The ASX 200 is down 7 points in mid morning trade after a big night of oil (-7.1%), Brexit (deal text agreed) and trade. Energy & Materials worst. PGH downgrade, DLX results, SWM &MPL AGMs. Wages data and Chinese data today, EUR IP, UK and US CPI tonight with UK cabinet meeting on Brexit. #ausbiz


  • Economic data – Westpac Consumer Confidence Index, Wage Price Index


  • Chinese economic data – Fixed Asset Investment (YTD), Industrial Production, Retail Sales, FDI


  • Japanese data – GDP Growth Rate QoQ Prel Q3, Capacity Utilization, Tertiary Industry Index, Industrial Production


  • UK Inflation Rate, PPI Output
  • European – GDP Growth Rate, Industrial Production
  • US – CPI. Consensus is for 0.3%, unchanged from September


The Bank of America Merrill Lynch month survey of fund managers surveys around 225 global fund managers, covering around $640bn in FUM. Some key points from the latest survey.

  • Average cash balances fell to 4.7% (from 5.1% in September). Long term average is 4.5%.
  • Reduced exposure to technology (only 18% said they were overweight – the lowest level since February 2009)
  • Although expectations for the S&P peak are at 3056 (12% from current levels) based on the weighted average of estimates, 1 in 3 respondents thought the market had already peaked. BAML said the big low is expected in 2Q 2019.
  • Growth outlook – 44% of managers expect global growth to decelerate in the next 12 months. It’s the worst outlook on the global economy since November 2008. 54% (net) expect a slowdown in Chinese growth in the next year,
  • Top 3 risks for markets – Trade war (sixth month at the top, quantitative tightening and a slowdown in China.


  • Dulux (DLX) – FY18 Delivery of Solid Profit Result. Segment result – Dulux ANZ: consistent revenue and earnings growth, despite significant raw material increases; Selleys & Parchem: modest earnings growth – good growth in core businesses offset by weaker Selleys trade and Parchem NZ; B&D Group: revenue and EBIT growth; margin improvement; Lincoln Sentry: continued revenue and EBIT growth; Other businesses: EBIT declined slightly – investment in UK and Indonesia.2019FY profit expected to be ahead of 2018 equivalent of $150.7. Comments on the housing market. “The new housing market accounts for approximately 15% of DuluxGroup revenue. Although new construction approvals are expected to moderate in FY19, completions are expected to remain at FY18 levels given the pipeline of work. Non-residential commercial construction markets are expected to continue to grow, while relevant engineering construction and maintenance markets are expected to be flat overall.


  • Medibank Private (MPL) – The improvement in policyholder momentum experienced in 2H of fiscal 2018 has continued into the current financial year. For the first four months of this FY, we have experienced modest growth of around 8,000 resident policyholders. This is approximately 9,000 higher than the pcp (decline of 1K). We remain confident that this positive momentum supports our milestone of modest market share growth this year, against a backdrop of likely flat overall market volumes. No change in the guidance on hospital and ancillary utilisation from FY2018 results in August – that hospital utilisation growth remains subdued and ancillary utilisation in FY19 is expected to be slightly lower than in 2018. Has resulted in a claims provision release of approximately $10m as at October year to date, from our 30 June provision. No change in our expectations previously communicated relating to our management expenses, dividend payout ratio or building out our health services capability with 1 – 2 more small acquisitions.
  • Seven West Media (SWM) – Overall expects the metro TV ad market to be broadly flat in the financial year, but for Seven to increase share. Seven Studios has also had a very strong start to the year. Upgraded net F!9 cost saving targets from $10-20 million to $20-30 million. We reiterate our guidance issued at our FY18 financial year result for underlying EBIT in FY19 to grow by 5-10% on the prior period.
  • Eclipx (ECX) – FY18 result. Net Operating Income (NOI) of $325.3 million (+27% on FY17), Net Profit After Tax & Amortisation (NPATA) of $78.1 million (+14% on FY17). The increase in NOI reflects strong growth in Fleet and Commercial underpinned by continued solid endof-lease (EOL) profit performance and a full year contribution from GraysOnline, offsetting some softness in the Right2Drive and CarLoans consumer businesses. The higher NPATA reflects growth across all segments and is in line with revised guidance provided on 6 August. Total assets under management or finance +9% to $2.43 billion; New business writings +11% to $1.1 billion; Cash earnings per share down 2% to 24.7c; Total dividend per share up 5% (0.75c) to 16.0c, fully franked; Final dividend per share of 8.0c, fully franked; Proposed merger with McMillan Shakespeare (announced 8 November)
  • Computershare (CPU) – Affirmed FY19 Management EPS guidance to increase by around +10% on FY18 in constant currency. Encouraging start to the year.


  • AusNet Services (AST) – 1H results. Dividend of 4.62c unfranked


  • Bingo (BIN) – Reaffirms FY19 guidance


  • Pact Group (PGH) – Earnings for 1H19 are expected to be weaker than the pcp, adversely impacted by on-going lags in recovering higher than anticipated resin costs and higher costs for contract manufacturing materials. Based on our projected run rate for the first half, EBITDA for FY2019 would be around $245 million, compared to $237 million in the pcp (previous guidance $270-285m). EBITDA would be skewed to the second half with higher benefits from efficiency programs and a full 6-month contribution from TIC Retail Accessories (TIC)
  • Downer EDI (DOW) – Notes media speculation in relation to a potential management buyout of its mining services business. DOW says it has not received any such proposal.
  • Aveo Group (AOG) – Mentions softening residential markets and the impact on sales rates for FY19. “Due to current market conditions and uncertainty around future sales levels, management will not be confirming FY19 EPS guidance today. In addition, there will be a significant skew of profits to the second half due to the timing of new retirement development unit deliveries and settlement of non-retirement lots.”





US EQUITIES – S&P500 -4 (-0.15%), Dow Jones -101 (-0.40%), Nasdaq +0 (+0.00%).

Main themes

  • Volatile trading with the Dow down as much as 193, but then recovered after White House economic advisor Larry Kudlow confirmed reports of renewed talks between the US and China on trade, saying he believes them to be “very positive” (between Treasury Secretary Steve Mnuchin and Chinese Vice President Liu He)…and then fell again
  • Oil prices fall further on Trump’s calls for no production cuts
  • Apple continued to fall – after an initial bounce – after Lumentum (which makes technology for Apple’s face recognition function) cuts its outlook for the 2Q, saying one of its largest customers had asked it to materially reduce shipments.
  • Brexit – The EU and Britain have agreed on Brexit language that will avoid a hard border between Ireland and Northern Ireland once Brexit is completed

EUROPEAN MARKETS – All higher. STOXX500 +0.67%, UK FTSE +0.01%, German DAX +1.30%, French CAC +0.85%.


  • The USD is eased 0.4% to 97.19.
  • The Aussie dollar has strengthened to US72.12c.
  • The GPB hit a 7 month high versus the Euro


BONDS – 2-yr: -5 bps to 2.88%, 5-yr: -5 bps to 2.99%, 10-yr: -4 bps to 3.15%, 30-yr: -2 bps to 3.37%. Italian 10-year yields were up 3bp, with the Italian government approaching a deadline to respond to the EC’s request for a new budget proposal


  • WTI crude futures closed down US$4.24 or 7.1% at US$55.69, its lowest level since last November.  Trump urged OPEC and Saudi Arabia to maintain the current policy of gradually increasing production to offset supply lost from sanctions against Iran and cap price rises. OPEC also reduced its forecast for 2019 demand growth for the 4th time in as many months, saying production increases from non-OPEC countries will outpace demand growth next year. On Sunday, OPC reps said looming oversupply may result in new strategies to balance the market, while Saudi Energy Minister Khalid al Falih said OPEC members agree that technical analysis points to the need for production cuts approaching 1 million bpd. Oil has fallen 25.5% over the last 5 weeks, from US$76.90 reached in October, on supply issues including record Chinese imports and US output, and reports production has been increasing in Saudi Arabia and Russia.
  • Gold closed down US$1.40 or 0.12% to US$1202.00 an ounce.
  • Iron Ore – IRESS reports iron ore up USD$1.00 to US$76.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down US$1.55 at US$75.20/dry ton. (CFR Tianjin port)
  • LME metals – Mostly lower. Cu +0.40% the exception, Ni -0.48%, Al -0.33%.


  • Brexit progress – British and EU negotiators have agreed a draft text of a Brexit accord that has been sent to Prime Minister Theresa May. Separately the EC has also said it intended to adopt (by the end of December) all the legislation necessary to prepare the EU for a British exit – without a divorce (or withdrawal) agreement should it be necessary – by Brexit day on March 29
  • Italian yields up 3bp, with the Italian government approaching a deadline to respond to the EC’s request for a new budget proposal. There is concern around the GDP forecast, which could result in a higher deficit in % of GDP terms.
  • European growth out tonight. Forecast is for a halving to 0.2% in the quarter to give 1.7%yoy (down from 1.7%). ECB chief economist Peter Praet said that recent developments in the eurozone point to a slowdown in growth and that significant monetary stimulus is still needed.
  • European data – Eurozone November ZEW Economic Sentiment -22.0 (expected -17.3; last -19.4); German October CPI +0.2% (as expected, last 0.2%) to be +2.5%yoy (as expected, last 2.5%). November ZEW Economic Sentiment -24.1 (expected -24.2; last -24.7) and ZEW Current Conditions 58.2 (expected 65.0; last 70.1);
  • UK data – Unemployment Rate 4.1% (expected 4.0%; last 4.0%). Average Earnings Index + Bonus +3.0%yoy (as expected, last 2.8%). Claimant Count Change 20,200 (expected 4,300; last 23,200)
  • Royal Commission next week – CBA (Matt Comyn or Catherine Livingston), WBC (Brian Hartzer) and Macquarie (Nick Moore). ASIC Chairman James Shipton appears at the end of the week. ANZ and NAB will appear in week 2 along with BEN and APRA.


“The reason we love our parents is because they loved us first. Every single company should take this advice.” – Gary Vaynerchuk, Belarusian-American businessman born this day in 1975.


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