The ASX200 is up 37 points in mid-morning trade after a +ve US session. Most sectors higher. INdsutrials and Disc exceptions. Materials & IT lead. FLT Acquisition, PLG takeover. Next week FOMC dominates. Quiet otherwise #ausbiz
- Ex-dividend – Atlas Arteria (ALX) 12.0c, Big River Industries (BRI) 3.5c, Clinuvel Pharmaceuticals (CUV) 2.0c, Enero Group (EGG) 2.5c, Jupiter Mines. (JMS) 5.0c
- Japanese data – Core Inflation Rate, Inflation Rate, Nikkei Manufacturing PMI Flash, All Industry Activity Index
- European data – Markit Composite PMI, Markit Manufacturing PMI, Markit Services PMI
- UK data – Public Sector Net Borrowing, CBI Industrial Trends Orders
- Amcor (AMC) – Eric Roegner has been appointed as President Amcor Rigid Plastics. He will succeed Mike Schmitt in this role in mid-November, based in Ann Arbor, Michigan, US.
- Navitas (NVT) – Investor Presentation Day
- Flight Centre (FLT) – Has acquired Umapped to fuel digital transformation. Umapped is a Toronto-based technology company that provides travel documentation, communication and itinerary management software to the travel industry. The purchase price is is said to be immaterial to the company and will be funded from cash.
- ASL (ALQ) – The role of Chief Financial Officer will relocate from Brisbane to Houston. Mr Luis Damasceno has joined as new CFO to replace Richard Stephens who will not be relocating.
- Michael Hill (MHJ) – Daniel Bracken has been appointed as new Chief Executive Officer, replacing Phil Taylor who has been diagnosed with a health issue and has decided to resign to focus on his treatment and recovery. Daniel is currently CEO of Specialty Fashion Group.
- Atlas Arteria (ALX) – Has completed the acquisition of the remaining 30% equity interest and shareholder loan in Warnow Tunnel for €3.7m.
- Zip Co (Z1P) – Pocketbook has achieved final performance milestone
- Brickworks (BKW $16.17) – Outlook – Noted that tighter bank lending controls have reduced personal borrowing capacity, and this is now impacting building activity, due to delays and cancellations of dwelling construction.
- Macquaire has a Neutral recommendation with a target price of $15.65 (from $15.60.). The result was ahead of the analyst’s expectations. They note headwinds to growth are mounting with rising energy costs affecting building products and property profits are also expected to decline. While the housing market remains a challenge, management has pointed to strong order books and supportive macro conditions in the east coast market.
- Morgans has a Hold recommendation with a target price of $16.00 (from $15.61). The FY18 results were ahead of the analyst’s expectations and they have increased FY19 operating earnings estimates by 12%. With building activity slowing and higher energy costs creating a headwind for building products, they think earnings growth over the next few years will be challenging and they see the stock as fully valued.
- Bank of Queensland (BOQ $11.38) – Morgan Stanley has an Underweight recommendation with a target price of $9.30 (from $9.50). The analyst has trimmed 2H margin forecasts, saying the bank has not re-priced enough to stem funding pressures and stabilise margins. They expect a $30m restructuring charge to be announced at results (October 4), while capital initiatives are contingent on the sale of St Andrews to Freedom Insurance. Regulatory and compliance spending continues to increase as well.
- Premier Investments (PMV $19.00) – Underlying EBIT up 10.3% to $150.1m. Total sales up 8.2% on FY17 to a record $1.18 billion; 2H18 sales up 9.5%;
- Deutsche Bank has downgraded to a Hold (from Buy) recommendation with a target price of $18.50 (from $16.70).
- UBS has a Neutral recommendation with a target price of $20.20 (from $20.30).
- Rio Tinto (RIO $78.10) – New $3.2bn buy-back, representing proceeds from the coal divestments
- Macquarie has an Outperform recommendation with a target price of $91.00. With a higher skew towards buying back ASX stock, the analyst notes a re-weighting of recent buybacks to be broadly in line with the company’s 75:25 LSE:ASX structure. They see further capital management potential should the US$3.5m Grasberg divestment be completed.
- Morgans has upgraded to an Add (from Hold) recommendation with a target price of $81.32 (from $80.67). While positive, the analyst is concerned that coal divestment has further concentrated the business. They think recent weakness in the share price has created value, and healthy metal prices could mean additional capital management and growth.
- Reliance Worldwide (RWC $5.33) – Deutsche Bank has upgraded to a Hold (from Sell) recommendation with a target price of $4.80. The analyst notes that John Guest is on track as it is the near-term catalyst for the business. They still remain concerned that adequate US sales margin growth can be achieved as the opportunities are largely in lower margin segments. They have upgraded due to share price underperformance.
- Viva Energy (VEA $2.38) – UBS has initiated coverage with a Buy recommendation with a target price of $2.85. The analyst notes 1H results were mixed as cash flow in refining missed estimates, while retail outperformed stronger volumes and cost control. The don’t think the market is pricing in the upside from the retail and commercial divisions and forecasts 5% three-year growth in EPS.
NEXT WEEK – TheFOMC meeting will be the key focus, with a rate rise pretty much fully priced into markets. Other data includes final GDP numbers in the UK and US, and Chinese Caixin PMI on Friday. Domestically very quiet with private sector credit on Friday the only item of note
SPI FUTURES +22
US EQUITIES – S&P500 +23 (+0.78%), Dow Jones +251 (+0.95%), Nasdaq +78 (+0.98%).
Main themes –
- Dow reaches a record close (first since January) and S&P500 also reached a record close.
- Trump tweeted for OPEC to bring oil prices down
EUROPEAN MARKETS – All higher. STOXX500 +0.70%, UK FTSE +0.49% German DAX +0.88%, French CAC +1.07%.
- The US dollar fell 0.7% to 93.90.
- The Aussie dollar is higher at 72.93c.
BONDS – 2-yr: +2 bps to 2.81%, 5-yr: +2 bps to 2.96%, 10-yr: +3 bps to 3.08%, 30-yr: +4 bps to 3.24%
- WTI crude futures closed down US32c to US$70.80 after tweet by Trump demanding OPEC “get prices down now.” Ahead of a meeting of oil exporters on Sunday.
- Iron Ore – IRESS reports iron ore was up US$1 at US$69.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down 5c at US$69.75/dry ton. (CFR Tianjin port)
- LME metals – MIxed. Cu -0.65%, Ni +0.92%, Al +0.84%.
ECONOMIC DATA, NEWS & POLITICS
- US economic data – Weekly Initial Claims 201K (consensus 209K; prior 204K), Continuing Claims 1645K (prior 1696K), and September Philadelphia Fed Survey 22.9 (consensus 15.3; prior 11.9); August Existing Home Sales unchanged at 5.34mn (consensus 5.37mn; prior 5.34mn) and August Leading Indicators 0.4% (consensus 0.5%; prior 0.6%)
- European data – Consumer Confidence -2.9 (expected -2.0; last -1.9)
- UK data – August Retail Sales +0.3% (expected -0.1%; last 0.9%) to be +3.3%yoy (expected 2.3%; last 3.8%). August Core Retail Sales +0.3% (expected -0.2%; last 1.1%) to be +3.5%yoy (expected 2.5%; last 4.0%)
- Japanese politics – Prime Minister Shinzo Abe won the LDP leadership election, which puts him on track to be Japan’s longest-serving prime minister
QUOTE OF THE DAY
“There is a crack in everything, that’s how the light gets in.” – Leonard Cohen, Canadian musician born this day in 1934. Died 7 November 2016.