price of $10.00. The upgrade is due to recent weakness, with concerns about operating complexity and poor returns remaining. The analyst also notes that since the downgrade in August last year, QBE has exited its Latin American assets,replaced its CEO and CFO and remains in the process of simplifying its operations

CHT6

  • Suncorp (SUN $14.64) – Deutsche Bank has downgraded to a Hold (from Buy) recommendation with a target price of $14.50. Despite upside from the sale of SUN’s life assets, shares are trading above the analyst’s valuation.

CHT7


OVERNIGHT

MMM10MMM11

SPI FUTURES -8

US EQUITIES – S&P500 -23 (-0.86%), Dow Jones -166 (-0.68%), Nasdaq -117 (-1.54%).

Main themes

  • See-saw action in US markets on conflicting interpretation of Trump’s moves relating to investment from China, with an initial 286-point gain in the Dow erased.
  • The conclusion was that the White House would take a less aggressive approach to regulating foreign investment in US technology companies, relying on strengthened Committee on Foreign Investment in the US (CFIUS). CFIUS can block ventures if there is technology transferred
  • Technology companies still underperformed
  • Crude prices spiked, and energy shares rallied on a bigger than expected drop in weekly inventory of 9.9 million barrels

EUROPEAN MARKETS – Mostly higher. STOXX 600 +0.72%, UK FTSE +1.11%, German DAX +0.93%, French CAC +0.87%.

CURRENCIES

  • The US dollar rallied 0.74% to 95.36
  • The Aussie dollar has sold off to US73.31c.

BONDS – 2-yr: -2 bps to 2.51%, 5-yr: -5 bps to 2.70%, 10-yr: -5 bps to 2.83%, 30-yr: -6 bps to 2.97% %

COMMODITIES

  • WTI oil futures rallied US$2.23 or 3.2% to US$72.76 (highest since November 2014) after a fall in inventories of 9.9mb (bigger than the 2.6mb) came on top of the US administration’s attempt to restrict Iran’s oil exports, concerns about Libyan production and a major supply outage in Canada.
  • Gold futures were down US$3.80 at US$1,256.10.
  • Iron Ore – IRESS reports iron unchanged at US$66.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down 85c atUS$63.80/dry ton. (CFR Tianjin port)
  • LME metals – Mixed. Cu -0.31%, Ni +0.64% and Al +0.86%.

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – Weekly MBA Mortgage Index -4.9% (prior 5.1%), May Durable Orders -0.6% (consensus -1.0%; prior -1.0%), Durable Orders -ex transportation -0.3% (consensus 0.4%; prior 1.9%), Advance May International Trade in Goods -$64.9bn (prior -$67.3bn), Advance May Wholesale Inventories 0.5% (prior 0.1%), Pending Home Sales -0.5% (consensus 0.8%; prior -1.3%)
  • European data – Eurozone May M3 Money Supply +4.0% (expected 3.8%; last 3.8%) and Private Sector Loans +2.9% (expected 3.0%; last 2.9%), French June Consumer Confidence 97 (expected 100; last 99); Italian June Business Confidence 106.9 (as expected, last 107.6) and Consumer Confidence 116.2 (expected 113.2; last 113.9). May PPI +0.7% (expected -0.3%); to be +2.4%yoy (last 1.4%)
  • UK data – Nationwide HPI +0.5% (expected 0.3%; last 0.2%) to be +2.0%yoy (consensus 1.7%; last 2.4%). June CBI Distributive Trades Survey 32 (expected 10; last 11)

QUOTE OF THE DAY

Making money is a happiness. And that’s a great incentive. Making other people happy is a super-happiness.” –Muhammad Yunus, Bangladeshi banker, economist and Nobel Peace Prize recipient, born this day in 1940

MMM12

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s