The ASX 200 is down 36 points in mid-morning trade after o/s markets cracked it at the Fed. Staples and H/Care ok but banks slump of NAB div cut. WOW good sales, Wes bid for KDR, AMP & PDL outflows and HSN acq. #ausbiz


  • Economic data – HIA New Home Sales
  • Chinese Economic data – CN Caixin Manufacturing PMI APR
  • Ex-dividend – Acorn Capital Investment Fund (ACQ) 3.5c, Australian Pharmaceutical Industries (API) 3.8c, CBG Capital (CBC) 1.7c, OM Holdings (OMH) 2.0c, Waterco (WAT) 2.0c
  • National Australia Bank (NAB) – 1H result today. The key focus will be the dividend – with several analysts expecting a from 99c to 90c (at Ord Minnett, Credit Suisse, and UBS). Goldman Sachs expects 89cps. Also expecting strong growth in cash earnings (9% versus 2% for ANZ), with operating costs cuts the key driver.


  • European data – Markit Manufacturing PMI Final, Construction PMI
  • BoE Interest Rate Decision
  • US economic data – Productivity-Prel, Factory Orders


  • National Australia Bank (NAB) – Cash earnings up 7.1% to $2.954m. Dividend cut to 83c (down 16% from 99c. Market had expected a more modest cut to 90c). CTE1 at 10.4%. Includes a further $525m in customer remediation costs. Excluding remediations costs, earnings were flat on 1H18. Revenue up 1.4% with growth in housing and business lending, partly offset by lower margins. NIM down 7bp due to housing lending competition and product mix changes. Expenses up 1.7% with higher investment spend offset by productivity benefits. Credit impairment charges up 20.4% to $449m and % of loans up 2bp to 15bp. Consumer division the worst (cash earnings down 20.6%), NZ +7.7%. Fairly bearishe economic outlook with expectations for the RBA to cut rates a number of times this year.
  • Woolworths (WOW) – Australian Food’s sales momentum improved in the third quarter with Easter-adjusted sales growth of 4.7% (Easter-adjusted comparable sales: 4.2%) benefiting from lower deflation and more settled weather; Customer scores remain high but were impacted by flood and drought effects on Fruit & Vegetables prices, quality and availability; Endeavour Drinks’ Easter-adjusted sales increased by 6.4% with positive comparable growth from BWS and Dan Murphy’s assisted by the timing of New Year’s Eve and weather; New Zealand Food Easter-adjusted sales growth of 2.9% with online growth remaining a highlight; BIG W’s Easter-adjusted sales increased by 5.6% driven by Everyday, Leisure and Home; Improved sales growth from Hotels driven by Bars and Food with Easter-adjusted growth of 2.7%; Group Online sales growth of 35.1%; Successful completion of Woolworths Petrol sale to EG Group; proceeds of $1.7 billion being returned to shareholders


  • Wesfarmers (WES) – Proposal to acquire 100% of Kidman Resources for $1.90, a 47.3% premium to the 1 May closing price and 44.4% premium to the 60-day VWAP and corresponds to a transaction value of approximately $776m. Has received board support and 17% of outstanding shareholdings support the proposal. Kidman’s major asset is a 50% interest in the Mt Holland lithium project based in WA, which it owns jointly with Sociedad Quimica y Minera de Chile S.A. (SQM), one of the world’s largest producers and marketers of lithium products. The project includes the construction of a mine and co-located concentrator at Mt Holland, and a lithium hydroxide refinery in Kwinana.
  • AMP – Q1 cashflow. Australian wealth management net cash outflows of $1.8bn, including $538m of regular pension payments, reflected expected continued weakness in inflows and higher outflows in the post-Royal Commission environment; AMP Capital net external cash outflows of $20m reflected quarter-end liquidity management by China Life AMP Asset Management investors and fixed income redemptions; AMP Bank increased deposits by A$218 million, with the most growth in retail deposits, while the total loan book also grew by A$127 million to A$20.1 billion; Solid increases in assets under management (AUM) across Australian wealth management (5 per cent), New Zealand wealth management (7 per cent) and AMP Capital (4 per cent) during the first quarter, driven by stronger investment markets. Also new CFO. John Moorhead will succeed Gordon Lefevre as CFO. Mr Moorhead is currently CFO and Chief Operating Officer of AMP Capital,
  • Pendal Group (PDL) – Cash NPAT down 26% to $84.5m. Key issues – significantly lower performance fees, down 91% to $4.4m from $47.6, global market volatility, Brexit uncertainty. Resulted in cautious investor sentiment and subdued industry flows. FUM $100.9bn, down $0.7bn led by lower market levels and partially offset by the lower Australian Dollar and strong inflows into cash and fixed income strategies. Interim div of 2c.
  • Hanson (HSN) – Has acquired Sigma Systems. Cost is enterprise value (EV) of CAD157.0m( AUD166.2m) – which equates to an EV/EBITDA acquisition multiple of 8.3 times calendar year 2018 (CY182) normalised EBITDA3. Expected to be earnings per share (EPS) accretive in FY202
  • Fisher & Paykel (FPH) – Introduction of an innovative new mask for obstructive sleep apnea (OSA), F&P Vitera. It’s a more comfortable full face mask.
  • Trade Me (TME) – Has announced a A$165m fully underwritten institutional placement (Placement) to enhance balance sheet flexibility, increasing the capacity for strategic acquisitions, including the proposed acquisition of GBST, and to drive growth in existing geographies and into new geographies and markets.
  • IRESS (IRE) – Partnerchip with neobank Volt to “support its goal of delivering a seamless experience to mortgage customers.” Volt’s mortgage software, MSO is used to process 1 in 4 mortgages in the UK>


  • Orocobre (ORE) – Best March quarter production to date. Olaroz remains a low cost, high margin producer with Olaroz gross margins of 56%; Growth projects fully funded: Olaroz Stage 2 Expansion underway and 10,000 tpa Naraha Lithium Hydroxide Plant to be built in Japan; FY19 production to be similar to FY18; Lithium chemical prices are lower than previous periods but long term fundamentals remain intact; Further staged expansions to grow Olaroz production into the future.
  • Australian Pharmaceutical Industries (API) – Outlook Statement – We remain confident in our strategy; Diversified earnings base leveraging existing competencies and assets; Ongoing review of our shareholding in Sigma; Balance sheet that supports our growth strategy; Operational initiatives are gaining traction to deliver growth
  • GUD – Outlook comments. Further improvement in financial performance expected in H2 FY19 from:  The Narva Catalogue release in Q4; Full year contribution from other new Automotive products; Stronger cash conversion anticipated in H2 FY19; Improved Davey result following H1 FY19 driven by sales initiatives. GUD remains well positioned to deliver continued strong returns for shareholders
  • Challenger (CGF) – Conclusion slide is that CGF remains well positioned. Market leader – long term fundamentals remain strong. Strong systemic tailwinds including super system growth and ageing demographics; Two complementary businesses both with leading market positions; Leading retirement incomes brand and recognised as industry thought leader; Strong track record in developing high quality products across both businesses; Highly scalable business and operating platform; Strong risk management culture and capability




US EQUITIES – S&P 500 -22 (-0.75%), Dow -163 (-0.61%), NASDAQ -46 (-0.57%).

Main themes –

  • The US Federal Reserve left interest rates unchanged. Chair Jerome Powell said he does not see a case for a move in either direction. He also said recently low inflationary pressures may only be “transitory”. Expectations for a rate cut as early as September initially increased in immediate response to the FOMC Statement, but returned to previous levels during the press conference.
  • Losses accelerated towards the end of the trading session
  • The Fed lowered the interest rate on excess reserves (IOER) to 2.35% from 2.40%, to help maintain the effective fed funds rate within the target range.
  • weaker than expected ISM Manufacturing Index 52.8 (consensus 55.0), lowest level since October 2016
  • US-China trade deal could be announced by next Friday (reported by CNBC)
  • Apple (+4.91%) after beating earnings and revenue expectations and providing strong guidance.

EUROPEAN MARKETS – Dragged down by the UK. STOXX600 -0.07%, UK FTSE -0.44%, Other markets closed for May Day


  • The USD is a bit stronger at 97.66
  • The Aussie dollar is lower at 70.12 after hitting a low of 70.07c.

BONDS – 2-yr: +3 bps to 2.30%, 3-yr: +3 bps to 2.27%, 5-yr: +2 bps to 2.30%, 10-yr: UNCH at 2.51%, 30-yr: -2 bps to 2.92%


  • Oil – WTI futures closed down US31c at US$63.60 a barrel, after US inventories rise by 9.9mb (exp 1.5mb) to 470.6mb, the highest since Sept 2017. Other factors include the escalating crisis in Venezuela, and the ending of waivers to sanctions for importing Iranian oil today.
  • Iron Ore – IRESS has the iron ore price up US$1 at US$96.50 a tonne. Chinese markets closed yesterday.
  • LME metals – Mixed. Copper -3.00%, nickel -0.57%, aluminium +0.75%. Options expiry and closure in some markets.


  • US Economic data – Weekly MBA Mortgage Index -4.3% (prior -7.3%); ADP Employment Change 275,000 (consensus 170,000; prior 151,000); Construction Spending -0.9% (consensus 0.1%; prior 0.7%) and April ISM Manufacturing Index 52.8 (consensus 55.0; prior 55.3)

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