MID MORNING MARKETS 24-07-19

The ASX 200 is up 44 points in mid-morning trade after another largely +ve night. Gold lagging but all else ↑. Energy best. Q reports from EVN, ILU and BPT. Z1P Q update +ve. Quiet data but big US earnings ahead #ausbiz

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TODAY

  • Economic data – CommBank Australia Manufacturing PMI Flash, CommBank Australia Services PMI Flash, CommBank Australia Composite PMI Flash
  • Japanese data – Jibun Bank Manufacturing PMI Flash, Jibun Bank Services PMI Flash, Jibun Bank Composite PMI Flash, Coincident Index Final, Leading Economic Index Final, Markit Manufacturing PMI Flash
  • Q reports – Beach (BPT), Iluka (ILU)

TONIGHT

  • Europe – Markit Services PMI Flash, M3 Money Supply, Markit Composite PMI Flash, Loan Growth
  • UK – UK Finance Mortgage Approvals
  • US economic data – New Home Sales
  • US earnings – AT&T (T), Boeing (BA), Caterpillar (CAT), T. Rowe Price (TROW), UPS. After The Close – Facebook (FB), Ford Motor (F), PayPal (PYPL), Tesla (TSLA)

COMPANY NEWS

  • Zipco (Z1P) – Q report.  Zip exceeded all financial targets set at the beginning of FY19 – transaction volume up 108% on prior year to $1.1bn (target: $1.0bn), customer numbers up 80% to 1.3 million (target: 1.0 million) and grew rapidly whilst improving cash EBTDA; Record quarterly revenue of $27.0m, up 17% on Q3.; Receivables increased to $682.6m, up 21% on Q3; Quarterly transaction volume of $351.8m, up 105% year on year, with June volume over $130m; Customer numbers increased to over 1.3 million, up 159k in the quarter, an increase of 14% on Q3; Zip App achieved a top 10 ranking across both the Apple (#7) and Google Stores (#7); Delivered market-leading credit performance with net bad debts 1.63%, down from 1.75% in Q3; Operating leverage continues with scale – costs (as a percentage of average receivables), fell from 15.5% in Q3 to 14.8% in Q4; Signed Australian specialty fashion retailer Just Group with iconic brands: Smiggle, Peter Alexander, Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti.; Kmart Australia, Bing Lee, and Freedom joined the platform in the quarter, with a number of other major retailers in advanced discussions; Signed partnership agreement with Tyro, a leading provider of EFTPOS terminals servicing approximately 20,000 merchants; Natively integrated into leading ecommerce platform, BigCommerce, enabling Zip for thousands of Australian sites; Personal finance manager app, Pocketbook finished the quarter with a total user base of c.700,000.
  • Iluka (ILU) –

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  • Beach (BPT)

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  • Atlas Arteria (ALX) – Weighted average traffic for Q2 2019 was 2.1% lower than Q2 2018 and 1.1% lower for the half year compared with the same period in 2018. This result was expected and reflects primarily the unusually strong traffic performance in 2018 caused by the French National Railway strikes.

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Evolution Mining (EVN) – FY20 Guidance – Forecast FY20 Group gold production of 725,000 – 775,000 ounces with AISC in the range of A$890 – A$940 per ounce.

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  • Tabcorp (TAH) – The Supreme Court of Queensland issued orders that caused a redacted version of the Claim (by Racing Queensland) to be made publicly available. The Claim relates to the extent to which the point of consumption tax (POCT) imposed on UBET is borne by UBET or Racing Queensland and impacts the calculation of fees under two contractual arrangements:

OVERNIGHT

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SPI FUTURES +33

US EQUITIES – S&P500 +20 (+0.68%), Dow Jones +177 (+0.65%), NASDAQ +47 (+0.58%)

Main themes

  • Trade developments – Talks to begin next week
  • Reassuring earnings, guidance from widely-held companies

 

  • Relative strength in the S&P 500 materials and financials sectors
  • Congress reached agreement to increase budget deficit and suspend debt ceiling for two years

EUROPEAN MARKETS – All stronger. STOXX600 +0.98%, UK FTSE +0.56%, German DAX +1.64%, French CAC +0.92%,

CURRENCIES

  • The USD is higher at 97.70.
  • The Aussie dollar is lower at US70.05

BONDS – 2-yr: +2 bps to 1.83%, 3-yr: +3 bps to 1.80%, 5-yr: +3 bps to 1.83%, 10-yr: +3 bps to 2.07%, 30-yr: +4 bps to 2.61%

COMMODITIES

  • Oil – WTI futures was up US64c or 1.0% to US$56.77 a barrel with key factors being expectations of lower supply and rising tensions in the Middle East, offset by the restarting of the Libya’s Sharara oilfield (which had removed 290kbpd while closed) and lower demand forecasts.
  • Gold futures were down 0.34% to US$1,422.00
  • Iron Ore – CommSec has iron ore unchanged at US$118.10 a tonne.
  • LME metals – Mixed. Cu -0.69%, Ni +0.07%, Al +0.11%.

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – May FHFA Housing Price Index 0.1% (prior 0.4%) to be +4.3% yoy; June Existing Home Sales -1.7% 5.27m (consensus 5.30m; prior 5.36m). Lower mortgage rates haven’t led to a meaningful increase in sales
  • US earnings – Coca-Cola (+6.07%), Kimberly-Clark (0.59%), Lockheed Martin (0.05%), PulteGroup (-8.33%), After The Close chipotle Mexican Grill (+3.41% )
  • Global Growth – The IMF cut its 2019 global GDP growth forecast to 3.2% from 3.3% but the outlook for the United States was increased to 2.6% from 2.3%. The Fund expects global trade will grow 2.5% in 2019, down from the previous forecast for growth of 3.4%.
  • Boris Johnson was named the next British prime minister. His appointment increases the likelihood of a no-deal Brexit on October 31.

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