MID MORNING MARKETS 14-05-19

The ASX 200 is down 93 points in mid-morning trade after another wild night/trade drama (yes that is a repeat for 3 days). Defensives best, IT and Financialss worst. NAB ex drags, INC ↑date, MYX and AHG ↓date.  #ausbiz

m1m2m3TODAY

  • Australian economic data – NAB Business Confidence
  • Ex-dividend – Jumbo Interactive (JIN) 8.0c, National Aust. Bank (NAB) 83.0c
  • Japanese data – Bank Lending, Current Account

TONIGHT

  • UK – Average Earnings, Unemployment Rate, Claimant Count Change, Employment Change
  • European data – Industrial Production, ZEW Economic Sentiment Index
  • US economic data – NFIB Small Business Optimism Index, Import/Export Prices
  • Fed Speak – New York Fed President (permanent FOMC voter) John Williams and Kansas City Fed President (FOMC voter) Esther George

COMPANY NEWS

  • Downer EDI (DOW) – Awarded 2.5 year contract with Chorus Limited for the 2019 Field Services Agreement to provide field services for most of the country from the Waikato to the Lower South Island. Expected revenue approximately $220m.
  • Invocare (IVC) – AGM and Performance Update. Soft market conditions had started to improve, with the number of deaths beginning to revert to the long-term trend. This shift in market conditions and impact of the 2018 acquisitions had meand good 1Q. Revenue +7.8%, operating EBITDA +22.2%.
  • Mayne Pharma (MYX) – Market update. 2H19 sales affected by additional competition on key generic products and generic market trading pressures; Expects stronger FY20 results driven by recent specialty brand launches of TOLSURA® and LEXETTE™, growth of the generic and proprietary dermatology and women’s health portfolios, potential market supply disruptions and the pipeline of committed Metrics Contract Services business; Detailed review of the carrying value of generic acquired and development intangible assets will be undertaken at 30 June 2019

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  • Automotive Holdings (AHG) – Expects to deliver FY2019 Operating NPAT of ~$50m, down from previous guidance of $52-$56m provided in February 2019. The downgrade reflects the challenging conditions in franchised automotive retail volumes and margins, as well as weaker than expected April performance in AHG’s Refrigerated Logistics division on the back of subdued Easter trading. AHG (with the assistance of external advisers) is undertaking a review of the carrying value of receivables generated across prior years and FY2019 which might result in a write-down. “AHG would not expect any of the above to impact the takeover bid from AP Eagers.”

HOUSING FINANCE

Not such great housing finance data yesterday. Total finance for housing (excluding refinancing) down 3.2%. This included a 3.4% fall in OE and a 2.7% fall in investor lending.

Not much of comfort here.

One (clutching at straws) positive is that the ANNUAL rate of falls looks to have bottomed…now 15.2% for OO and 25.9% for investors.

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OVERNIGHT

m10m11

SPI FUTURES -54

US EQUITIES – S&P 500 -70 (-2.41%), Dow -617 (-2.38%), NASDAQ -270 (-3.41%). (The NASDAQ had it worst day of the year)

Main themes –

  • Chinese tensions escalated, with China announcing tariffs on US$60m US imports on 1June (targeting a broad range of agricultural products) in retaliation
  • Rally in US bonds and safe-haven assets/sectors such as Utilities.
  • Markets came off their lows in afternoon trading after Trump said he had not decided whether to put tariffs on an additional $325bn in Chinese goods.

EUROPEAN MARKETS – Mixed. STOXX600 -1.21%, UK FTSE -0.55%, German DAX -1.52%, French CAC -1.22%

CURRENCIES

  • The USD is little changed at 97.33.
  • The Aussie dollar is lower at 69.48c.

BONDS – 2-yr: -6 bps to 2.18%, 3-yr: -6 bps to 2.15%, 5-yr: -6 bps to 2.19%, 10-yr: -5 bps to 2.41%, 30-yr: -4 bps to 2.84%

COMMODITIES

  • Oil – WTI futures were down US62c or 1% to US$61.04 a barrel on escalating US-China tensions, after earlier rising on concerns that tanker attacks in the Middle East could disrupt supplies.
  • Gold was up 1.1% at US$1,301.80 an ounce.
  • Iron Ore – IRESS reports iron ore up US50c at US$98.50 a tonne. CommSec has iron ore down US$1.05 or 1.1% to US$95.40 a tonne.
  • LME metals – All lower. Cu -2.13%, Ni -1.67%, Al -0.17%

ECONOMIC DATA, NEWS & POLITICS

  • Trade developments – Trump said he will meet with Chinese President Xi Jinping and Russia’s President Vladimir Putin at the G-20 summit in Osaka on June 28/29. US Trade Representative Robert Lighthizer is preparing a 25.0% tariff on all remaining imports from China.

m12

  • Brexit – British Prime Minister Theresa May will reportedly reopen Brexit talks with the EU in order to keep Labour on her side.
  • Banks under pressure – Yesterday Macquarie (MQG) and ANZ went ex-div, and CBA reported disappointing results. Together the majors and MQG took around 31.5 points off the All Ords yesterday. CBA 11 points on its own….

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