The ASX 200 closed up 31 in a day dominated by heaps of news. MMS takeover of ECX, REA and XRO results, JHX guidance, APA takeover off, NAB ex-div, CTD fights back (yeah!!!!),, NAB ex 99c. Chinese trade data +ve, $A72.95. FOMC tonight. #ausbiz
- Ex-dividend – Australian Pharmaceutical Industries (API) 4.0c, National Aust. Bank (NAB) 99.0c, Waterco (WAT) 3.0c
- Japanese data – Current Account, Bank Lending, Machinery Orders
- Chinese data – Balance of Trade, Imports/Exports. Trade data much stronger than expected.
- US FOMC decision
- Corporate Travel (CTD) – Response to VGI short report. CTD has engage EY to address the issues raised in the report. EY has pretty much slammed the VGI report as rubbish.
- BHP Billiton (BHP) – AGM. Also BHP has acquired a 100% participating interest in, and operatorship of, two exploration licences for blocks 8 and 12 in the offshore Orphan Basin in Eastern Canada. The aggregate bid amount of US$625m covers the drilling and seismic work required by the exploration work programs under the licence agreements over the six year term. BHP’s minimum commitment under the licence agreements is for US$157m.
- REA Group (REA) – 1Q financial information. Strong revenue growth driven by the Australian Residential business and the inclusion of the Hometrack Australia business. There was also a full quarter contribution from the Smartline business compared to two months in the first quarter last year. Unfavourable market conditions with a 3% decrease in listings nationally (including listing declines of 8% in Sydney and 1% in Melbourne). The revenue growth reflects the price changes which took effect from 1 July, an improved product mix and further depth penetration. There was also a stronger contribution from newer products such as Audience Maximiser and Front Page. Market conditions are not expected to improve in the short term. Listings may be weaker in the lead up to the NSW election in March, while the impact of the Federal election is harder to predict. In October overall residential listings were down 2% with Sydney down 12% while Melbourne was up 4%.
- APA Group – FIRM has blocked the proposed acquisition by CK Asset Holdings Limited (CK Group), noting it would be contrary to the national interest.
- Fairfax (FXJ)/Nine Entertainment (NEC) – ACCC will not oppose proposed merger.
- AMP – Is raising $200m through a subordinated note issue.
- Machmillian Shakespeare (MMS) – Trading halt expects to make an announcement to the ASX in connection with a material transaction
- Eclipx (ECX) – Paused trading pending a further announcement.
- Pendal (PDL) – FY results
- Afterpay Touch (APT) – Market update referring to strong sales performance and addressing regulatory issues.
- Xero (XRO) – 1H results. Revenue up 37% to $256.5 million (33% in constant currency (CC)); AMRR increased by 40% to $589.1 million (36% in CC); Average Revenue per User (ARPU) increased 6% from 30 September 2017 to $31.1 (3% in CC); Net subscriber additions of 193,000 during the half year, taking total subscribers to 1.579 million at 30 September 2018 (net subscriber additions before inclusion of acquired Hubdoc subscribers was 174,000); Lifetime Value (LTV) per subscriber increased 6% to $2,494 (3% in CC). Added $1.1 billion in total subscriber LTV in the past year (unchanged in CC), to reach $3.9 billion. Outlook – Cash outflow (operating less investing cash flows) in the financial year ended 31 March 2019 (FY19) is forecast to reduce from the financial year ended 31 March 2018 (FY18). Excluding capital outlays for M&A, Xero is managing the business to cash flow breakeven within its current cash balance, without drawing on its debt facility or the net proceeds from convertible notes issued in October 2018 Following cash flow break-even, it is intended that surplus cash flow will be reinvested, subject to investment criteria, to drive long-term shareholder value.
- James Hardie (JHX) – 1H dividend of 10c. Guidance – JHX noted the range of analysts’ forecasts for net operating profit of US$313-US$335 million. Management expects full year Adjusted net operating profit to be between US$280-US$320m.
- Platinum (PTM) – FUM
SPI FUTURES +37
US EQUITIES – S&P500 +58 (+2.12%), Dow Jones +545 (+2.13%), Nasdaq +195 (+2.64%).
- Positive respond after midterm election results, which were largely expected. President Donald Trump indicated he is willing to work with Democrats on policy initiatives that would help the economy keep growing.
- Health care stocks rise with the unlikelihood that a divided Congress will fully repeal the Affordable Care Act. Democratic House also reduces the likelihood of bank deregulation
- Attorney General Jeff Sessions resigned effective immediately per President Trump’s request
EUROPEAN MARKETS – All higher. STOXX500 +1.06%, UK FTSE +1.09%, German DAX +0.83%, French CAC +1.24%.
- The USD is a little bit lower at 96.12.
- The Aussie dollar is stronger at US72.83c.
BONDS – 2-yr: +1 bp to 2.93%, 5-yr: +1 bp to 3.06%, 10-yr: UNCH at 3.21%, 30-yr: UNCH at 3.43%
- WTI crude futures are down US54c or almost 1% at US$61.67. US stockpiles rose for the 7th week, up 5.8mb (more than double expectations). US oil production also hit a record 11.8mbpd. There were also reports that Russia and Saudi Arabia were discussing oil output cuts next year.
- Iron Ore – IRESS reports iron ore was up US$1 at US$75.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was down US$1.30 at US$74.5/dry ton. (CFR Tianjin port)
- LME metals – Mixed. Cu -0.08%, Ni +0.38%, Al +1.77%.
ECONOMIC DATA, NEWS & POLITICS
- Midterm election results – Republicans maintained control of the Senate while Democrats took control of the House. A split Congress may make it more difficult for President Trump to make deals, but a Democratic House reduces the likelihood of bank deregulation.
- US economic data – September Consumer Credit $10.92 billion (consensus $14.50 billion; prior $22.88 billion), Weekly MBA Mortgage Index -4.0% (prior -2.5%)
- US earnings – Etsy (+23.7%) and Office Depot (+24.0%) both beat earnings and raised their guidance, Michael Kors (-14.6%) beat earnings estimates but lowered its fiscal Q3 guidance below consensus, and Groupon (-10.6%) missed earnings expectations.
- European data – September Retail Sales 0.0% (expected 0.1%; last 0.3%) to be +0.8%yoy (expected 0.7%; last 2.2%); German September Industrial Production +0.2% (expected 0.1%; last 0.1%); Italian September Retail Sales -0.8% (expected -0.1%; last 0.6%) to be -2.5%yoy (last 2.1%)