MID MORNING MARKETS 06-08-19

The ASX 200 is down 177 points in mid morning trade after a record night on Wall Street. It’s all red, apart from the gold bits. RBA may take our minds off things..or not  #ausbiz

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TODAY

  • Ex-dividend – AFIC (AFI) 14.0c, CVC 8.0c
  • Earnings – Shopping Centres of Australia (SCP)
  • Economic data – Balance of Trade, imports/Exports
  • RBA Interest Rate Decision
  • Japanese data – Household Spending, Leading Economic Index Prel, Coincident Index Prel

TONIGHT

  • US economic data – JOLTS – Job Openings

COMPANY NEWS

  • Shopping Centres of Australia Property Trust (SCP) – Statutory NPAT -37.4% to $109.6m, primarily due to expensing transaction costs on acquisitions completed during the period and reduced investment property valuation uplift; Funds From Operations (“FFO”) +24.1% to $141.8m; FFO per unit (“FFOPU”) +6.7% to 16.33cpu; Distribution +5.8% to 14.70 cpu, a payout ratio of 90%; FFO adjusted for maintenance capex, incentives and leasing costs +20.5% to $127.4m; Weighted average cost of debt currently 3.6%pa. Gearing of 32.8% as at 30 June 2019, up from 31.2% at 30 June 201; Investment property portfolio value of $3,147.0m (up by $693.2 million since 30 June 2018 largely due to acquisitions of $677.9m and development expenditure of $13.4m); NTA down 1.3% to $2.27 primarily due to the expensing of transaction costs on acquisitions completed during the period; MER of 0.37%, down from 0.43% as at 30 June 2018; FY20 FFO per unit guidance of 16.70 cpu (2.3% above FY19 actual) and FY20 Distribution per unit guidance of 15.10 cpu (2.7% above FY19 actual).
  • Magellan Financial Group (MFG) – FUM. Net inflows of $574m, which included net retail inflows of $349m and net institutional inflows of $225m.

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  • Southern Cross Media  (SCA) – Will outsource its television and rado broadcast transmission services to Broadcast Australia.
  • Ausdrill (ASL) – Wholly owned subsidiary African Mining Services has been selected as preferred open-pit mining contractor by West African Resources Limited at the Sanbrado Gold Project in Burkina Faso. The scope of work includes a full suite of open pit mining services – including site preparation, drill and blast, load and haul, and maintenance works – 5 year term and $235m revenue.
  • Orocobre (ORE) – Construction of the Naraha Lithium Hydroxide Plant (Naraha Plant) has commenced in Japan. The plant is designed to convert primary grade lithium carbonate feedstock sourced from the Olaroz Lithium Facility into purified battery grade lithium hydroxide.

OVERNIGHT

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SPI FUTURES -110

US EQUITIES – S&P500 -87 (-2.98%), Dow Jones -767 (-2.9%), NASDAQ -278 (-3.47%)

Main themes

  • Worst day of the year for all indices
  • 6 days of falls for the NASDAQ and S&P.
  • Trade war escalates: Yuan weakens past 7 per dollar – its lowest level in 11 years – and Chinese state-owned enterprises asked not to buy agricultural products from the US. Also reports they will add tariffs to farm goods purchased after August 3.
  • Broad-based losses but tech sector was weak, led by Apple -5.2%.
  • US bonds continue recent surge, boosting rate cut expectations

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EUROPEAN MARKETS – Big moves lower. STOXX600 -2.31%, UK FTSE -2.47%, German DAX -1.80%, French CAC -2.19%,

CURRENCIES

  • The USD is a lower 97.45.
  • The Aussie dollar is also lower at US67.68c

BONDS – 2-yr: -13 bps to 1.58%, 3-yr: -13 bps to 1.54%, 5-yr: -13 bps to 1.53%, 10-yr: -12 bps to 1.74%, 30-yr: -10 bps to 2.30%. The US 10 year bond is down 90bp in the last month.

COMMODITIES

  • Oil – WTI futures were down US97c or 1.74% to US$54.69 on the global growth story. The global benchmark Brent futures were down US$2.08 or 3.36% to US$59.81. (US prices were supported by a stock drawdown at Cushing, Oklahoma).
  • Gold futures were up 1.1% to US$1,473 an ounce as part of the move to safe havens.
  • Iron Ore – CommSec has iron ore down US$9.30 or 8.6% to US$99.15 a tonne.
  • LME metals – Large moves lower. Cu -0.78%, Ni +2.62%, Al -0.59%.

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – ISM Non-Manufacturing Index 53.7 (consensus 55.4; prior 55.1)
  • Trade dispute – Reuters reported that Chinese state-owned enterprises have complied with the request to stop buying agricultural products from the US.
  • HSBC – CEO John Flint will depart after 18 months with the bank. HSBC will fire 4,000 workers.
  • Chinese data – July Caixin Services PMI 51.6 (expected 52.0, previous 52.0)
  • Japanese July Nikkei Services PMI 53.8 (expected 50.4, previous 49.6)
  • Brexit – Election being prepared for after Johnson’s party majority decreased to just one seat.
  • European economic data – July Services PMI ticked down to 53.2 (expected 53.3) from 53.3 while August Sentix Investor Confidence decreased to -13.7 (expected -6.9) from -5.8.

 

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