The ASX 200 is down 8 points in mid-morning trade despite positive leads. Banks lose steam to be major drag, Materials ok and industrials/IT leading. Focus on CBA result, COL deal boosts VEA. CIM, NCK and GMA results. Lowe speech ahead. #ausbiz


  • Results – SCA Property Group (SCA), Cimic Group Ltd (CIM), Commonwealth Bank (CBA), Insurance Australia (IAG), Dexus (DXS)
  • Commonwealth Bank (CBA) – Expected to report half-year earnings on Wednesday with an adjusted net profit of $4.79 billion, according to estimates compiled by Bloomberg – a 2.5% decline from last year’s $4.912 billion. Dominated by RC commentary and the housing market effect
  • Ex-dividend – ResMed (RMD) 3.6c
  • Philip Lowe speaking at the National Press Club


  • Commonwealth Bank (CBA) – Cash profit down 2.1% (or up 1.7% on a continuing operations basis. Cost-to-income ratio +10bp to 44.4% (-60bp to 42.6% on continuing operations basis), Dividend unchanged at $2.00. Credit quality remain solid. Lower margins. Operating income down 1.9% as NIM dropped to 210bp (from 214 in 2H18 and 216 in 1H18. Higher funding costs, switching and competition the issues.


  • IAG Group (IAG) – Growth in gross written premiums of 4.1%. Underlying margin also up to 16.2% from 13.0%. Cash earnings down 49.4%. Dividend cut to 12c (from 14c).


  • Coles (COL) – Coles Group and Viva Energy have entered into a New Alliance agreement until 2029 in a strategic step in positioning the Coles Convenience business to be Australia’s leading convenience retailer. Coles Convenience customers will continue to enjoy loyalty benefits and will benefit from a more compelling customer offer; Coles’ Convenience business will move to a commission agent model and Viva will set the retail price of fuel; Coles will continue to operate the Alliance sites and has the opportunity to expand the network; Viva Energy will pay Coles $137 million at transaction close





US EQUITIES – S&P 500 +13 (+0.47%), Dow +172 (+0.68%), NASDAQ +55 (+0.74%)

Main themes

  • Stocks approached the 200 moving day average before retreating
  • Trump’s State of the Union address is ahead
  • Apple’s retail chief will leave the company.

Earnings – Google (+0.92%) reported better than expected results after market close yesterday but noted declining advertising prices and rising costs. Archer-Daniels (-5.93%) missed estimates although it did raise its dividend. Estee Lauder (+11.64%) beat estimates.

EUROPEAN MARKETS – Much stronger. STOXX500 +1.41%, UK FTSE +2.04%, German DAX +1.71%, French CAC +1.66%.


  • The USD is higher at 96.05.
  • The Aussie dollar is weaker at US72.35c.

BONDS – 2-yr: -1 bp to 2.52%, 3-yr: -1 bp to 2.51%, 5-yr: -2 bps to 2.51%, 10-yr: -2 bps to 2.70%, 30-yr: -3 bps to 3.04%


  • WTI crude futures were down US90c or 1.7% at $53.66. Poor factory orders and an increase in inventories at Cushing were partly responsible.
  • Gold down US10c to US$1319.20 an ounce.
  • Iron Ore – Chinese markets closed.
  • LME metals – Mixed. Copper +1.05%, nickel -1.66%, aluminium +0.16%


  • US economic data – January ISM Non-Manufacturing Index 56.7 (consensus 57.0; prior 58.0)
  • FED – President Trump met with Fed Chairman Jay Powell, but monetary policy was apparently not discussed. REALLY????
  • Earnings – 1Q 2019 through 3Q 2019 S&P 500 EPS growth expectations continue to go lower with some providers already showing negative growth.
  • Economic data yesterday – Disappointing retails sales data but it does appear that the seasonal adjustment may need to be adjusted….


  • RBA Yesterday – The RBA made some major changes to its meeting statement. This was not a “cut & paste” job. Notes slowing in 2H18; Downside risks in global markets have increased, noting trade tensions and continuing slowing in China; Removed reference to faster wages growth; US rate rise no longer expected; GDP expect cut for this year to 3.0% from 3.5%; Main domestic uncertainty is outlook for household spending and the effect of falling house prices; Pick up in inflation likely be gradual and take a little longer than expected and headline inflation to fall near term (reduced forecasts) due to lower petrol prices.
  • Brexit – British Prime Minister Theresa May meets European Commission President Jean-Claude Juncker in Brussels on Thursday. It comes after German Chancellor Angela Merkel said a “creative compromise” could solve the Irish backstop problem.
  • European data – services PMI increased to 51.2 (expected 50.8, last 50.8). December Retail Sales decreased 1.6%mom (expected -1.5%; last 0.8%), but were +0.8%yoy (expected 0.5%; last 1.8%); French Services PMI 47.8 (expected 47.5; last 47.5) and Italian January Services PMI 49.7 (expected 50.0; last 50.5) were below 50.0, indicating contraction

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s