MID MORNING MARKETS 4-10-18

The ASX200 is up 39 points in mid-morning trade. Oil rally supporting Energy, Materials & Banks also ↑. BOQ result in line, MFG FUM and ASX AGM. CKF rolls out Taco Bill. EX-div AIA, MYO, NUF, SGM #ausbiz

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  • Ex-dividend – Ainsworth Game Technology (AGI) 2.5c, Auckland Airport (AAI) 10.0c, ARB Corporation (ARB) 19.5c, Arowana (AWN) 0.3c, Genesis Energy (GNE) 7.6c, MYOB Group (MYO) 5.8c, Nufarm (NUF) 6.0c, Rhipe (RHP) 1.0c, Ryder Capital (RYD) 2.0c, Sims Metal Management (SGM) 30.0c, XRF Scientific (XRF) 0.3c
  • Economic data – HIA New Home Sales, Balance of Trade, Imports/Export

TONIGHT

  • US economic data – Factory Orders
  • Fed Speak – Governor Randal Quarles (FOMC voter)

COMPANY NEWS

  • Bank of Queensland (BOQ) – Cash earnings after tax down 2% to $372m, Statutory NPAT  down 5% to $336m, Net Interest Margin up 5 basis points to 1.98%; Cost to Income ratio up 90 bps to 47.5%; Core operating expense growth of 1%; Loan Impairment Expense down 15% to $41 million or 9 bps of gross loans; Common Equity Tier 1 (CET1) capital ratio of 9.31%; Basic earnings per share down 3% to 94.7 cents; Return on average ordinary equity down 50 bps to 9.9%; Fully franked final dividend maintained at 38 cents per ordinary share. Slightly better than analysts expectations.
  • ASX – Monthly activity report and AGM today
  • Magellan (MFG) – FUM. Net inflows of $86 million, which included net retail inflows of $60 million and net institutional inflows of $26 million.

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  • BHP Billiton (BHP) – Notes recent media reports concerning an agreement with the State Prosecutor of Mariana in the State of Minas Gerais in relation to compensation for the impacts of the Samarco dam failure on 5 November 2015
  • Suncorp (SUN) – hold an Extraordinary General Meeting (EGM) on 13 December 2018 to seek approval for a pro-rata return of capital and share consolidation from sale of its Australian life business.
  • Gateway (GTY) – Hometown’s stake increased to 70.26%. The offer closes at 7pm on 8 October.
  • Collins Foods (CKF) – Will roll out 50 Taco Bell restaurants. The roll-out will be funded from internally generated cash flows.

OVERNIGHT

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SPI FUTURES +9

US EQUITIES – S&P500 +2 (+0.07%), Dow Jones +54 (+0.20%), Nasdaq +26 (+0.32%).

Main themes

Economic data was better than expected. Employment Change report (+230K vs +184K consensus), September ISM Services Index (61.6 vs 58.2 consensus)

Financials outperform after 10-year bond yield was up 10 basis points to 3.16%.

EUROPEAN MARKETS – Mixed. STOXX500 +0.50%, UK FTSE +0.48%, German DAX -0.42%, French CAC -0.71%.

CURRENCIES

  • The US dollar is stronger at 95.99.
  • The Aussie dollar is weaker at 71.89c.

BONDS – 2-yr: +6 bps to 2.86%, 5-yr: +8 bps to 3.02%, 10-yr: +10 bps to 3.16%, 30-yr: +11 bps to 3.32%

COMMODITIES

  • WTI crude futures closed up US$1.18 or 1.6% at US$76.42, a 4-year high. Saudi Arabia’s oil minister said oil output had increased to near a record high, while Reuters reports Russia and Saudi Arabia struck a private deal in September to produce more oil. In other oil news, EIA inventories jumped 8mb last week, quadruple analysts’ expectations and the biggest build since March 2017
  • Iron Ore – Chinese holiday. IRESS reports iron ore was unchanged at US$69.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was unchanged at US$69.50/dry ton. (CFR Tianjin port)
  • LME metals – Mixed. Cu -0.21%, Ni +2.04%, Al +4.15%.

ECONOMIC DATA, NEWS & POLITICS

US economic data – ADP Employment Change 230K (consensus 184K; prior 168K), ISM Services 61.6 (consensus 58.2; prior 58.5), Weekly MBA Mortgage Index 0.0% (prior 2.9%)

Italian fiscal position – bonds rally after officials reportedly agree lower its deficit targets for 2020 (to 2.2%) and 2021 (to 2.0%). The news allayed worries that the 2.4% deficit target for 2019 would be followed by higher deficits in the future.

European economic data – Retail Sales -0.2% (expected 0.2%; last -0.6%) to be +1.8%yoy (expected 1.7%; last 1.0%), Services PMI 54.7 (as expected, last 54.7); German Services PMI 55.9 (expected 56.5; last 56.5); French September Services PMI 54.8 (expected 54.3; last 54.3); Italian Services PMI 53.3 (expected 52.8; last 52.6). Q2 Public Deficit 0.5% (last 3.4%)

UK Services PMI 53.9 (expected 54.0; last 54.3)


QUOTE OF THE DAY

“If you want to achieve your dreams, you must follow them, and the best way to follow them is not to think about wanting to be very rich, but to think about doing something that you really want to do.” – Jackie Collins, British author born this day in 1937. Died 19 September 2015.

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