The ASX 200 is down 45 in mid-morning trade, but off the lows, as markets get the spooks again. Not much corp news. Gold the sole highlight. Chinese data today. ECB meeting and US GDP next week. #ausbiz


  • Ex-dividend – Antipodes Global Investment Company (APL) 5.0c, APN Outdoor Group (APO) 30.0c, New Hope (NHC) 8.0c
  • Japanese economic data – Inflation Rate
  • Chinese data – Industrial Capacity Utilization, Fixed Asset Investment, GDP Growth Rate, Industrial Production, Retail Sales



  • US economic data – Existing home sales
  • Fed Speak – Dallas Fed President (non-voter) Robert Kaplan; Atlanta Fed President (FOMC voter) Raphael Bostic


National Australia Bank (NAB) – Facing the Senate Inquiry today.


  • Ansell (ANN) – Deutsche Bank has a Hold recommendation with a target price of $27.25. FY19 guidance for earnings per share of $1.00-1.12 has been reaffirmed but will be weighted to 2H due to higher raw material costs in 1H and the timing benefit of price rises. The Deutsche Bank analyst is cautious about management highlighting a skew to the second half because this has not been emphasised before, despite historically having a second half skew.


  • Australian Pharmaceutical (APR) – FY results. Underlying1 NPAT of $54.7m, up 0.9% on pcp, Underlying EBIT of $90.5m, down 1.5% on the pcp. Morgan Stanley has an Underweight recommendation with a target price of $1.58 (from $1.43).The result met the analyst’s expectations. No FY19 outlook has been provided because of uncertainty created by the government’s review of the community service obligation funding pool. The government is expected to report within weeks, which will set the tone for FY19. They suggests there is a lack of confidence in forecasting the retail performance in the upcoming Christmas trading period.


  • BHP Billiton (BHP) – Macquarie has an Outperform recommendation with a target price of $40.00. The AGM commentary noted the key focus is capital discipline, but also warned the completion of the sale of the US shale assets could slip into 2019. The analyst believes completion is a key catalyst for the stock as shareholders will be rewarded through buybacks.


  • CSL – Citi has upgraded to a Buy recommendation with a target price of $218 (from $238), The Citi analysts have reviewed the models and views in light of the share price correction. s corrected noticeably in line with rising bond yields. While adjusting the target price lower (this includes some $12 for CSL112) the recommendation has also been upgraded. With the revised target price, CSL shares will be trading on an FY20 PE of 31x compared to the three year average of 28x.


  • Treasury Wine Estates (TWE) – Deutsche Bank has a Hold recommendation with a target price of $18.00. TWE reiterated guidance for 25% EBITS growth in 2019, with early indications that changes being made to the US route to market are positive. The Deutsche Bank analyst welcomes the news, given the market’s concerns around demand from China as well as a distribution changes in the US.


  • JB Hi-Fi (JBH) – Macquarie has an Outperform recommendation with a target price of $29.00 (from $28.80). Ahead of the AGM next week, the analyst has raised earnings forecast modestly on increased margin assumptions, noting price competition appears to have stabilised. While The Good Guys’ margin weakness has been worse than anticipated, they see a multi-year synergy tailwind.


  • Domino’s Pizza (DMP) – Deutsche Bank has a Sell recommendation with a target price of $36.00. The analyst notes that same store sales in Europe were most likely weaker in the SepQ, which has been attributed to hot and dry weather across Europe.


  • Woodside Petroleum (WPL) – UBS has a Buy recommendation with a target price of $40.70 (from $37.50). The analyst notes the revised timeline for the Browse final investment decision, now due in 2020 as opposed to 2021. Contracts for concept definition and the preliminary agreement between the Browse JV and then North West Shelf JV are expected shortly. Overall the September quarter production was ahead of UBS estimates because of the faster ramp up of Wheatstone T2 and higher output from the NWS.


  • Santos (STO) – SepQ production up 6% to 15 mmboe due to strong performance across the core assets; Sales revenue up 10% to $973 million, including record quarterly LNG revenues of $405 million; PNG LNG achieved record daily rates equivalent to ~9.2 mtpa annualised production
    • UBS has upgraded to a Neutral (from Sell) recommendation with a target price of $7.55 (from $5.70). Sales volumes were ahead of the analyst’s estimates. The company has lifted the lower end of its production and sales guidance for 2018 and reduced 2018 capital expenditure by $50m. The analyst observes the results are starting to demonstrate the positive impact of increased drilling in the Cooper Basin. Overall production was slightly below their estimates because of the timing of asset sales to Ophir Energy. The have since incorporated the acquisition of Quadrant.
    • Macquarie says the report was in line. 2018 guidance has been tightened to the top end of the prior range. Ahead of the Quadrant acquisition, Santos achieved its gearing reduction target one year ahead of schedule, the broker notes



It’s a quiet week on the economic front

  • No domestic economic data domestically but RBA Deputy Governor Guy Debelle is making a couple of speeches
  • The ECB meets on Thursday and European data includes consumer confidence and the Markit PMI numbers
  • The Fed beige book is released on Wednesday and the key economic release is advance GDP on Friday.





US EQUITIES – S&P500 -40 (-1.44%), Dow Jones -327 (-1.27%), Nasdaq -158 (-2.06%).

Main themes

  • The usual worries resurfaced – US-China trade war, higher US interest rates, tech over-valuations
  • Treasury Secretary Steven Mnuchin said he will not participate in next week’s Future Investment Initiative Summit in Saudi Arabia.
  • Disappointing earnings/guidance from industrials sector components weighed

EUROPEAN MARKETS – Mixed. STOXX500 -0.51%, UK FTSE -0.39%, German DAX -1.07%, French CAC -0.55%.


  • The US dollar is stronger at 95.96.
  • The Aussie dollar is weaker at 70.94c.

BONDS – 2-yr: UNCH at 2.88%, 5-yr: -2 bps to 3.02%, 10-yr: UNCH at 3.18%, 30-yr: +1 bp to 3.36%


  • WTI crude futures closed down US$1.10 or 1.6% at US$68.65 after a big increase in US stockpiles the previous day.
  • Iron Ore – IRESS reports iron ore was up US50c at US$70.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was up 5c to US$74.30/dry ton. (CFR Tianjin port)
  • LME metals – MIxed. Cu +0.06%, Ni -1.75%, Al -0.59%.


  • ECB President Mario Draghi said one of the risks for the economy was countries trying to circumvent EU budget rules.
  • Italian bonds sold off again after two EU Commissioners criticized Italy for “obvious significant deviation” from EU rules. Italy has a Monday deadline to provide the EU Commission with a clarification regarding its 2019 budget, and specifically, its structural deficit
  • Brexit – EU leaders have cancelled plans for a November Brexit summit due to the lack of progress in negotiations
  • UK economic data – Retail Sales -0.8% (expected -0.4%: last 0.4%) to be +3.0%yoy (expected 3.6%; last 3.4%). September Core Retail Sales -0.8% (expected -0.4%; last 0.5%) to be +3.2%yoy (expected 3.7%; last 3.6%)
  • US economic data – Weekly Initial Claims 210K (consensus 212K; prior 215K), Continuing Claims 1640K (prior 1653K), and October Philadelphia Fed 22.2 (consensus 20.0; prior 22.9); September Leading Indicators 0.5% (consensus 0.5%; prior 0.4%)
  • Fed Speak – St. Louis Fed President James Bullard (alternate voter) said he has been willing to go along with rate hikes due to strong growth, but does not believe the Fed should pencil in more hikes at this time.


“I think bankers will always get away with whatever they can get away with.” – John le Carre, English author born this day in 1931.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s