MID MORNING MARKETS 22-01-19

The ASX 200 is down 10 points in mid-morning trade after few leads from offshore. Growth in focus after China and IMF downgrade. Banks and Materials drag while IT and Energy ↑. BHP Q numbers a little disappointing. Dow futures down 82 #ausbiz

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COMPANY NEWS

  • BHP (BHO) – Q production report. Impact from freight train derailment in Western Australia, a plant outage in South Australia and a mine fire in Chile. Expect to see some potential downgrades. Production guidance for the 2019 financial year remains unchanged for petroleum, iron ore, metallurgical coal and energy coal. Total copper production guidance increased to between 1,645 and 1,740 kt and reflects the retention of Cerro Colorado.

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  • Oil Search (OSH) – Guidance for FY18. Production costs and depreciation and amortisation charges for 2018 are expected to be at the lower end of the previously advised guidance ranges of US$11.50 – 12.50 /boe and US$12.00 – 13.00/boe, respectively

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  • Santos (STO) – Santos has a 52.5% interest in the Van Gogh-Coniston-Novara project, which it operates
  • Super Retail Group (SUL) – Anthony Heraghty will succeed Peter Birtles as Group Managing Director and Chief Executive Officer of Super Retail Group from 31 March 2019

OVERNIGHT

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SPI FUTURES +0

US EQUITIES – Markets closed for the Martin Luther King holiday

S&P 500 +35 (+1.32%), Dow +336 (+1.38%), NASDAQ +73 (+1.03%)

Main themes

  • China GDP in line with expectations but growth the slowest in 28 years.
  • IMF cut to global GDP growth forecasts

EUROPEAN MARKETS – Mostly weaker. STOXX500 -0.19, German DAX -0.62%, French CAC -0.17%, %, UK FTSE +0.03% the exception.

CURRENCIES

  • The USD is little changed at 96.32.
  • The Aussie dollar is stronger at US71.61c.

BONDS – US closed

COMMODITIES

  • WTI crude futures were up US10c or 0.19% to $53.90.
  • Gold is down US$3.00 or 0.23% at $1279.60 as calmer markets reduced the appeal of safe haven assets.
  • Iron Ore – IRESS reports iron ore was up US50c atUS$74.50 a tonne. CommSec reports iron ore unchanged at US$75.95.
  • LME metals Copper -1.17%, nickel -0.17%, aluminium -0.96%

ECONOMIC DATA, NEWS & POLITICS

  • Janet Yellen to the National Retail Federation’s annual Big Show event in New York. “If there is a downturn in the global economy and that spills into the U.S. … It’s very possible we may have seen the last interest rate hike of this cycle.” The current Fed dot plot factors in 2 rate hike this year (and perhaps one next year), while markets see no chance of a hike and in fact see a 28% chance of a cut.
  • Chinese data yesterday showed growth in line with expectations, albeit at the slowest rate in 28 years. Mot sure anyone really has any faith in the numbers, though. GDP Grew 6.6% from the previous year. (The 6.4% represents the growth in 4Q 2018 compared to growth in 4Q17, while the 6.6% is entire 2018 GDP compared to total 2017 GDP).

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  • Brexit – Theresa has announced tweaks to her original plans. Saying a second Brexit referendum did not enjoy majority support and rejecting growing calls for her to rule out a “no-deal” Brexit as a possibility.
  • IMF growth forecasts cut again – It’s the second cut in 3 months, to a 3.5% growth rate worldwide for 2019 and 3.6% for 2020 — 0.2 and 0.1 percentage points below its last forecasts in October. The cut in October related to the impact of US and Chinese tariffs. The additional reflect broader softer momentum in 2H18, including in Germany, Italy, and Turkey, and also weakening financial market sentimtent. Risks are seen skewed to the downside (trade, Brexit and China)


QUOTE OF THE DAY

“With an open trade in corn and a fixed duty we should have every man in the country fully fed and happy, instead of our present situation in which so much distress exists – distress of our own producing.” – Joseph Hume, Scottish scientise born this day in 1777. Died 20 February 1855.

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