The ASX 200 is down 6 points in mid-morning trade after another positive overnight session. MQG, ORI and CSR result, CTD flops, other banks hit. GXL trading update and takeover. Retail sales today and US payrolls tonight #ausbiz
TODAY
- Economic data – PPI and retail sales. Consensus is for a 0.3% increase in retail sales.
TONIGHT
- European Markit Manufacturing PMI Final
- UK Construction PMI
- US economic data – Avg. Hourly Earnings, Nonfarm Payrolls, Trade Balance, Unemployment Rate, Factory Orders. Consensus is for jobs growth of 185K, up from 121K, while the unemployment rate is expected to remain unchanged at 3.75. Average weekly earnings are expected to ease to 0.2% (from 0.3%).
COMPANY NEWS
- Macquarie (MQG) result – 1H19 net profit up 5% on 1H18 to $A1,310m, and in line with 2H18; H19 net operating income of $A5,830 million, up 8% on 1H18 and up 6% on 2H18; Annuity-style businesses’ combined net profit contribution1 down 29% on 1H18 and up 10% on 2H18; Capital markets facing businesses’ combined net profit contribution up 95% on 1H18 and up 6% on 2H18; International income 67% of total income2 in 1H19; 1H19 operating expenses of $A4,125 million, up 12% on 1H18 and up 10% on 2H18; Assets under management of $A551.0 billion at Sep 18, up 11% from Mar 18; Financial position comfortably exceeds regulatory requirements3; Bank CET1 ratio 10.4% (Harmonised: 13.0%); Leverage ratio 5.6% (Harmonised: 6.4%); 1H19 earnings per share (EPS) $A3.88, up 5% on 1H18 and in line with 2H18; Annualised return on equity (ROE) 16.3%, down from 16.7% in 1H18 and down from 16.9% in 2H18; Interim ordinary dividend of $A2.15 per share (45% franked), from 1H18 $2.05 (45% franked) and 2H18 $3.20 (45% franked). Outlook – expects the FY19 result to be up approximately 10 per cent on FY18.
- Orica (ORA) Results. Underlying NPAT was down 16% to $324m. EBIT down 3% to $618m. “While earnings in the first half were clearly disappointing, we responded quickly to the issues within our control to lift earnings before interest and tax by 46% in the second half. The temporary technical issues with the Burrup ammonium nitrate plant have been resolved and permanent repairs are expected to make the plant fully available for use in the first half of our 2020 financial year.”
- MYOB (MYO) – Will grant information access to KKR to progress its Indicative Proposal, which has been increased to $3.77 per share. The MYOB Board notes that there is no certainty that the Proposal will result in an offer for MYOB.
- CSR – 1H report. Profit down 31% on revenue up 6%. Hopes to sell the Viridian glass business by the end of the year. Outlook – Expects that group net profit after tax (before significant items) for YEM19 will be within the current range of analysts’ forecasts of $180-205m.
- Greencross (GXL) – AGM and Trading update
ECONOMIC DATA YESTERDAY
Domestic Trade Data – 1% growth in exports and 1% fall in imports led to a bigger-than-expected trade surplus of $3bn. This number will feed through into the GDP numbers.
This is from CommSec, and shows how important China is becoming to Australia’s economic health.
China – The Caixin PMI numbers stayed above the all-importance 50 level (which separates expansion from contraction). Economists had expected a fall to 49.9. It comes after the previous day’s official PMI numbers, where the manufacturing PMI fell to 50.2 (from 50.8, consensus est 50.6), so a bit of reprieve there. The Yuan is at a 10 year low (the weekly chart below is a 5 year chart from November 2013)
CoreLogic House Prices
House prices overall fell 0.5% in October to be down 3.5% for the year, with CoreLogic citing tighter credit conditions as the main issue.
NEXT WEEK
- Domestic Economic data – RBA meeting on Tuesday, with housing finance data and the RBA Statement on Monetary Policy on Friday.
- China – Caixin services and composite PMI data on Monday, trade data on Thursday and inflation an dPPI on Friday
- Japan – BoJ Meeting minutes on Monday. With a range of secondary data throughout the week
- UK – GDP on Friday
- US FOMC meeting with PPI and the Uni of Michigance sentiment index on Friday.
CORPORATE CALENDAR
- Westpac (WBC) Results on Monday
- AGMs – Commonwealth Bank (CBA) Wednesday, BHP Billiton (BHP) on Thursday, Nanosonics (NAN) on Friday
OVERNIGHT
SPI FUTURES +5
US EQUITIES – S&P500 +29 (+1.06%), Dow Jones +265 (+1.06%), Nasdaq +128 (+1.75%).
Main themes
- President Trump tweeted about great conversation with Chinese President Xi Jinping on a range of issues
- Apple -5.95% in after hours trade
EUROPEAN MARKETS – Higher. STOXX500 +1.71%, UK FTSE +1.31%, German DAX +1.42%, French CAC +2.31%.
CURRENCIES
- The USD is weaker at 96.28.
- The Aussie dollar is much stronger at US72.06c after reaching a high of US72.13c.
BONDS – 2-yr: -4 bps to 2.84%, 5-yr: -2 bps to 2.97%, 10-yr: -2 bps to 3.14%, 30-yr: -2 bps to 3.39%
COMMODITIES
- WTI crude futures closed down US$1.62 or 2.5% to US$63.69 (low of US$63.11), at a near 7 month low, ahead of sanctions against Iran which kick off next week. Strong production from OPEC and the US, while EIA stockpiles increased for the 6th consecutive week.
- Iron Ore – IRESS reports iron ore unchanged at US$75.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down US$1.00 at US$74.55/dry ton. (CFR Tianjin port)
- LME metals – All stronger. Cu +1.64%, Ni +2.48%, Al +0.64%.
ECONOMIC DATA, NEWS & POLITICS
- US economic data – Weekly Initial Claims 214K (consensus 213K; prior 216K), Continuing Claims 1631K (prior 1638K), Q3 Productivity – Preliminary 2.2% (consensus 2.1%; prior 3.0%), and Unit Labor Costs – Preliminary 1.2% (consensus 1.1%; prior -1.0%); September Construction Spending 0.0% (consensus 0.2%; prior 0.1%) and October ISM Manufacturing Index 57.7 (consensus 59.0; prior 59.8)
- BofE meeting – The Bank of England voted 9-0 to leave its bank rate and asset purchases unchanged at their respective 0.75% and GBP435bn
- Reports that British PM Theresa May is close to reaching a deal on the post-Brexit future of financial services in the UK. No confirmation from EU officials as yet.
QUOTE OF THE DAY
“All you need for happiness is a good gun, a good horse, and a good wife.” – Daniel Boone, American explorer born this day in 1734. Died 26 September 1820. Don’t want the gun but I’d love to get me a wife…
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