The ASX 200 is up 3 points in mid-morning trade as we await the Fed’s decision (well actually not the decision, but the dot plots, forecasts and views on “patience”). Staples boosted by COL cost cuts, Disc boosted by WEB blockchain and payments soln. Bank mixed and materials flat. Ears on the Fed tonight #ausbiz



  • Economic data – House Price Index, House Price Index
  • Investor days for Coles (COL) and Link Group (LNK but to be held in London)


  • European data – Balance of Trade, Inflation Rate, ZEW Economic Sentiment Index
  • US economic data – Building Permits, Housing Starts



  • Coles Group (COL) – Investor Day. Defines purpose – “sustainably feeding all Australians to help them lead healthier, happier lives.” Three pillars – i) Inspire Customers through best value food and drink solutions to make lives easier ii) Smarter Selling through efficiency and pace of change iii) Win Together with team members, suppliers and communities. Approximately $1bn of cumulative cost savings targeted by FY23. Outlook update – Comparable Supermarket sales growth for fourth quarter expected to be in the upper half of the range between second and third quarter comparable growth, adjusted for New Year’s Eve.  Net capex for FY19 unchanged at $700m-$800m
  • Webjet(WEB) – Investor session: Rezchain – the first workable blockchain in the travel industry, Rezpayments – creates a flexible, cost effective solution to solve a complex and highly critical component of the payments lifecycle. Also confirmed guidance – We remain on track to deliver at least $120 million EBITDA (excluding one-offs associated with the acquisition of DOTW), including all start up costs associated with Umrah Holidays International).

BROKER CHANGES (from yesterday)

  • Amcor (AMC) – Combination of Amcor and Bemis.
    • Morgans has a Hold recommendation with a target price of $15.55 (from $14.14). The combination of Amcor and Bemis creates the largest plastic packaging company in the world, an the deal significantly enhances Amcor’s presence in North America. But they still remain concerned about the fall in return on funds employed (ROFE is estimated to fall to 16% in FY22 from 19% in FY18). The acquisition will therefore be dilutive to returns, despite assumptions that management will deliver on the cost synergy targets.
    • Ord Minnett has an Accumulate recommendation with a target price of $16.00 (from $15.50). The analyst has updated its model to reflect the finalisation of the Bemis transaction. Changes reflect the timing of the close of the transaction, divestments relating to the transaction and updated currency assumptions.


  • Aurizon (AZJ) – UBS has a Neutral recommendation with a target price of $5.10. Adani will build a dedicated 190km rail line to connect to the Newland system and from there use existing track for 180km to the Abbot Point terminal. Following the formal application for access, a capacity assessment is currently being completed by Aurizon. The analyst does not foresee material upgrades to the track, as additional volume from Adani can be absorbed under the current infrastructure. If Adani chooses to use a third-party rail operator, Aurizon is considered well-positioned to win the contract.


  • Challenger (CGF) – Morgan Stanley has an Equal-weight recommendation with a target price of $6.85 (from $7.50). Although widely considered a growth stock, the analyst notes that Challenger’s earnings have actually produced little growth over the last five years and return on equity has continued to decline. While the de-risking of the asset portfolio and re-setting long-run targets was the right thing to do and has put the company on a more sustainable footing. But the stock is still not cheap enough.


  • Ramsay Health Care (RHC) – UBS has a Neutral recommendation with a target price of $68.40. The UK NHS has published hospital activity data for April. The analyst estimates NHS e-referrals represent around 79% of Ramsay Health Care’s UK total admissions. April volumes for Ramsay decreased 2.9% while 12-month rolling growth moderated to 4.9% from 6.5% at the end of March. UBS believes the current admissions data combined with a tariff increase should support robust growth in NHS-derived revenue in the second half and into FY20. However, based on increased usage of agency nursing to manage the higher caseload, the analysy models a 40 basis points decline in UK earnings (EBIT) margin in 2H.





US EQUITIES – S&P 500 +3 (+0.09%), Dow +23 (+0.09%), NASDAQ +48 (+0.62%).

Major themes

  • Quiet ahead of the FOMC meeting
  • Relative strength in the tech sector. Facebook +4.24$ and Netflix +3.21% notable mentions.

EUROPEAN MARKETS – Mixed. STOXX600 -0.09%, UK FTSE +0.16%, German DAX -0.09%, French CAC +0.43%


  • The USD is a touch at 97.57.
  • The Aussie dollar continues to weaken at US68.52.

BONDS – 2-yr: +3 bps to 1.87%, 3-yr: +1 bp to 1.80%, , -yr: -1 bp to 1.84%, 10-yr: -1 bp to 2.08%, 30-yr: -1 bp to 2.58%


  • Oil – WTI futures were up down 1.1% to US$51.93 on weaker Chinese data and concerns about global demand. This was partially offset by increase Middle East tensions.
  • Gold futures were down US$1.60 at US$1,342.90
  • Iron Ore – IRESS has iron ore up US$3.50 at US$112.50 a tonne. CommSec has iron ore down US$1.20 or 1.1% at US$108.20 a tonne.  
  • LME metals – Mixed. Cu +0.60%, Ni -1.13%, Al -0.03%


  • US economic data – June Empire State Manufacturing -8.6 (prior 10.1); June NAHB Housing Market Index 64 (consensus 66; prior 66)
  • Tech sectors – Samsung has reportedly pushed back its forecast for the recovery of the chip market from the second half of 2019 to the end of 2019.
  • Politics – China’s President Xi Jinping will visit North Korea at the end of this week.
  • European budget – The Italian government has reportedly been given a week to respond to the EU Commission’s request for details about the country’s budget. Prime Minister Giuseppe Conte is expected to request a review of the rule that calls for keeping the budget deficit below 3.0%.
  • Airline profits – Lufthansa lowered its revenue guidance for the fiscal year due to falling prices.


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