MID MORNING MARKETS 23-07-19

The ASX 200 is up 27 points in mid-morning trade after a largely +ve night. Gold and miners lag after fall in comms. IT, Industrials, Energy and consumer ↑. DOW contract, OZL Q, Quiet before the earnings/Fed storm…#ausbiz

m1m2m3COMPANY NEWS

  • Downer (DOW) – Has been selected by AusNet Services to provide operational and maintenance services on the electricity distribution network in Victoria. 5 year contract worth approximately $600m with 6 year extension opion. DOW’s services will expand from the current work delivered in AusNet Services’ Central region to include the remainder of AusNet Services’ electricity distribution network in Victoria’s Northern and Eastern regions.
  • Caltex (CTX) – Refiner margin update (Q2 2019)

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  • OZ Minerals (OZL) – Q report. Carrapateena on schedule for first concentrate in Q4; ~46,000 tonnes of development ore stockpiled; Prominent Hill on track for guidance; Explorer Challenge drill targets identified; West Musgrave progress update to be provided in Q3; 10Mtpa confirmed as optimised processing rate; Brazil operational update released; low risk, modest capital hub strategy to be adopted; Eloise JV restructure implemented; new earn-in agreements also signed in Carrapateena province and Sweden; Cash balance at $187 million following $177 million investment into Carrapateena; growth capital to further reduce cash balance by year end

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  • Computershare (CPU) – CFO Mark Davis stepping down after almost seven years in the role and nineteen years with the Company. Reaffirmed earnings guidance.
  • Fletcher Building (FBU) – Andrew Clarke appointed Group General Counsel and Company Secretary.
  • Pendal Group (PDL) – Alexandra Altinger has been appointed as CEO of the J O Hambro Capital Management (JOHCM) operations in the UK, Europe and Asia. She most recently spent four years as CEO of Sandaire Investment Office, a UK multi-family office offering tailored investment portfolios and solutions for families and foundations

TODAY

  • RBA – Speech by Christopher Kent, Assistant Governor (Financial Markets) – The Committed Liquidity Facility – at The Bloomberg Address, Sydney (8.30 am)
  • Q reports – Oz Minerals (OZL)

TONIGHT

  • BoE FPC Minutes
  • UK – CBI Industrial Trends Orders, CBI Business Optimism Index, BoE Haldane Speech
  • European data – Consumer Confidence Flash
  • US economic data – FHFA Housing Price Index, Existing Home Sales
  • US earnings – Coca-Cola (KO), Kimberly-Clark (KMB), Lockheed Martin (LMT), PulteGroup (PHM), After The Close chipotle Mexican Grill (CMG)

OVERNIGHT

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SPI FUTURES +10

US EQUITIES – S&P500 +8 (+0.28%), Dow Jones +18 (+0.07%), NASDAQ +58 (+0.71%)

Main themes

  • Caution ahead of a big week of earnings
  • Revising of expectations about company earnings
  • Boeing (-1.03%) – after Fitch downgraded its outlook on the airplane maker to negative
  • Apple – (+2.29% to $207.22) benefited from Morgan Stanley raising its price target from $231 to $247. Semiconductor stocks were stronger after Goldman Sachs put out some positive commentary.

EUROPEAN MARKETS – Mostly higher. STOXX600 +0.13%, UK FTSE +0.08%, German DAX +0.24%, French CAC +0.26%,

CURRENCIES

  • The USD is higher at 97.22.
  • The Aussie dollar is a touch lower at US70.37

BONDS – 2-yr: -1 bp to 1.81%, 3-yr: -1 bp to 1.77%, 5-yr: -1 bp to 1.80%, 10-yr: -1 bp to 2.04%, 30-yr: -1 bp to 2.57%

COMMODITIES

  • Oil – WTI futures was up US59c or 1.1% to US$56.22 a barrel on supply concerns after Iran seized 2 UK tankers last week. Offsetting this, force majeure was lifted in Libya’s Sharara oilfield, which had removed 290kbpd while closed.
  • Gold futures were steady at US$1,428.70
  • Iron Ore – CommSec has iron ore down US$3.75 or 3.1% to US$118.10 a tonne.
  • LME metals – Mostly lower. Cu -0.92%, Ni -2.97%, Al -1.71%.

ECONOMIC DATA, NEWS & POLITICS

  • Earnings season – 15% of the S&P 500 has posted quarterly results. 78.5% have topped analyst expectations for earnings while 67% have reported better-than-expected quarterly revenues.
  • Lawmakers in Washington are reportedly close to an agreement that would suspend the debt ceiling for two years.
  • Fed Speak – Boston Fed President Rosengren (FOMC voter) advocated against a rate cut at the July 30-31 policy meeting
  • Japanese politics – Prime Minister Shinzo Abe’s LDP won the upper house election, but came up short of super majority.
  • China – Reports that new local government bond issuance increased 55.2%yoy in 1H19. Issuance in June was CNY717was, representing the highest monthly total of the year.
  • British politics – Junior Foreign Minister Alan Duncan resigned while Chancellor of the Exchequer, Philip Hammond, said he will resign if Boris Johnson becomes the next prime minister.
  • Separation of Fed and government?

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