MID MORNING MARKETS 27-11-18

The ASX 200 is up 17 points in mid morning trade but losing momentum after a strong o/n session. Oil recovers and Italy/Brexit “more” +ve. IT stocks lead but most sectors ↑. Defensives lag. HVN sales update, BKW and SEK guidance. IPH confirms offer, RC continues.  #ausbiz

m1m2m3TODAY

  • AGMs – Brickworks (BKW), Seek (SEK), Harvey Norman (HVN)
  • Ex-dividend – OFX Group (OFX) 2.6c
  • Chinese industrial profits

TONIGHT

  • UK Housing prices
  • US economic data – Case-Shiller 20-city Index, FHFA Housing Price Index, Consumer Confidence
  • Fed Speak – Vice Chair Richard Clarida, Chicago Fed President (alternate voter) Charles Evans, Atlanta Fed President (FOMC voter) Raphael Bostic, Kansas City Fed President (alternate voter) Esther George

COMPANY NEWS

  • Harvey Norman (HVN) – Sales FYTD (23 November) were up 2.7% on pcp to $2.88bn. Up 3% on camparable store basis, Positively affect from 6.2% appreciation in the Euro €, a 7.0% appreciation in the UK Pound £, a 7.0% appreciation in the Singaporean dollar $, a 11.1% appreciation in the Malaysian Ringgit and a 0.2% appreciation in the NZD. Back at the lows from August 2014 but techincally not exciting.

m2

  • McMillan Shakespeare (MMS) – Macquarie Conference
  • IPH Limited (IPH) – Response to media speculation regarding an approach by IPH to QANTM Intellectual Property Group Limited in relation to a potential transaction. IPH confirms that it has made a number of approaches culminated in a proposal on 20 November at $1.80 per QANTM share.
  • Brickworks (BKW) – 1H earnings from Property are expected to be similar to the prior full year,
  • BHP – Copper exploration update. Has confirmed identification of a potential new iron oxide, copper, gold (IOCG) mineralised system, located 65 kilometres to the south east of BHP’s operations at Olympic Dam in South Australia.
  • Qube (QUB) – NSW Ports announced a significant investment in rail infrastructure at Port Botany, investing in ‘on-dock’ rail infrastructure capacity at each of the three container terminals at Port Botany, commencing in 2019. The investment will be staged, with stevedores being required to invest in rail operating equipment to meet target terminal capacities.
  • Seek (SEK) – No changes to short-term guidance. Technically looking more interesting. MACD indicators ticking up and RSI looks to have bottomoed.

m1.png

m3

  • Freedom Foods (FNP) – Presentation to UBS Food and Agribusiness

m2


OVERNIGHT

m10m11

SPI FUTURES +46

US EQUITIES – S&P 500 +41 (+1.55%), Dow +354 (+1.46%), NASDAQ +143 (+2.06%)

Main themes

  • Retailers did well on strong reports on Black Friday and expectations for large Cyber Monday participation. Amazon +5.3%
  • Oil rebounded 2.4% after the 7.7% fall on Friday
  • General Motors (+4.8%) announced additional restructuring plans that will result in a 15% reduction of its salaried staff and possibly the closure of five of its North American plants. President Donald Trump said he is unhappy with the job cuts and is hopeful that something else will replace the GM plants in Ohio.

EUROPEAN MARKETS – All stronger. STOXX500 +1.23%, UK FTSE +1.20%, German DAX +0.49%, French CAC +0.97%.

CURRENCIES

  • The USD is a higher at 97.07.
  • The Aussie dollar is a touch weaker at US72.21c.

BONDS – 2-yr: +1 bp to 2.83%, 5-yr: +2 bps to 2.90%, 10-yr: +2 bps to 3.07%, 30-yr: +1 bp to 3.32%

COMMODITIES

  • WTI crude futures were up US$1.21 or 2.4% at US$51.63. Moves more a relief bounce rather than being supported by new events. Morgan Stanley expects weakness to last into 2019.
  • Iron Ore – IRESS reports iron ore down US$1.5 at US$72.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was down US$4.20 or 6.1% at US$68.90 dry ton. (CFR Tianjin port)
  • LME metals – Mixed. Cu -0.29%, Ni -0.37%, Al +0.13% the exception

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – German November ifo Business Climate Index 102.0 (expected 102.3; last 102.9). November Current Assessment 105.4 (expected 105.3; last 106.1) and Business Expectations 98.7 (expected 99.2; last 99.7)
  • Italian politics – Shares up 2.4% and bond yields down 14 basis points after reports officials are willing to lower the deficit target, but this report followed weekend remarks from Deputy Prime Minister Matteo Salvini, who said he would bring down the government if the deficit target is changed. Deputy Prime Minister Luigi Di Maio said that a lower budget deficit would not be a problem if budget measures remain unchanged.
  • Brexit – EU leaders approved have the Brexit withdrawal bill, and now the bill will need to be passed by the British parliament on December 11. British Prime Minister Theresa May warned that there is no better deal available.

QUOTE OF THE DAY

“It’s not the daily increase but daily decrease. Hack away at the unessential.” – Bruce Lee, American actor born this day in 1940. Died 20 July 1973.

Excellent portfolio management advice too! Avoid the losers rather than pick the winners.

m12

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