The ASX 200 closed flat after a very mixed day. CSL bounces back for Hcare, TLS wildcard, Banks OK, IT worst & Disc not far ahead/behind. CGF and WES, APT AUSTRAC notice, APX CEO sale. Jobs all over the place (the data anyway!) #ausbiz



  • Economic data – Employment Change, Unemployment Rate
  • Corporate events – Wesfarmers (WES) Strategy Date, Challenger Group (CGF) Investor Day
  • Ex-dividend – CIMIC Group (CIM) 86.0c, Fisher & Paykel Hlth (FPH) 12.8c, Plato Income Maximiser (PL8) 0.5c, Select Harvests (SHV) 12.0c


  • European – Industrial Production
  • US economic data – Export/Import Prices


This month’s employment report not only meets but IS the definition of mixed signals.

Unemployment date unchanged at 5.2% (bad) but number of new jobs better than expected (good), due mainly to increased participation rate (also good), while the underemployment date rose to 8.6% (really bad) giving a steady underutilisation rate of 13.7% (blah).


Participation Ratem4


  • Wesfarmers (WES) – Earnings before interest and tax from continuing operations for Kmart Group for the 2019 financial year are now expected to be between $515-$565m (down at least 10% on 2018 and below consensus of $585m). Blamed subdued sales, heightened price competition and store closures.
  • Afterpay Touch (APT) – Has received a notice from AUSTRAC to appoint an external auditor (as authorised by AUSTRAC) to carry out an audit in respect of its AML/CTF compliance. “We welcome the opportunity to continue to work closely and constructively with AUSTRAC and we will approach this formal process as an opportunity to ensure that our AML/CTF compliance is robust. We are committed to remaining focused on becoming better at what we do.”
  • Challenger Group (CGF) – Expecting FY 2020 normalised NPBT of $500-$550m, down from the expected $545-565m in FY19. This is also a downgrade from previous guidance of $591-613m for FY20 and the company also guided to the.


  • Carsales (CAR) – Pursuing the sale of its 50.1% interest in Stratton Finance Pty Ltd, the vehicle finance broking business. Also provides estimate of FY19 results.


  • Helloworld (HLO) – Network expansion in New Zealand to add $46m in TTV to give NZ$300m




US EQUITIES – S&P 500 -6 (-0.20%), Dow -44 (-0.17%), NASDAQ -30 (-0.38%).

Major themes

  • Continued protests over an extradition bill in Hong Kong weigh on sentiment
  • US-China trade concerns remain – President Donald Trump on Tuesday said he is holding up negotiations until Beijing agrees to return to the terms of negotiations laid out earlier in trade talks.

EUROPEAN MARKETS – Lower. STOXX600 -0.30%, UK FTSE -0.42%, German DAX -0.33%, French CAC -0.62%


  • The USD is higher at 97.01.
  • The Aussie dollar is weaker at US69.30.

BONDS – 2-yr: -4 bps to 1.89%, 3-yr: -5 bps to 1.83%, 5-yr: -3 bps to 1.88%, 10-yr: -1 bp to 2.13%, 30-yr: +1 bp to 2.62%


  • Oil – WTI futures were down US$2.13 or 4% to US$51.14 after US stockpiles grew 2.2mb in the week, compared to expectations of a decrease of 481K barrels. The highest level of stocks since July 2017. EIA also cut its forecast for global oil demand growth to roughly 1.2 mbpd in 2019, down from last month’s projection of about 1.4mbpd. Trade issues with China not helping.
  • Gold was up US$5.60 at US$1,336.80 an ounce – mainly a US feature.
  • Iron Ore – IRESS has iron ore up US$4.00 at US$105.00 a tonne. CommSec has iron ore up US60c or 0.60% at US$106.50 a tonne.
  • LME metals – Mixed. Cu -0.65%, Ni -0.50%, Al +0.51


  • US economic data – Weekly MBA Mortgage Index 26.8% (prior 1.5%); May CPI 0.1% (consensus 0.1%; prior 0.3%) and Core CPI 0.1% (consensus 0.2%; prior 0.1%). The monthly changes left the yoy readings at 1.8% and 2.0%, respectively, versus 2.0% and 2.1% for the 12 months ending in April. Overall, the report confirms that consumer inflation pressures remain muted, which will reinforce market expectations for a Fed rate cut.
  • Hong Kong protests – China’s President Xi Jinping said in early January that “no one can change the fact that Taiwan is a part of China” and that independence activities will not be tolerated. This, together with the attempted law change in Hong Kong shows that China is trying to ascertain its control over the region at a time when western nations were expecting the country to open up.
  • ECB politics – The Italian government is reportedly ready to back a French candidate to lead the European Central Bank in order to avoid giving the job to Bundesbank President Jens Weidmann.

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