The ASX 200 is flat (+2) in mid-morning trade after a volatile US session driven by earnings. Gold the worst, Materials and banks also lag, Telcos and Energy lead. COL invests in distribution with write-down, STO, OZL and GXY Q reports. Employment data key today and ECB meeting ahead. #ausbiz
TODAY
- Employment data
TONIGHT
- ECB meeting – May push back estimates for the next move in rates (currently end summer)
COMPANY NEWS
- Coles (COL) – Has executed definitive contracts with WITRON Australia Pty Ltd to develop two new automated ambient distribution centres, one each in Queensland and New South Wales. Total CAPEX relating to the supply chain modernisation project for the two automated distribution centres is approximately $950m over six years. Coles also confirmed a pre-tax provision of $146m in its 2019 interim result as a significant item, relating to lease exit costs and redundancies for existing distribution centres that will be closed over a five year period.
- Santos (STO) – Q reports, update FY18 guidance and new FY19 guidance (sales volumes to be in the range of 88-98 mmboe and production to be in the range of 71-78 mmboe)
- OZ Minerals (OZL) – Copper and gold production exceed 2018 guidance, AISC and C1 costs below guided rang; Mine life extended to 2030; Gold production guidance raised for 2019
- Evolution Mining (EVN) – Q report. FY19 Group guidance maintained. FY19 Group production guidance 720,000 – 770,000 ounces at an AISC of A$850 – A$900 per ounce; On track to comfortably deliver production guidance; AISC expected to be at the top end of guidance range
- Galaxy (GXY) – Q report. Production Guidance – targeting total spodumene production 40,000-45,000 dmt in Q119 and 180,000-210,000 dmt for the full calendar year.
OVERNIGHT
SPI FUTURES -4
US EQUITIES – S&P 500 +6 (+0.22%), Dow +171 (+0.70%), NASDAQ +5 (+0.08%)
Main themes
- Strong company earnings – Procter & Gamble (+4.87%), United Tech (+5.38%), and IBM (+8.46%) provided support. Comcast (+5.5%) beat top and bottom-line estimates and increased its dividend by 10%.
- Ongoing growth and trade concerns
- Mixed session – the S&P500 was up as much as 0.8% shortly after the start of trading, lost as much as 0.8% by midday, and teetered around its flat line for most of the afternoon.
EUROPEAN MARKETS – Mostly weaker. STOXX500 -0.06%, UK FTSE -0.85%, German DAX -0.17%, French CAC -0.15%.
CURRENCIES
- The USD is a little lower at 96.13.
- The Aussie dollar is weaker at US71.19c.
BONDS – 2-yr: +2 bps to 2.59%, 3-yr: +2 bps to 2.57%, 5-yr: +2 bps to 2.59%, 10-yr: +3 bps to 2.76%, 30-yr: +2 bps to 3.07%
COMMODITIES
- WTI crude futures were down US39c or 0.75% to $52.62. Factors included weak Asian economic data, rising oil output from the United States, the impact of the US-China trade war and growing prospects of the United States hitting its debt ceiling.
- Gold is up US60c at $1284.
- Iron Ore – IRESS reports iron ore was unchanged at US$74.80 a tonne. CommSec reports iron ore was flat at US$74.60.
- LME metals – All higher. Copper +0.28%, nickel +0.99%, aluminium +1.38%
ECONOMIC DATA, NEWS & POLITICS
- US economic data – MBA Mortgage Index -2.7% (prior 13.5%); FHFA Housing Price Index 0.4% (consensus 0.3%; prior 0.4%)
- US earnings season – 14% of S&P 500 companies reported so far. Of those companies, 72.9% have topped earnings estimates, but only 58.7% of those companies have beaten sales forecasts. Overall, earnings have grown by 13.2%, slightly above expectations but at the slowest pace since 4Q17 (15.5%). (Factset)
- US-China trade – Reports (Reuters) that Trump is unlikely to accept a trade balance only deal that didn’t address intellectual property rights and forced technology transfers.
- BoJ meeting – No changes to policy stance, but the inflation forecast for fiscal 2019 was lowered to 0.9% from 1.4%.
- Venezuela – Juan Guaido proclaimed himself acting president during ongoing demonstrations against the government of President Nicolas Maduro. The US has expressed support for the opposition leader with President Trump recognizing Mr Guaido as interim president. Argentina, Brazil, Canada, and Colombia have also recognized the interim president.
- House Speaker Nancy Pelosi has cancelled the State of the Union address while the government remains partially closed.
QUOTE OF THE DAY
“It is not necessary to understand things in order to argue about them.” – Pierre Beaumarchais, French inventor born this day in 1732. Died May 18, 1799
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