The ASX 200 is up 46 points in mid-morning trade after strong overnight leads. Resources dominate but banks & other sectors also ↑. WBC & ANZ update, BIN dumped!, AMP super hit, BOQ, NHF, BXB, ANN results. US closed tonight. Wages and employment data in the week ahead. #ausbiz
- Japanese machinery orders
- Ex-dividend – Tabcorp )TAH) 11.0c
- US market closed
- Westpac (WBC – Trading Update. Unaudited 1Q19 cash earnings of $2.04bn. This compares to the quarterly average of Second Half 2018 of $1.91 billion or $2.05 billion before remediation charges. NIM excluding Treasury and Markets were higher following some repricing late in the 2018 financial year; The contribution from Treasury and Markets was lower as trading conditions were weaker; The impairment charge was $204 m; Expenses were lower given the exit of the Hastings business and the absence of additional costs associated with remediation; The quarter included $30m(pre-tax) in insurance claims for Sydney hailstorms. An additional $35 million (pre-tax) in claims costs (after reinsurance) are expected from the recent Queensland floods in 2Q19; and; No material remediation charges (or associated costs) were booked in 1Q19 although additional charges are likely to be incurred in 2Q19. CET 1 ratio was 10.4% at 31 December 2018 down from 10.6% as at September 2018 due to dividend payment. Stressed assets little changed. Australian mortgage delinquencies +4bp.
- Bank of Queensland (BOQ) – 1H19 cash earnings after tax expected to be $165-170m (1H18 $182m). Driven primarily by non-Interest Income which is expected to be $8-10m lower than the 1H18 level of $75m. This is due to continued downward pressure across fee, trading, insurance and other income lines. Also net interest income broadly in line with the 1H18 level of $475m, with NIM expected to be 1.93% to 1.95% (compared to 1.97% in 1H18). Attributable to continuing funding cost pressures (including the elevated bank bill swap rate) and price competition for new loans; Recurring operating expenses have been largely in line with expectations, however some non-recurring costs have negatively impacted the half year result; Loan impairment expense is expected to be in the range of 11-13 basis points of gross loans. Underlying asset quality trends across the portfolio remain sound. Outlook – market conditions are expected to remain challenging. We expect regulatory costs to increase as BOQ adapts to changes in regulatory requirements and expectations, including the impacts of the Royal Commission.
- AMP – Protecting Your Superannuation Bill impact. Will need to transfer approximately 370,000 low balance superannuation accounts to the Australian Tax Office (ATO). Indicative operating earnings impact on AMP’s retained businesses in FY 19 is expected to be approximately $10m (after tax), with an annualised impact of up to $30m (after tax) from 2020.
- Coca-Cola Amatil (CCL) – SPC update – Has received interest in SPC. Proceeded to first round non-binding indicative offers. But uncertain so recognising a non-cash impairment of the carrying value of SPC of $146.9m before tax in the 2018FY accounts. This will reduce the carrying value of SPC’s net assets held for sale as at 31 December 2018 to zero. Confirmed FY underlying EBIT loss for SPC of approximately $10 million for FY18.
- Nib Holdings (NHF) – Total Group underlying revenue +10.9% to $1.2 billion (+10.9%); Group underlying operating profit $114.3 million (+18.6%); Net profit after tax1 $74.3 million (+4.8%); Member satisfaction remains high with Net Promoter Score2 of 33.7% (+280bps); Interim dividend of 10.0 cents per share fully franked (+11.1%). Does not anticipate 2H to be as strong as the first. Key factors expected are unfavorable claims seasonality, the fact that the first half was boosted by a claims provision release within arhi and likely weak market conditions affecting parts of the Group. Full year UOP guidance is now expected to be at least $195 million (previously at least $190 million), with statutory operating profit of at least $178 million (previously at least $168 million).
- Brambles (BXB) –
- Ansell (ANN) – Sales of $725.3m; continuing operations up 0.4% and organic sales up 2.1%cc; Healthcare organic sales up 3.8%. Industrial 0.3%, following soft Q1, improved Q2; EBIT of $60.7m. Adjusted EBIT of $87.6m, up 3.9%yoy; Adjusted Profit Attributable of $63.6m, up 1.1%yoy; EPS of US28.6c, down YoY on expenses from Transformation Program and absence of one-time tax benefits in F’18 H1; Adjusted EPS of US46.1c up 6.2%; Total Group Sales & EBIT lower on divestment of Sexual Wellness (“SW”) with prior year Group EBIT including pre-tax gain on SW sale of $411m; Strong operating cash flow generation of $50.6m up 86% YOY; Increased half year dividend to US20.75c.
- Bingo (BIN) – Now expects underlying EBITDA for the full year ending 30 June 2019 to be broadly in-line with the previous year (previous guidance 15-20%). 1H in line. Key issues – A faster than anticipated softening in multi-dwelling residential construction activity across BINGO’s key markets in NSW and Victoria; No BINGO price rise in FY19; Reconfiguration of our development projects.
- Results season – So far 53 of ASX200 companies reported 1/2-year earnings, Aggregate revenue +7%, Expenses +9.6%, Profit -5%, Dividends +5.3%, Cash -4%
- Results season – From the CommSec site – So far 53 of ASX200 companies reported 1/2-year earnings Aggregate revenue +7%, Expenses +9.6%, Profit -5%, Dividends +5.3%, Cash -4%
- Domestic economic data – RBA meeting minutes on Tuesday, wages data on Wednesday (+0.6%/2.3% expected), employment data on Thursday (+21.6K, 5.0% expected)
- Japan – Trade data, an inflation
- European consumer confidence and Markit PMI numbers, as well as inflation on Friday
- UK – Employment and wages data on Tuesday,
- US data – FOMC meeting minutes, Housing starts and building permits, durable goods, existing home sales and leading indicators.
Results Season – Some very big names including BHP, WOW, CCL, WES, NHF, FMG
- Monday – Ansell (ANN), Brambles (BXB), iSelect (ISU), McGrath (MEA), nib (NHF)
- Tuesday – BHP, Cohclear (COH), Coles Group (COL), Oil Search (OSH)
- Wednesday – A2 Milk (A2M), Corporate Travel (CTD), Crown (CWN), Domino’s Pizza (DMP), Fortescue Metals Group (FMG), Sonic Healthcare (SHL), WorleyParsons (WOR), Woolworths (WOW)
- Thursday – Coca-Cola Amatil (CCL), Flight Centre (FLT), Iluka (ILU), RESS (IRE), MYOB (MYO), Origin Energy (ORG), Perpetual (PPT), Platinum (PTM), Qantas (QAN), Qube (QUB), Santos (STO), Sydney Airport (SYD), Wesfarmers (WES)
- Friday – BWX, InvoCare (IVC), Mane Pharma (MYX),
The biggest movements in short postiions over the previous week
SPI FUTURES +53
US EQUITIES – S&P 500 +30 (+1.09%), Dow +444 (+1.74%), NASDAQ +45 (+1.74%)
- Optimism on trade talks – Chinese President Xi Jinping said they will continue next week in Washington. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer have been in Beijing this week.
- President Trump said US-China trade talks are going extremely well and that the US is a lot closer to getting a “real trade deal” with China.
- President Trump also said he will sign a national emergency declaration to build a wall for border security.
EUROPEAN MARKETS – All significantly higher. STOXX500 +1.41%, UK FTSE +0.55%, German DAX +1.89%, French CAC +1.79%.
- The USD is little changed at 96.92.
- The Aussie dollar is a little stronger at US71.38c.
BONDS – 2-yr: +2 bps to 2.52%, 3-yr: +1 bp to 2.49%, 5-yr: +2 bps to 2.50%, 10-yr: +1 bp to 2.67%, 30-yr: -1 bp to 3.00%
- WTI crude futures were up US$1.18 or 2.20% at US$55.59. Positive factors include larger than expected production cuts by Saudi Arabia (500kmbpd), US sanctions on Venezuelan and Iranian oil, along with curtailed Libyan output because of civil unrest.
- Iron Ore – IRESS reports iron ore unchanged at US$87.50 a tonne. The CommSec site shows iron ore down US45c or 0.5% to US$87.35/a tonne.
- LME metals – All higher. Copper +1.27%, nickel +1.64%, aluminium +0.30%
ECONOMIC DATA, NEWS & POLITICS
- US economic data – January Export Prices ex-agriculture -0.3% (prior -1.1%), Import Prices ex-oil -0.2% (prior 0.0%), and February Empire Manufacturing Survey 8.8 (consensus 7.0; prior 3.9); Industrial Production -0.6% (consensus 0.2%; prior 0.1%) and Capacity Utilization 78.2%(consensus 78.8%; prior 78.8%); Preliminary February Michigan Sentiment Survey 95.5 (consensus 94.0; prior 91.2). A key takeaway of this report was that consumers’ long-term inflation expectations fell to the lowest level recorded in the last 50 years.
- ECB board member Benoit Coeure said a fresh round of long-term loans from the European Central Bank to euro zone banks is being discussed, and added that the euro zone’s recent economic slowdown is more pronounced than previously expected.
- Reuters report that Italian chair of the lower house budget committee Claudio Borghi said that EU elections scheduled for late May will present the last chance to change the European Union, otherwise Italy will have to leave.
QUOTE OF THE DAY
“Money is often a matter of chance or good fortune and is not the mark of a successful life. It is not the thing that brings a throb of pleasure or a thrill into my life. And I would not pose as a successful man if that were to be the measure.” – Charles M. Schwab, American businessman born this day in 1862. Died 18 October 1939