AT THE CLOSE 05-11-18

The ASX 200 closed down 31 points, near the lows, despite some mid-market strength. Financials the highlight while Healthcare suffered on CSL (-2.4% and -6.8pts). WBC results, GXL takeover, COH patent ruling. Dow futures -80. #ausbiz



  • Economic data – AIG Services Index, ANZ Job Advertisements 0.7% (prev -0.7%)
  • Ex-dividend – Joyce Corporation (JYC) 6.0c, NAOS Ex-50 Opportunities Company (NAC) 1.4c, NAOS Small Cap Opportunities Company (NSC) 1.4c
  • BoJ Monetary Policy Meeting Minutes
  • Chinese data – Caixin Composite PMI, Caixin Services PMI



  • UK – Markit/CIPS UK Services PMI, ISM Services


  • Webjet (WEB) – Trading Halt due to acquisition and capital raising. Acquiring Destinations of the World.
  • Westpac (WBC) – FY results. Statutory net profit $8,095m, up 1%; Cash earnings $8,065m, little changed; Cash earnings per share, 236.2 cents, down 1%; Cash return on equity (ROE) 13.0%, at the lower end of the range Westpac is seeking to achieve; Unchanged, final, fully franked dividend of 94 cents per share (cps), (full year, fully franked dividend of 188 cps; Common equity Tier 1 capital ratio 10.6%, above APRA’s unquestionably strong benchmark; Bank Levy $378 million (pre-tax), effective tax rate including Bank Levy 33%
  • Bluescope (BSL) – Has acquired YKGI Holdings Berhad’s (YKGI) manufacturing facility in Klang, Malaysia for a purchase price of $42m.
  • Cochlear (COH) – Ruling in USA Patent Infringement Case. Damages US$268,057,078 awarded against Cochlear in the patent infringement lawsuit by AMF and AB; Cochlear will appeal the Judgment with the timing of an appeal outcome expected in approximately two years; Cochlear established a provision in FY14 based on the view of Cochlear’s independent damages expert’s assessment of the liability that could result from the dispute; Cochlear will undertake a review of the current provision of AUD 21.3 million and will update the market once this review is complete; It is important to note that the infringement relates to a long expired patent and has no ongoing impact to Cochlear’s business.
  • Greencross (GXL) – Takeover offer at $5.55, which is apremium of 44.5% to the 1 month VWAP up to 9 October 20182 and an acquisition multiple of ~10x FY18A EV / EBITDA. The payment of a fully-franked Permitted Dividend of up to $0.21 per share on or shortly before the implementation date of the Scheme is currently being reviewed.



  • 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.


  • Westpac (WBC) Results today
  • AGMs – Commonwealth Bank (CBA) Wednesday, BHP Billiton (BHP) on Thursday, Nanosonics (NAN) on Friday




US EQUITIES – S&P500 -29 (-1.04%), Dow Jones -210 (-0.83%), Nasdaq -99 (-1.33%).

Main themes

  • Initial optimism on reports that President Trump had asked for a draft of a trade deal with China, but the report was refuted several hours later by Larry Kudlow
  • Strong employment report that is generally consistent with a view of gradual Fed tightening. Annual wages growth of 3.1% the highest since April 2009.
  • Apple -7.1% despite beating earnings and revenue guidance, as Q iPhone shipments missed estimates, guidance was soft and there were changes announced to its reporting structure.
  • US bonds were weaker, with the yield on the 10-year bond rising 7bp to 3.2%.

EUROPEAN MARKETS – Mostly higher. STOXX500 +0.28%, UK FTSE -0.29%, German DAX +0.44%, French CAC +0.32%.


  • The USD is stronger at 96.56.
  • The Aussie dollar is trading at US71.88c after reaching a high of US72.59c.

BONDS – Weaker. 2-yr: +4 bps to 2.88%, 5-yr: +5 bps to 3.01%, 10-yr: +5 bps to 3.19%, 30-yr: +4 bps to 3.43%


  • WTI crude futures closed down US55c or 0.8% to US$63.14. The US has said eight countries, including South Korea, Japan and India, will be able to continue buying Iranian oil once sanctions stat this 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 US45c at US$74.10/dry ton. (CFR Tianjin port)
  • LME metals – Bog moves. Cu +3.17%, Ni +1.23%, Al +0.36%.


  • Economic data – October Nonfarm Payrolls 250K (consensus 190K; prior 118K), Nonfarm Private Payrolls 246K (consensus 185K; prior 121K), Average Workweek 34.5 (consensus 34.5; prior 34.4), Average Hourly Earnings 0.2% and 3.1% over the year (consensus 0.2%; prior 0.3%), Unemployment Rate 3.7% (consensus 3.7%; prior 3.7%), and September Trade Balance -$54.00bn (consensus -$53.40bn; prior -$53.20bn); September Factory Orders 0.7% (consensus 0.4%; prior 2.6%)
  • European Banking Authority has released its latest stress test results – Banks were higher ahead of the results. The banks were benchmarked against a core tier ratio — 8% in the baseline scenario and 5.5% in the adverse scenario. All of the banks passed the “adverse scenario”. The lowest ranked banks (under the adverse scenario) were Barclays at 6.37%, Lloyds at 6.8%. Deutsche Bank scores 8.14%. The lowest ranked Italian bank (Banco BPM) scored 6.67%< while UBI Banca scored 7.42%.

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