The ASX 200 is up 13 points in mid-morning trade after strong leads. BHP buy-back and special div dominates (contributes 14pts) , NAB results,WOW Q sales, CCP upgrades PDL purchases, CTD bounces, AMP extends recovery. #ausbiz
COMPANY NEWS
- Woolworths (WOW) – Q sales. Australian Food sales growth of 1.9% (comparable sales: +1.8%) due to impact of removal of single-use plastic bags and a competitor continuity program; however, improved momentum in September and into October; Group online growth of 28% and Woolworths Online awarded the Canstar Blue 2018 award for most satisfied customers
- National Australia Bank (NAB) – Revenue up 0.5%, but up 1.85 excluding customer-related remediation, mainly reflecting growth in housing and business lending and stable margins, partly offset by lower Markets & Treasury income; Net Interest Margin was flat at 1.85% (excluding Markets and Treasury increased 3bp), reflecting the impact of prior period repricing and lower funding costs, partly offset by the bank levy and home lending competition; Expenses rose 17.8% (excluding restructuring-related costs and customer-related remediation increased 6.4%) mainly due to acceleration of investment spend announced in FY17. Credit impairment charges declined 3.8% to $779 million, and as a percentage of gross loans and acceptances declined 1bp to 13bps. FY18 charges include $130 million of additional collective provision forward looking adjustments for targeted sectors experiencing elevated levels of risk. Asset quality remained broadly stable with the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances up 1bp to 0.71%. Dividend unchanged!!!
- BHP Billiton (BHP) – Return of US$10.4m from sale of US onshore assets through off-market buy-back and a special dividend. Starts immediately with off-market buy-back of US$5.2bn , where BHP can buy back shares at up to a 14% discount. Balance in a special dividend to be determined following completion of the Off-Market Buy-Back, and to be payable in January 2019.
- Downer EDI (DOW) – AGM. “I am pleased to say that we are performing in line with expectations in the first few months of the new financial year and I confirm that Downer is targeting consolidated NPATA of $335 million before minority interests for the 2019 financial year. This 13% increase in our guidance for 2019 reflects Downer’s position in our major markets.”
- Credit Corp (CCP) AGM – Upgraded guidance for PDL due to stronger operational start to the year. Lending growth has exceeded expectations. US debt buying in line with competitors.
- Freedom Foods (FNP) – Australian Fresh Milk Holdings (AFMH) have entered into agreements to purchase the Coomboona Dairy operation in Northern Victoria. FNP has a 10% equity shareholding in AFMH. With the acquisition of the Coomboona Dairy operation, AFMH will be the largest dairy producer in Australia with current operations forecasting over 150 million litres of production into 2019.
CREDIT DATA YESTERDAY
Housing credit growth continues to slow. The annual pace of growth is now 5.2%, with owner-occupier growth slowing to 7.3% and investor growth slowing to 1.4%, the slowest on record. The 7.3% growth in owner-occupier growth compares to the 10 year average is 6.7%.
INFLATION DATA YESTERDAY
The headline numbers were smack-back in line with expectations, with 0.4% growth in the quarter and 1.9% for the year. But the RBA’s preferred measure, the trimmed mean CPI, came is a bit weaker at 1.8% over the year, down from 1.9%.
The most significant rises this quarter are international holiday travel and accommodation (+4.3%), tobacco (+1.8%), property rates and charges (+2.3%), automotive fuel (+1.4%) and fruit (+2.4%). The rise is partially offset by falls in child care (-11.8%) and telecommunications equipment and services (-1.5%).
Child care (-11.8%) saw the largest fall this quarter following the introduction of the Child Care Subsidy on 2 July, which replaced the Child Care Rebate and Child Care Benefit. There was a significant impact from this. Childcare subtracted 0.19ppt from the headline figure of 0.44% in Q3.
CHINESE DATA YESTERDAY
Components for the manufacturing PMI
- exports 46.9 versus 48. (was 51.2 in May and now in contraction territory)
- imports 47.6 versus 48.5
- Employment 48.1 versus 48.3 Also contracting
- new orders 50.8 versus 52.0 (was 53.8 in May)
- inventories of raw materials 47.2 versus 47.8
Yuan hit a 10-year low on the data 6.968
OVERNIGHT
SPI FUTURES +26
US EQUITIES – S&P500 +29 (+1.09%), Dow Jones +241 (+0.97%), Nasdaq +144 (+2.01%).
EUROPEAN MARKETS – Higher. STOXX500 +1.71%, UK FTSE +1.31%, German DAX +1.42%, French CAC +2.31%.
CURRENCIES
- The USD is stronger at 97.12.
- The Aussie dollar is weaker at US70.77c.
BONDS – 2-yr: +4 bps to 2.88%, 5-yr: +5 bps to 2.99%, 10-yr: +5 bps to 3.16%, 30-yr: +5 bps to 3.40%
COMMODITIES
- WTI crude futures closed down US86c or 1.3% to US$65.31. Prices were 1.8% lover over the month of October.
- Iron Ore –The CommSec site says China Import (Fines 62% Fe) was flat at US$75.55/dry ton. (CFR Tianjin port)
- LME metals – Large falls. Cu -0.66%, Ni -2.46%, Al -0.71%.
ECONOMIC DATA, NEWS & POLITICS
US economic data – October ADP Employment Change 227K (consensus 180K; prior 215K); Q3 Employment Cost Index 0.8% (consensus 0.7%; prior 0.6%); Weekly MBA Mortgage Index -2.5% (prior 4.9%)
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