The ASX200 is down 56 points in late-morning trade after weak o/s leads. IT sector hit, Materials and banks also ↓.  TLS the only big green box after guidance update. GNC guidance ↑, SIG result, Ex-div ASX, BHP, HSO and NHF. $A still under pressure #ausbiz


  • Ex-dividend – Aust Ethical (AEF) 235.0c, Air New Zealand (AIZ) 10.0c, Ariadne (ARA) 1.0c, ARQ Group (ARQ) 3.5c, ASX 109.1c, BHP Billiton (BHP) 85.6c, Beacon Lighting Group (BLX) 2.5c, Contango Income Generator (CIE) 1.8c, Corporate Travel Management (CTD) 21.0c, Century Australia Investments (CYA) 2.0c, Engenco (EGN) 1.0c, Estia Health (EHE) 8.0c, FlexiGroup (FXL) 3.9c, Globe (GLB) 6.0c, GTN (GTN) 11.0c, Healthscope (HSO) 3.5c, IDP Education (IEL) 6.5c, Kip McGrath (KME) 2.0c, Lifestyle Communities (LIC) 2.5c, Monash IVF Group (MVF) 2.6c, Midway (MWY) 9.0c, NIB Holdings (NHF) 11.0c, Northern Star Resources (NST) 5.0c, Pacific Current Group (PAC) 22.0c, Pro Medicus (PME) 3.5c, PWR Holdings (PWH) 6.2c, RedHill Education (RDH) 2.0c, SDI (SDI) 1.4c, Spheria Emerging Companies (SEC) 4.0c, Shine Corporate (SHJ) 2.3c, Sky Network TV (SKT) 6.9c, Templeton Global (TGG) 8.0c, Trade Me Group (TME) 29.7c, Veem (VEE) 0.3c, Yancoal Australia (YAL) 0.3c

Economic data – Balance of Trade, Imports/Exports


  • US economic data – ADP Employment Change, Productivity-Rev., Unit Labor Costs – Rev., Factory Orders, ISM Services
  • Fed Speak – New York Fed President (permanent FOMC voter) John Williams; Minneapolis Fed President (non-voter) Neel Kashkari; Atlanta Fed President (FOMC voter) Raphael Bostic


  • Telstra (TLS) – Revised guidance for the nbn Corporate Plan 2019. Lower than previously estimated premises declared Ready for Service (RFS) and premises activated for FY19. This defers Per Subscriber Address Amount (PSAA) receipts from nbn in FY19 into future periods, partly offset in FY19 by the natural hedge including benefits from lower nbn costs to connect (C2C), lower network payments to nbn and retaine dwholesale EBITDA. While the lower volumes impact Telstra’s outlook for FY19, it is anticipated these changes will be financially positive to Telstra over the full rollout due to the effects of the natural hedge.


  • Sigma Pharmaceuticals (SIG) – On track to deliver in line with FY19 guidance; Maintains high dividend payout ratio of 80% of Underlying NPAT; Investment in critical infrastructure remains on track and under budget; Business re-engineering program announced following decision not to renew MC/CW contract. Guidance of Underlying EBIT of $75 million for FY19, with the second half set to benefit from costs already removed from the business. Management also continues to target FY20 Underlying EBIT in the range of $40 – $50 million, with greater clarity expected as the detailed business re-engineering program advances


  • Graincorp (GNC) – Has lifted earnings guidance for the year ending 30 September 2018 to $255-$270 million underlying EBITDA and $60-$75 million underlying NPAT. Benefit from the positive performance of the global Malt business, strong market position in the North American craft beer sector; international grain trading book and Liquid Terminals businesses also performed strongly; good progress in the Foods unit within GrainCorp Oils; Grains business experienced ongoing challenging operating conditions in eastern Australia
  • Ramsay Health Care (RHC) – French subsidiary Ramsay Générale de Santé (RGdS) has lodged the offer document in relation to its SEK48.5 cash per share takeover offer for 100% of the shares in Capio AB, announced by Ramsay and RGdS on 13 July 2018.


  • Telstra (TLS) – Guidance update. Macquarie rates TLS as Underperform recommendation with a target price of $2.80. The analyst notes the new profit warning, on the back of lower than previously anticipated one-off receipts from NBN. They say it is yet another piece of evidence the operational environment for Telstra remains challenging, although the impact is immaterial to intrinsic valuation


  • CSL – UBS has a Neutral recommendation with a target price of $232 (from $230. The analyst thinks CSL is well-placed to benefit from growth in its core plasma products. Demand for both immunoglobulin and albumin in the significant markets of both the US and China remains robust.


  • Macquarie Group (MQG) Morgan Stanley has an Overweight recommendation with a target price of $130. The analyst suggests MQG will guide to 1H earnings being broadly in line with pcp next week and this could mean some short-term pressure on the stock. They are more confident in the full year outlook because of strong markets, a weaker Australian dollar and the Quadrant sale.


  • QBE Insurance (QBE) – Credit Suisse has a Neutral recommendation with a target price of $11.00. The analyst is positive due to the discount (25%) and improving environment. They like the European business and the reserve increase in the half-year results, noting history suggests a small increase is usually followed by a larger one. They think the company could rerate if the business turns around.



GDP came in at 0.9%, compared to expectations of 0.7%. The annual rate of 3.4%, best level since September 2012 at the height of the mining boom

  • Growth in domestic demand accounted for half of the increase and reflected strength in household expenditure
  • Domestic demand increased 0.6% for the quarter, driven by a 0.7%  growth in household consumption, with increased expenditure on both discretionary and non-discretionary goods and services.
  • General government final consumption expenditure increased 1.0% in the June quarter. Public investment remained at elevated levels reflecting continued work on infrastructure projects across the nation.
  • Net exports contributed 0.1 percentage points to GDP growth
  • The terms of trade fell 1.3%.
  • The Australian economy grew 2.9% in 2017-18
  • Investment in new dwellings increased 3.6% for the quarter. with strength observed in Victoria and South
  • Moderate growth in household disposable income coupled with strength in household consumption resulted in a decline in the household saving ratio to 1.0 per cent, recording its lowest rate since December 2007.
  • The household saving ratio is 1.0% in the June quarter 2018, which is at its lowest since December quarter 2007. This was due to continued strength in household final consumption expenditure (0.9%) alongside more moderate growth in household disposable income (0.4%).



Interesting chart from Citi research of its Panic/Euphoria (the other PE) model shows correction is due…





US EQUITIES – S&P500 -8 (-0.28%), Dow Jones +23 (+0.09%), Nasdaq -96 (-1.19%).

Main themes

  • Facebook (-2.33%) and Twitter (-6.06%) weaker as executives testify before Congress
  • US-Canada trade talks resume in Washington

EUROPEAN MARKETS – All weaker. STOXX500 -1.09%, UK FTSE -1.00%, German DAX -1.39%, French CAC -1.54%.


  • The US dollar was down 0.3% at 95.13.
  • The Aussie dollar is weaker at 71.95c.

BONDS – 2-yr: UNCH at 2.66%, 5-yr: -1 bp to 2.77%, 10-yr: UNCH at 2.90%, 30-yr: UNCH at 3.07%


  • WTI crude futures closed down uS$1.15 or 1.5% to US$65.72. as the gulf storm weakened and moved away from oil producing areas.
  • Iron Ore – IRESS reports iron ore was unchanged at US$67.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US35c at US$67.05/dry ton. (CFR Tianjin port) +0.9% to $66.62
  • LME metals – Mixed after recent weakness. Cu +0.96%, Ni -0.24%, Al +0.29%.


  • US economic data – July Trade Balance -$50.10bn (consensus -$50.60bn; prior -$45.70bn); Weekly MBA Mortgage Index -0.1% (prior -1.7%)
  • Fed Speak – St. Louis Fed President James Bullard (non-voter, votes in 2019) repeated arguments for pausing the rate hike cycle.
  • US tariffs – The period for public comment on US tariffs on US$200bn worth of Chinese imports finished tonight.
  • Brexit – There were reports the United Kingdom and Germany had abandoned key Brexit deal demands to focus on reaching an agreement, leading to euro and GBP strength. Germany announced that its position on Brexit remains unchanged.
  • Bank of Italy – will reportedly buy back an unspecified amount of short-term debt on Friday
  • European data – Services PMI 54.3 (expected 53.9; last 53.5); Retail Sales -0.2% (expected -0.1%; last 0.3%) to be +1.1%yoy (expected 1.3%; last 1.5%); German August Services PMI 55.0 (expected 55.2; last 55.2); French Services PMI 55.4 (expected 55.7; last 55.7); Italian Services PMI 52.6 (expected 53.2; last 54.0); Spanish Services PMI 52.7 (expected 52.1; last 52.6); UK Services PMI 54.3 (expected 53.9; last 53.5)


“To live only for some future goal is shallow. It’s the sides of the mountain that sustain life, not the top.” Robert M. Pirsig – American writer philosopher born this day in 1928. Died 24 April 2017.


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