The ASX 200 is down 27 points in mid-morning trade after Wall St hit a wall. Most sectors↓. IT and defensives best. WES up on brokers, COL on gambling move, Chinese congress and Greek bonds ahead (after Moody’s upgrade). #ausbiz



  • Ex-dividend – Capitol Health (CAJ) 0.5c, Estia Health (EHE) 8.0c, Mayfield Childcare (MFD) 9.0c, Money3 Corporation (MNY) 5.0c, Medibank Private (MPL) 5.7c, Nick Scali (NCK) 25.0c, Nine Entertainment Co. Holdings (NEC) 5.0c, Oil Search (OSH) 11.9c, Platinum Asia Investments (PAI) 2.0c, Resimac Group (RMC) 1.0c, St Barbara (SBM) 4.0c, Spheria Emerging Companies (SEC) 2.0c, Spark Infrastructure (SKI) 8.0c
  • Economic data – CommBank Australia Composite PMI Final, Current Account Q4, AIG Services Index
  • RBA Interest Rate Decision
  • Chinese data – Caixin Services PMI, Caixin Composite PMI
  • Japanese data – Nikkei Services PMI
  • China’s National People’s Congress – Premier Li Keqiang expected to announce key economic targets.


  • Europe – Markit Services PMI Final, Retail Sales, Markit Composite PMI Final
  • UK – Markit/CIPS UK Services PMI
  • US economic data – ISM Non-Manufacturing Index, New Home Sales


  • Economic data yesterday – was weaker than expected and there weill be some downgrades to the GDP estimates (released Wednesday).



  • Coles (COL) – Liquor JV with Australian Venue Co (KKR) with Coles’ hotels business, Spirit Hotels. AVC will manage Spirit Hotels and will receive the economic benefit of this business. Coles will manage the 243 retail liquor stores in QLD 10 retail liquor stores attached to Spirit Hotels venues in Western Australia and South Australia. Coles will receive cash consideration of approximately $200 million at completion, subject to satisfying certain conditions. This is an important development and is a step in COL distancing itself from its hotels and gaming business (while still retaining exposure to the liquor business).
  • ASX – Monthly Report
  • Class (CL1) – $4m Investment in Managed Account Services with Philo Capital Advisers
  • Dicker Data (DDR) – For FY19 profit before tax forecast at $51.4m. Maintaining our recent track record of +10% growth


  • Cimic Group (CIM) – Macquarie has downgraded to a Neutral recommendation (from Outperform) with a target price of $50.90 (from $50.26). Downgrade as CIM trading close to its target. The analyst believes the share price has also caught up with the traditional correlation to earnings. Macquarie forecasts growth of 8% in FY19 and believes this is attractive, considering the broader market is challenged. They believe the recent difficulties in the sector have strengthened the company’s competitive position. CIMIC is also cooperating with the US Department of Justice in relation to possible breaches of its code of ethics. This first emerged in 2011 and an Australian Federal Police investigation has been ongoing since 2012. Macquarie suspects the US development may expedite potential AFP outcomes.


  • Cochlear (COH) – Citi has upgraded to a Buy (from Neutral) recommendation with a target price of $198 (from $190). After downgrading in February, the analyst has now used a general sector update to reverse that decision on the basis of share price weakness that has gone too far. Underpinning the decision is the prediction that the market share issue in the Americas will be resolved, and implant growth will resume in 2H20.


  • Metcash (MTS) – Strategy Update
    • Citi has a Sell recommendation with a target price of $2.45. The message was that management is investing to safeguard the future of Metcash. More capex in order to achieve more growth thus. While lifting estimates post FY19, analysts still maintain their Sell rating as they continue to see downside risks to consensus forecasts. Overall they do not think this strategy is sufficient to overcome the numerous structural challenges awaiting on the horizon
    • Credit Suisse has a Neutral recommendation with a target price of $2.69 (form $2.60. The analyst believes the company’s newly-outlined strategy is well crafted, but the positive implications for shareholders are less obvious. The balance sheet is fully committed for the next several years, thus removing the prospect of increased capital returns.  They suggest the stock is likely to trade on the near-term earnings guidance, and even more so while capital is committed to growth. The trading update was marginally negative, with no improvement foreseen in supermarket sales and decelerating sales growth in hardware.
    • Macquarie has a Neutral recommendation with a target price of $2.41. Another cost reduction program, $50m over FY20 and FY21. Macquarie points out these savings are required to offset the impact of inflation and should not, therefore, be considered as outright profit upside. Growth expenditure of $300m has been flagged across FY20-24. They note the outlook is challenging and growth in FY20 is being hindered by the loss of the Drakes contract. But they still think cost reductions and reasonable valuation are positive.
    • Morgan Stanley has an Overweight recommendation with a target price of $3.40. The analyst notes MTS is refining its strategy and will spend $300m for growth across FY20-24. Management has signalled a 15% minimum return hurdle and, if this is not achieved, expenditure will slow and capital management resume. Either way, Morgan Stanley expects earnings per share will be supported. They observes the company continues to close the sales gap to the major supermarkets as its strategies gain traction. Moreover, while hardware trading has slowed versus the first half trends, sales growth remains positive. Even if retail sales growth turns negative as the housing cycle worsens, Morgan Stanley believes cost reductions can limit the declines.






US EQUITIES – S&P 500 -11 (-0.39%), Dow -207 (-0.79%), NASDAQ -18 (-0.23%)

Main themes

  • Trade positivity – US and China reportedly nearing a trade deal that could be finalised during the last week of March
  • Profit taking and technical factors seen to be an issue.

EUROPEAN MARKETS – Mostly stronger. STOXX500 +0.23%, UK FTSE +0.39%, German DAX -0.08%, French CAC +0.41%.


  • The USD is stronger at 96.61.
  • The Aussie dollar is a touch stronger at US70.94.

BONDS – 2-yr: -1 bp to 2.54%, 3-yr: -1 bp to 2.53%, 5-yr: -3 bps to 2.53%, 10-yr: -3 bps to 2.72%, 30-yr: -3 bps to 3.09%


  • Oil – WTI futures were up US79c or 1.5% to US$56.59 on positive trade sentiment.
  • Iron Ore – IRESS reports iron ore up US$ to US$86.00 a tonne. CommSec reports iron ore was down US 50c to U$86.80
  • LME metals – Mostly weaker. Copper -0.66%, nickel +0.80%, aluminium -1.68%


  • US economic data – Construction Spending -0.6% (consensus -0.3%; prior 0.8%)
  • Politics – The House Judiciary Committee is opening a probe into potential obstruction of justice, corruption, and abuse of power by President Trump.
  • Chinese 13th National People’s Congress – gets underway with Premier Li Keqiang expected to announce key economic targets for the country.
  • Greek bond issuance – Greece plans raise up to €2.50bn in 10-yr debt this week. It is the second debt sale of 2019 and the first sale of the 10-yr tenor in nine years. On Friday, Moody’s raised Greece’s issuer ratings to B1 from B3, citing the effectiveness of the country’s reform programme.


“Scratch a pessimist and you find often a defender of privilege.” – Sir William Beveridge, English economist born this day in 1879. Died March 16, 1963


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