The ASX 200 is down 59 points in mid morning trade as the SP500 futures dip below 2800 and bond markets implode. AU 10yr < RBA cash rate. Gold the only +ve sector. TLS write-downs & job cut update, DOW partner in administration #ausbiz


  • Economic data – HIA New Home Sales


  •   Nothing major


  • Downer EDI (DOW) – DOW’s partner in the Murra Murra wind farm (Senvion) has entered administration. Stage 1 is at an advanced stage and work is continuing, with DOW working to establish a process for securing delivery of outstanding equipment and completing Stage One and see if it will have any impact on guidance.
  • Telstra (TLS) – As a result of good progress on its T22 strategy, expects to make a non-cash impairment and write down of the value of its legacy IT assets by around $500m. Also increasing guidance on its restructuring costs for FY19 by around $200m, as a result of bringing forward consultation on proposed job reductions. Should have announced a reduction of ~6000 roles by the end of the FY and on track to reach net cost out target of $2.5bn by the end of 2022.
  • Mirvac Group (MGR) – Expects to deliver FY19 EPS of 17.1c, up 4% and at the top end of its previous guidance (16.9-17.1cps). Re-affirms FY19 DPS guidance of 11.6c, up 5%. Also capital raising of $750m insto and $75m SPP at $2.97 (4% discount to 28 May close and 4.5% discount to 4 day VWAP).
  • Fletcher Building (FBU) – Commercial Bay update. Confirms it remains within the Construction provisions announced in February 2018. Precinct Properties has acknowledged that Fletcher Construction has brought a number of claims and further claims are anticipated. “We remain confident in our programme.”
  • Bank of Queensland (BOQ) – Chairman Roger Davis will retire as Chairman following full year results in October 2019.




US EQUITIES – S&P 500 -24 (-0.84%), Dow -238 (-0.93%), NASDAQ -30 (-0.39%).

Major themes

  • Selling intensified in the final hour, to close on the lows


  • President Trump indicates US not ready to make a trade deal yet but will in the future
  • Bond yields lower with yield curve inversion steepening – US 10yrr yield down 6bp and 10yr German bund near all-time low
  • Consumer confidence better than expected 134.1 (consensus 130.0; prior 129.2)

EUROPEAN MARKETS – All lower. STOXX600 -0.22%, German DAX -0.37%, French CAC -0.44%


  • The USD is stronger at 97.94.
  • The Aussie dollar is a touch stronger at US69.26.

BONDS – 2-yr: -4 bps to 2.12%, 3-yr: -5 bps to 2.06%, 5-yr: -5 bps to 2.07%, 10-yr: -6 bps to 2.27%, 30-yr: -5 bps to 2.71%


  • Oil – Brent settled up US51c or 0.9% to S$59.14. Flooding throughout the Midwest limited flow from the main US storage hub in Cushing, Oklahoma
  • Gold futures were down 0.5% to US$1,277.30 an ounce
  • Iron Ore – IRESS has iron ore unchanged at US$106.00. CommSec has iron ore down US$1.90 or 1.8% to US$106.10 a tonne.
  • LME metals – Mixed. Cu -0.02%, Ni -2.41% correcting after recent strength, Al +0.08%


  • European bonds – Germany’s 10-yr bund yield nears record low amid reports Chancellor Angela Merkel will keep her post until 2021
  • US economic data – FHFA Housing Price Index 0.1% (consensus 0.3%; prior 0.3%) and S&P Case-Shiller Home Price Index 2.7% (consensus 2.9%; prior 3.0%); Consumer Confidence 134.1 (consensus 130.0; prior 129.2)
  • Further speculation that China may restrict exports of rare earth elements.
  • Japanese IP – Will limit foreign ownership of telecom and technology companies on August 1.
  • Italian debt – The European Commission may begin disciplinary process over Italian 2018 debt levels as early as June 5. Deputy Prime Minister Matteo Salvini said he will use all his energy to fight outdated EU fiscal rules.
  • Rate cuts – JP Morgan expects 4 rate cuts in the next 12 months.

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