The ASX200 is down 9 points in mid-morning trade after strong US data and more trade tactics. IT and H’care bounce but most sectors ↓. BGA cap raising. Chinese CPI and PPI later today. RC #6 focus on insurance. #ausbiz


  • Royal Commission – Another round gets underway today, this time into the insurance sector.
  • Ex-dividend – Auswide Bank (ABA) 18.0c, Caltex (CTX) 57.0c, Equity Holdings (EQT) 42.0c, Folkestone (FLK) 3.0c, Mineral Commodities (MRC)0.6c, Netwealth Group (NWL) 10.6c, Orora (ORA) 6.5c, PRO-PAC Packaging (PPG) 1.0c, Reliance Worldwide Corporation (RWC) 3.0c, Sandfire Resources (SFR) 19.0c, Tassal Group (TGR) 8.0c, Veris (VRS) 0.5c
  • Japanese data – Current Account, GDP Growth Rate, Eco Watchers Survey Current, Eco Watchers Survey Outlook, Machine Tool Orders
  • Chinese data – Inflation Rate, PPI


  • UK data – Balance of Trade, Construction Orders, Construction Output, Manufacturing Production, Industrial Production
  • US economic data – Consumer Credit


  • National Australia Bank (NAB) – Is keeping rates on hold.
  • Bega Cheese (BGA) – $200m Capital raising. Institutional bookbuild and then share purchase plan. Price expected to be $7.20-$7.40. Funds used to strengthen balance sheet with no mention of bid for Capilano Honey (CZZ). CZZ is under offer from a private equity group but BGA has built up a 5% position in recent weeks.
  • CIMIC (CIM) – Awarded $190m contract at Leinster underground mine.
  • Pact Group (PGH) – CEO Malcolm Bundey has resigned. Will “remain available” until 8 March 2019. Raphael Geminder has been appointed Executive Chairman until a new CEO has been appointed
  • Brickworks (BKW) – Production employees at the Horsley Park and Bowral manufacturing sites intend to take protected industrial action in respect of ongoing negotiations for a new enterprise agreement. Indefinite strike and indefinite overtime ban from Thursday 13 September.


  • Domino’s Pizza (DMP $54.70) The Fair Work Ombudsman (FWO) report has found issues, the majority of which are administrative errors, totalling a little under $2,000 of underpayment of wages for 20 team members across 19 stores over a four-week period.
    • Morgan Stanley has an Overweight recommendation with a target price of $65.00. The analyst believes the findings lift a significant overhang from the stock and suggest this should incrementally drive a stronger Australian performance as the focus shifts to operations and the negative media commentary slows down.


  • Incitec Pivot (IPL $3.73) – Investor Day. Downgrade to Phosphate Hill production guidance, lower distribution margins,
    • Credit Suisse has upgraded to a Neutral (from Underperform) recommendation with a target price of $4.02 (from $3.37). The analyst notes that surplus cash is being used to reduce debt and create reinvestment opportunities, suggesting the focus on downstream expansion in explosives appears relatively low in capital requirements and low risk. They also point out that divesting the local fertiliser business appears to be off the table, which they think is a missed opportunity. They believe earnings will be swept higher because of a tightening in fertiliser prices over the medium term and a gradual tightening in the explosives market.
    • Macquarie has an Outperform Recommendation with a target price of $4.16. The briefing was consistent with the analyst’s preview and they see stronger FY19 earnings due to better FY19 production, ongoing growth in US explosives and firm global fertiliser prices. The note the growth agenda with bias on explosives. IPL sees an opportunity to continue investing in electronic explosives/emulsion and also to better market its capabilities, while there is potential for Moranbah to expand in 2021.
    • Morgan Stanley has an Equal-weight recommendation with a target price of $3.90 (from $3.80). The analyst points to the strategy for growth in both the explosives and fertiliser businesses. They think the explosives business has the first call on capital to expand into end market and/or adjacent geographies. IPL has also outlined opportunities to improve its position in the fertiliser value chain and the analyst also notes debt reduction appears to be a priority which his appropriate given the cyclical nature of the business.


  • James Hardie (JHX $20.97) – Dr Jack Truong, current President – International, will succeed long-standing CEO Louis Gries as CEO towards end FY2019. UBS has a Buy recommendation with a target price of $26.20. The analyst suspects investor caution prevailed ahead of this announcement because any change of CEO create some hesitation over the stock but they consider Mr Truong the right person for the job as he has led the smooth acquisition and integration of Fermacell.


  • Sigma Healthcare (SIG 57c) – Morgan Stanley has an Underweight recommendation with a target price of 41c (form 43c). The analyst notes industry conditions are challenging. After a re-rating in 2016 on growth strategy deliver and contract terms with Chemist Warehouse, earnings are harder to predict given this contract is terminating. They expect material risk until the Chemist Warehouse agreement expires and a firm earnings base is revealed.



Global markets –  Tech sector (NASDAQ -2.55%) underperformed the broader US (S&P500 -1.03%). European markets also underperform. China (-0.84%) outperforms. Facebook -7.22, Netflix -5.17. Oil (-2.89%) and base metals all weaker. Bonds sell off and Aussie dollar slammed


Domestic markets – Tech sector underperformed. APT hit by bad press on accounting, APX on performance of tech clients in the US. CSL the other disappointment..although not surprising considering the performance the presviou week. Telstra (TLS) rules again…



  • Australia – NAB business confidence on Tuesday, Westpac consumer confidence on Wednesday but employment data on Thursday will be the main focus.
  • China – Inflation and PPI on Monday, followed by industrial production and retail sales on Friday
  • Bank of England and ECB meetings
  • US PPI Wednesday, CPI on Thursday, retail sales and consumer confidence on Friday





US EQUITIES – S&P500 -6 (-0.22%), Dow Jones -79 (-0.31%), Nasdaq -20 (-0.25%).

Main themes

  • Strong August jobs report – particularly the 0.4% wages growth – pushes 2-yr bond yield to fresh 10-year high, with expectations for two more rate hikes in 2018. Also increased the likelihood of another rate increase in March 2019 to 47.7% from 38.1% yesterday.
  • Fresh tariffs – Trump said tariffs on another $267bn worth of Chinese imports are ready to go.
  • Trump also said that trade negotiations with Japan will be opened.

EUROPEAN MARKETS – All weaker. STOXX500 -0.59%, UK FTSE -0.87%, German DAX -0.71%, French CAC -0.31%.


  • The US dollar was up 0.3% at 95.34.
  • The Aussie dollar is weaker again at 71.09c.

BONDS – 2-yr: +6 bps to 2.69%, 5-yr: +7 bps to 2.82%, 10-yr: +6 bps to 2.94%, 30-yr: +5 bps to 3.10%


  • WTI crude futures closed down US2c to US$67.75.
  • Iron Ore – IRESS reports iron ore was up US50c at US$68.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was unchanged at US$68.85/dry ton. (CFR Tianjin port) +0.9% to $66.62
  • LME metals – Mixed again. Cu +0.09%, Ni -0.72%, Al +1.47%.


  • Economic data – August Nonfarm Payrolls 201K (consensus 187K; prior 147K), Nonfarm Private Payrolls 204K (consensus 175K; prior 153K), Unemployment Rate 3.9% (consensus 3.9%; prior 3.9%), Average Hourly Earnings 0.4% (consensus 0.2%; prior 0.3%) to be up 2.9% for the year (prior 2.7%)the highest since May 2009, and Average Workweek 34.5 (consensus 34.5; prior 34.5)
  • Fed Speak – Dallas Fed President Robert Kaplan (non-voter in 2018) said that policymakers have until mid-2019 to decide whether rates should become restrictive. It suggests Fed may be comfortable with maintaining the rate hike pace until then
  • European data – Q2 GDP +0.4% (as expected, last 0.4%) to be +2.1%yoy (expected 2.2%; last 2.2%), German trade surplus EUR15.80bn (expected surplus EUR19.0bn; last surplus of EUR19.3bn). July Exports -0.9% (expected 0.2%; last 0.1%) and July Imports +2.8% (expected 0.2%; last 1.3%); French trade deficit EUR3.50bn (expected deficit of EUR5.70bn; last deficit of EUR6.10bn). Industrial Production +0.7% (expected 0.2%; last 0.7%); Italian July Retail Sales -0.1% (expected 0.2%; last -0.1%) to be -0.6% year-over-year (last 1.4%)
  • UK August Halifax House Price Index +0.1% (expected -0.3%; last 1.2%) to be +3.7%yoy (expected 3.9%; last 3.3%)


“Because of the dog’s joyfulness, our own is increased. It is no small gift. It is not the least reason why we should honor as love the dog of our own life, and the dog down the street, and all the dogs not yet born.” –  Mary Oliver, American poet born this day in 1935.


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