The ASX 200 is down 63 points in mid morning trade after another global market fail. US year’s gains gone, oil ↓6.6%. H’care↑ but big falls everywhere. COL trades 11am, WES ↓$13.33RC. TME takeover. When will it end? #ausbiz
TODAY
- Wesfarmers (WES) – Coles (COL)lists today and is expected to trade at 5-10% discount to WOW. Most brokers think shares will trade somewhere between $13-14. Some specifics – Citi $14.20 a share, Morgan Stanley has a wide range with a midpoint at $11.09, CLSA is also at $14.20 and Deutsche Bank team is at $13. This put Coles market cap at $18bn and PE of 18x compared with WOW on 19.8x FY2020 years earnings. Wesfarmers (WES) now trades at 44.30 with PE of 16.9x this year and 16.3x next year earnings.
- Japanese data – All Industry Activity Index
TONIGHT
- Brexit – British Prime Minister Theresa May is scheduled to meet with European Commission President Jean-Claude Juncker to discuss the Brexit withdrawal bill
- Italy – The European Commission is expected to respond to Italy’s refusal to alter its fiscal targets for 2019. The Commission is likely to announce that an excessive deficit procedure will be opened against Italy.
- UK – Public Sector Net Borrowing
- US economic data – Durable Orders, Leading Indicators, Univ. of Michigan Consumer Sentiment – Final, Existing Home Sales
COMPANY NEWS
- Coles (COL) lists today
- APA Group (APA) – has reconfirmed FY2019 guidance for FY19 EBITDA of $1,550-$1,575m following termination of the Implementation agreement with the CKI Consortium, including costs of the process. All other guidance metrics also remain unchanged, interest costs $500-510m, growth CAPEX at around $425m, total distributions for the year ~46.5c.
- Trade Me (TME) – Offer from Apax Partners at NZ$6.40. The Board is engaging with Apax
- Webjet (WEB) – AGM
- Cimic (CIM) – Sydney Metro works – CPB Contractors and UGL have been selected to deliver the Line-wide works package in support of the Sydney Metro City & Southwest project, Australia’s biggest public transport project. The $1.376bn JV project will commence this year and is scheduled to conclude in 2024.
OVERNIGHT
SPI FUTURES -65
US EQUITIES – S&P500 -49 (-1.82%), Dow Jones -552 (-2.21%), Nasdaq -120 (-1.70%).
Main themes
- Gains for the year lost
- Concerns about the economic outlook and the downside, with bear market risk being identified.
- Retailers weaker with Target down 10.5% on a weaker-than-expected Q earnings report.
- FAANG stocks mixed. Apple now down 23.7% from its record close in October.
EUROPEAN MARKETS – All lower. STOXX500 -1.14%, UK FTSE -0.76%, German DAX -1.58%, French CAC -1.21%. Greece down significantly -3.91%.
CURRENCIES
- The USD is up 0.7% to 96.82.
- The Aussie dollar has also fallen over 1% to US72.20c.
BONDS – 22-yr: +2 bps to 2.79%
COMMODITIES
- WTI crude futures closed down US$3.77 or 6.6% at US$53.43. The same issues at play – rising production, falling demand. There was also some speculation that Saudi Arabia might not force an oil production cut now after defended the US relationship with Saudi Arabia amid the killing of Jamal Khashoggi.. Major producers meet next on December 6.
- Iron Ore – The CommSec site says China Import (Fines 62% Fe) was down US$1.60 at US$73.50 dry ton. (CFR Tianjin port)
- LME metals – All lower. Cu -1.20%, Ni -0.76%, Al -0.25%.
ECONOMIC DATA, NEWS & POLITICS
- US economic data – Housing Starts 1228K (consensus 1230K; prior 1210K) and Building Permits 1263K (consensus 1260K; prior 1241K)
- Trump says the US stands with Saudi Arabia despite the killing of Khashoggi
- Spanish Prime Minister Pedro Sanchez said that an election would be called when it is in the country’s best interest. This comes amid recent speculation that a snap election could take place in May
- European data – Germany PPI +0.3% (as expected, last 0.3%) to be +3.3%yoy (as expected, last 3.2%), French Q3 Unemployment Rate 9.1% (expected 9.2%; last 9.1%)
- UK’s November CBI Industrial Trends Orders 10 (expected -6; last -6)
QUOTE OF THE DAY
“Common sense is not so common.” – Voltaire, French writer born this day in 1694. Died 30 May 1778.
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