The ASX200 is up 19 points in mid-morning trade. Most sectors up. Gold and Tech lead, Healthcare and banks ↓. NUF results but trading halt, STO investor day, FOMC decision tonight #ausbiz
- Ex-dividend – Blackmores (BKL) 155.0c, Capitol Health (CAJ) 0.4c, Cedar Woods Properties (CWP) 18.0c, Gale Pacific (GAP) 1.0c, Maxitrans (MXI) 1.5c
- US data – New Home Sales
- FOMC Rate Decision
- Santos (STO) – Investor Day. Outlined plans to grow production to more than 100mbpoe by 2025, almost doubling current levels of production.
- Nufarm (NUF) – Full year results. Results impacted by drought conditions in Eastern & Southern states. Also updated on Glyphosate, noting it is considered safe to use by major regulatory authorities globally and views the likelihood of it being removed from grower use as low.
- Southern Cross Media (SXL) – Will transfer its Canberra broadcast playout operation in 2020 to NPC Media, a joint venture between the Nine and Seven Networks for an initial period of seven years
- Independence (IGO $4.54) – Macquarie has downgraded to an Underperform (from Neutral) recommendation with a target price of $4.20 (from $4.70). The analyst has downgraded gold price forecasts which affect IGO’s earnings materially. With nickel price and $A forecasts also changed, it means a 20% cuts to the company’s FY19 earnings estimates.
- Webjet (WEB $15.58) – Morgan Stanley has an Equal-weight recommendation with a target price of $16.60. The analyst doesn’t see much scope for upside after noting soft peak summer demand at Thomas Cook. Webjet acquired Thomas Cook’s “sun and beach” complementary hotel contracts in 2016. They consider disclosures on B2B are opaque after it changed the reporting of the segment to be “by geography”.
- Woodside Petroleum (WPL $37.99) – Macquarie has a Neutral recommendation with a target price of $35.40. The analyst notes that Total has announced the successful appraisal of the Shwe Yee Htun-2 well in Myanmar. The well intersected 40m of net pay and a high-quality reservoir. Macquarie expects these initial results to provide upside to the existing resource base in Woodside’s 2018 result. They value the current resource at around US$150m (unrisked) with a 5% risking because of early stage exploration.
- Australian Pharmaceuticals (API $1.90) – Credit Suisse has downgraded to an Underperform (from Neutral) recommendation with a target price of $1.55 (from $1.63. The analyst nites that shares have risen 29% since the Clearskincare acquisition, simply on multiple expansion, despite an increasingly challenged operating environment in which both PBS and retail revenues are under pressure. They expect the this to correct following the company’s October result release when focus on the challenging environment is renewed.
- Telstra (TLS $3.17) – Citi has a Sell recommendation with a target price of $2.65 (from $2.30). The analysts are changing their valuation approach, separating the infrastructure parts from telecommunication services, leading to an increase in valuation. They still think TLS will be unable to generate sufficient cash flows to maintain a 22c dividend longer term and note price competition in mobile is rising, suggesting price pressure. On current forecasts, they expect the dividend to fall to 16c this year, to 11c by FY21.
SPI FUTURES +6
US EQUITIES – S&P500 -4 (-0.12%), Dow Jones -70 (-0.26%), Nasdaq +14 (+0.18%).
Main themes –
- Trump faced the UN General Assembly – pushed on trade and oil prices.
- Bonds sell off – US-10 year bond yield up 3bp to 3.1% (high since May)
- Energy outperformance continues
- Fed meeting started – rate hike expected tomorrow
- Nike and KB Home will report after the close Tuesday.
EUROPEAN MARKETS – Slightly higher. STOXX500 +0.46%, UK FTSE +0.66% German DAX +0.19%, French CAC +0.05%.
- The US dollar was little changed at 94.15.
- The Aussie dollar is a bit lower at 72.51c.
BONDS – 2-yr: +5 bps to 2.85%, 5-yr: +3 bps to 2.99%, 10-yr: +3 bps to 3.10%, 30-yr: +3 bps to 3.24%
- WTI crude futures closed up US16c to US$72.24. Trump told the UN General Assembly that OPEC is “ripping off” the world and repeated calls for increased production, while also saying the US will impose further sanctions on Iran after initial sanctions take effect in November (expected to remove 1-1.5mbpd from supply).
- Iron Ore – IRESS reports iron ore was unchanged at US$69.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down 10c at US$68.80/dry ton. (CFR Tianjin port)
- LME metals – MIxed. Cu -0.55%, Ni -0.04%, Al +0.53%.
ECONOMIC DATA, NEWS & POLITICS
- US address to UN General Assembly – Trumps claims that his administration “has accomplished more than almost any administration in the history of our country” met with laughter
- NAFTA – US Trade Representative Robert Lighthizer said the U.S. was prepared to move ahead on a trade deal with Mexico that excluded Canada. Lighthizer said negotiations with Canada are at an impasse.
- US economic data – July FHFA Housing Price Index 0.2% (consensus 0.2%; prior 0.3%) and July S&P Case-Shiller Home Price Index 5.9% (consensus 6.2%; prior 6.4%); September Consumer Confidence 138.4 (consensus 131.0; prior 133.4)
- European data – German WPI +0.3% (expected 0.2%; last 0.1%) to be +3.8%yoy (last 3.6%); French Business Survey 107 (expected 109; last 110); Spanish PPI +5.2%yoy (last 4.6%)
- Argentina – Central Bank Governor Luis Caputo resigned due to personal reasons
QUOTE OF THE DAY
“If you aren’t in over your head, how do you know how tall you are?” – T. S. Eliot, American poet born this day in 188. Die 4 January 1965.