The ASX200 is up 8 points in mid-morning trade after flat US market. Trade remains key. TLS loses momentum, CSL unstoppable. Reports of fake o/s honey, BGA stake in CZZ and FPH guidance downgrade. Ex-div BEN 35c, APX 4c. Retail sales today, US closed tonight #ausbiz


  • Ex-dividend – BetaShares Australian High Interest Cash ETF (AAA) 8.6c, Altium (ALU) 14.0c, Appen (APX) 4.0c, Aust. United Investment (AUI) 19.0c, Bendigo Adelaide Bank (BEN) 35.0c, Bravura Solutions (BVS) 4.5c, Diversified United Investment (DUI) 8.5c, DWS 5.0c, Eumundi Group (EBG) 3.3c, Integrated Research (IRI) 3.5c, NAOS Ex-50 Opportunities Company (NAC) 2.5c, NAOS Small Cap Opportunities Company (NSC) 3.0c, People Infrastructure (PPE) 4.0c, Salmat (SLM) 2.0c, Servcorp (SRV) 13.0c, Villa World (VLW) 10.5c
  • Economic data – AIG Manufacturing Index, Business Inventories , Company Gross Profits, ANZ Job Advertisements, Retail Sales
  • Chinese – Caixin Manufacturing PMI
  • Japanese – Capital Spending, Nikkei Manufacturing PMI Final


  • European – Markit Manufacturing PMI Final
  • UK – Markit/CIPS Manufacturing PMI
  • US market closed


  • Transurban (TCL) – Has received approval for its WestCommex acquisition from FIRB.
  •  A2Milk (A2M) – New Chinese laws for e-commerce applies to both domestic and cross border. Further implementation guidance is expected.
  • Fisher & Paykel (FPH) – Profit guidance given legal costs. FY 2019 NZ$205-NZ$210m down from approximately NZ$215m. Earnings guidance for its 2019 half year result remains unchanged. Relates to new patent allegations from ResMed (RMD) in relation to its sleep masks. FPH and RMD have been in litigation since August 2016 with allegations of patent infringement brought by both parties in the US, Europe, New Zealand and Australia
  • Bega Cheese (BGA) – Now holds 5.76% in Capilano Honey
  • Capilano Honey (CZZ) – Notes media reports of tests showing that some imported honey may not be pure honey. It doesn’t affect the Capilano brand Australian honey, only affects Allowrie honey which is a blend of quality imported honey and premium Australian honey. Says the test cited (NMR) rely on a database of reference honeys that is underrepresented for honeys from our region. CZZ says “We stand by our Allowrie honey as being 100% pure honey and the testing we employ on every batch. However customers have a choice and there are great quality 100% pure Australian honey products on the market such as our Capilano brand, supplied by over 600 Australian beekeeping families”


  • Freedom Foods (FNP $6.56) – Operating EBDITA rises 49.5% to $39.2m, operating EBDITA margins increased to 11.1% from 10.0%; Operating net profit increases 96.9% to $19.4mFY 2019 net sales guidance unchanged at $500-$530m. The chart is showing a MACD buy signal (the blue bars moving from negative to positive) but shares are still very overbought on the RSI
    • Morgans has upgraded to a Hold (from Reduce) recommendation with a target price of $6.01 (from $5.50). The analyst notes the beat on profit was due to tax, with underlying earnings slightly missing consensus. They have upgraded forecasts as new facilities are beginning perform better than expected, but execution risk remains. They note high capex requirements, poor cash flow generation and a low return on equity but concede FNP has a great product portfolio, strong brands, and is leveraged to healthy eating trends, rising demand from Asia and the scaling of new facilities which should drive solid earnings.



  • Harvey Norman (HVN $3.60) – NPBT down 17.1% to $530.17m. Underlying PBY down 0.96% to $532.54m. Dividend 18c. Company operated sales revenue up 8.8% to $1,993.76m. Franchise sales revenue up 2.6%. Entitlement offer – 1:17 offer at $2.50 to raise
    • Macquarie has a Neutral recommendation with a target price of $4.10 (from $4.50). The result was in line with the analyst’s estimates. International growth has been positive but they are concerned about the recent franchising performance, particularly as competition is expected to intensify and housing activity to moderate. While they see upside, this is mainly related to the real estate valuation component.
    • Morgan Stanley has an Underweight recommendation with a target price of $3.10 (from $2.90). The analyst has raised FY19-21 estimates by 4-5% to reflect the better-than-expected FY18 result and an improved outlook for the Australian franchisee margin. But they still see Australian trading weakening as the housing market cools. They’re cautious despite a cheap valuation and an improving international performance.
    • UBS has a Neutral recommendation with a target price of $3.50. The result was in line with the analyst’s estimate, with Australia softer due to a 22% lift in 2H tactical support and costs from the closure of a franchisee. UBS downgrades FY19-21 estimates by 1-4%. They key surprise was a higher dividend and the 1-for-17 rights issue at $2.50 a share to pay down debt.


  • Telstra (TLS $3.10) – UBS has a Neutral recommendation with a target price of $3.00. The analyst has upgraded FY20 EPS estimates by 7%, given higher one-off disconnection payments from NBN. The main piece of news in the company’s new 2019-22 corporate plan is the large ramp up in the FY20 NBN roll-out. They believe TLS is guiding for net one-off NBN payments to increase to $1.8-1.9bn in FY19 but this now appears at odds with NBN Co’s forecasts for subscriber payments to decline slightly in FY19. Still, the $3bn NBN gap is unchanged and there is no change to long-term earnings. The recent rally looks to be running out of steam.


THIS WEEK – It’s a big week

  • Australia – retail sales Monday, RBA meeting Tuesday, GDP on Wednesday (0.7%/2.7% expected), trade data Thursday, housing finance Friday
  • China – Caixin manufacturing index Monday, Caixin services and composite PMI Wednesday, trade data next weekend
  • Europe – manufacturing PMI Monday, PPI Tuesday, GDP and retail sales Wednesday,
  • US – closed Monday, ISM Tuesday, employment Friday





Global markets last week – US market lifted by tech sector (Amazon +5.63%, Appl +5.31%), outperforms Europe (-0.34%0, UK (-1.91%) and China (-0.15%). US & UK bonds sell-off. Commodity prices mixed with oil (+2%) the highlight. AUD below 72c.


Domestic markets last week – ASX200 (+1.16%) outperforms global peers. Banks (+2.30%) see some strength while Telcos (-2.29%) the only negative sector






US EQUITIES – S&P500 0 (+0.00%), Dow Jones -22 (-0.09%), Nasdaq +21 (+0.26%).

Main themes – Tariffs and trade in focus

  • More Chinese tariffs come into effect this week
  • Canadian talks failed reach a deal to replace NAFTA, with Trumps off-the-record comments leading to falls; and
  • Doubts about the longevity of the US/EC agreement to suspend tariffs while negotiations take place, after President Trump said that it would be insufficient for Europe to remove tariffs on auto imports if other barriers remained in place

EUROPEAN MARKETS – STOXX500 -0.80%, UK FTSE -1.11%, German DAX -1.04%, French CAC -1.30%.


  • The US dollar was up 0.4% at 95.10.
  • The Aussie dollar is lower at 71.95.
  • The Turkish lira rose 0.91% to 70.81 but the loss for the month is 25.3%

BONDS – 2-yr: -2 bps to 2.63%, 5-yr: -2 bps to 2.74%, 10-yr: -1 bp to 2.85%, 30-yr: UNCH at 3.01%


  • WTI crude futures closed down 45c at US$69.80 but finished the week almost 2% hiher, supported by US sanctions on Iran and falling output from Venezuela.
  • Iron Ore – IRESS reports iron ore unchanged at US$66.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US40c at US$66.15/dry ton. (CFR Tianjin port)
  • LME metals – Mostly lower. Reports of China shorting. Cu -1.50%, Ni -3.65%, Al -0.33%.


  • US economic data – August Chicago PMI 63.6 (consensus 63.0; last 65.5), Final August Michigan Sentiment Index 96.3 (consensus 95.5; last 95.3)
  • Chinese economic data – Official PMI numbers. Manufacturing 51.3 (exp 51.0, prev 51.2), Services 54.2 (ext 53.8, prev 54.0)
  • European data – CPI +2.0% (expected 2.1%; last 2.1%) and Core CPI +1.0% (expected 1.1%; last 1.1%). July Unemployment Rate 8.2%, as expected (last 8.2%); German Retail Sales -0.4% (expected -0.2%; last 0.9%) to be +0.8%yoy (last 2.7%); French PPI +0.6% (last 0.1%), CPI +0.5% (as expected, last -0.1%) to be +2.3%yoy (last 2.3%); Italian CPI +0.5% (expected 0.2%; last 0.3%) to be +1.7%yoy (expected 1.4%; last 1.5%). Q2 GDP +0.2% (as expected, last 0.2%) to be +1.2%yoy (expected 1.1%; last 1.2%)


“One does not meet oneself until one catches the reflection from an eye other than human.” – Loren Eiseley, American anthropologist born this day in 1907. Died 9 July 1977.


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 )

Facebook photo

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

Connecting to %s