Marcus Today End Of Day Report
VIEW MORE ARTICLES BY HENRY JENNINGS
- ASX 200 up 18 to 5964 as buyers emerge.
- High 5965 Low 5945. Narrow range no conviction.
- Banks rebound with miners rising.
- Energy stocks in demand and healthcare firm.
- AUD slips again to 75.39c to a five-month low.
- Bitcoin US$8111 in relative quiet trade.
- US futures up 11.
- Asian markets weaker with China CSI 300 up 0.67% and Japan up 0.74%.
- MARCUS CALL – An important investment theme about wealth management disruption and other interesting insights.
- SMALL STOCK PORTFOLIO – The rise and rise of cannabis stocks (for now). Click here to read the latest blog. (and access archived blogs under the EDUCATION drop box).
- STOCK OF THE DAY – The Santos bid.
- US STOCK BOX - We have put this in the "TOOLS" drop box. Covers the S&P 500 stocks.
- INSIDERS – Keeping with the Insiders theme of shared ideas; are shared communities the future of investing as well? Henry has a look at SWF.
- CONNECT WITH US - We invite you to send us your own stock ideas. We also have the facility for you to email us any questions. Click on the "Ask Marcus Today" button in the newsletter or below - Ask us anything:
Movers and Shakers
- GXL +2.85% on short covering.
- MQA +2.52% management restructure and broker upgrade.
- AAD +0.86% AGM Commentary.
- SM1 +3.21% strength from A2M spill over.
- MLX +1.44% copper price strength.
- NWL +0.56% Consolidating after IPO debut yesterday.
- BBG +21.31% AGM Comments
- CAN +14.62% cannabis rebound after sell off yesterday.
- KDR +7.82% buyers return.
- MCP -24.39% Negative trading update
- Speculative stock of the day: Stemcell United (SCU) +75.00% Cannabis boom continues.
- Biggest risers – A2M, BAL, ACX, EHL, MND and HUB.
- Biggest fallers – ALQ, GNC, AJM, CLQ, FPH and DHG.
FUTURES AND HIGHS AND LOWS
- BHP Billiton (BHP) +0.41% Samarco update –BHP Billiton and Vale won 150 day extensionuntil April 20 from a Brazilian court to negotiate a settlement of a US$48B claim related to the Samarco mine disaster.The miners had been given an extension at the end of October until Nov which itself marked the end of a four-month extension granted in June. The two companies also entered into an agreement that brings the Brazilian prosecutors into the preliminary agreement over the settlement of Samarco claims.
- Technology One (TNE) +0.38% Another record result with NPBT up 9% to %58m. Special dividend of 2c on top of 5.6c normal div. Positive outlook statement and confident comments.
- A2 Milk (A2M) +5.52% AGM report and market update – China still the focus with A2M achieving #1 infant formula brand in Kaola, #2 on JD.com and #3 on Tmall. CFDA registration achieved in China label formula. No real hard numbers though.
- ALS Limited (ALQ) –7.36% NPAT within guidance of $70.1m however an impairment charge of $63m. Interim dividend of 8c and a $1745 m share buyback. FY18 underlying profit to be around $135m -$145m.
- Fonterra (FSF) +0.35% Global dairy update – string growth in dairy imports in China and Asia. EU showing strong export growth with further decline in NZ and AUS. October NZ milk collection increased by 2% to 209kgMS and FSF Australia milk collection increased 31% to 18m kgMS.
- Kathmandu (KMD) -3.86% 1Q Results – Total sales up 0.6% with Australian sales up 2.9%. NZ down by 10.3%. Gross margin 2.4% above last years as less clearance stock sold.
- GrainCorp (GNC) -4.91% net profit for the year lifted to $125.2m, from $31m a year earlier. Rising energy costs continue to be a serious challenge for the long-term sustainability of food and malt processing in Australia. The CEO suggested a challenging year for the GrainCorp's grains business, but the company had made significant progress on improving network efficiency and controlling costs.
- Specialty Fashion Group (SFH) -2.50% First strike on remuneration policy and the company to close 300 stores.
BEST AND WORST
RBA Minutes – Rates on hold for a long long time.
- Headline and trimmed mean inflation had both been 1.8% over the year to the September quarter, broadly in line with the Bank's expectations.
- Members noted that the outlook for inflation would be influenced by the persistence of heightened competitive pressures, the outlook for wage growth and the speed with which wage costs might flow through to higher prices.
- The Bank's forecast was for underlying inflation to remain slightly below 2% in the near term, before increasing gradually to 2%.
- The forecast gradual rise in inflation was consistent with the expectation that a further tightening in labour market conditions would gradually feed into higher wage pressures.
- Retail sales had been weak in the September quarter, which was expected to translate into lower quarterly consumption growth than in the June quarter.
- In the residential housing market, recent data on dwelling approvals had confirmed that the pipeline of dwellings approved or under construction appeared to have peaked in late 2016, although the pipeline of work remained at a high level.
- Employment growth had been running well above growth in the working-age population and, in preceding months, had been concentrated in full-time employment. Employment growth had also picked up across all states.
- The Bank's forecasts for growth were largely unchanged from three months earlier. The central forecast was for GDP growth to pick up and to average around 3%. The outlook for growth in the Australian economy was largely unchanged from three months previously.
- Conditions in the established housing market had eased in all major cities, but had remained relatively strong in Melbourne. Growth in rents had been subdued.
- Inflation was expected to increase, but only gradually.
- Morgan Stanley predicts the Aussie dollar will fall to 65c in 2019 as yield premium to US evaporates to a discount. Morgan Stanley predicts the Aussie will decline to 67c by the end of next year, making it the most pessimistic forecaster of the currency in a Bloomberg survey of more than 30 analysts. The median estimate is 80c. The extra yield on Australia’s 10-year bonds over similar-maturity Treasuries was at 20bps today, after falling to a 16-year low of 15bps in June. The last time the spread was consistently this narrow was in 2001.
- Wayne Byres, the chairman of APRA, said the regulator was now focusing on how lenders assessed living expenses and total indebtedness. APRA data of 400 loans presented on Tuesday showed 100 per cent of loans to borrowers with household incomes under $40,000 used the living expense benchmarks, while about 80 per cent of loans to households with incomes up to $100,000 and $200,000 also used benchmarks.
- Nikkei at a one week high.
- Hong Kong-listed China stocks were up as much as 1.8% on Tuesday as insurers rallied and Asian equities were broadly buoyed by positive closes in Europe and on Wall Street.
- Dalian Wanda, the Chinese property and entertainment conglomerate, denied reports on Tuesday that it was looking for a buyer for five of its overseas property developments.
- Tencent has become the first Asian internet company to be worth more than US$500bn.
EUROPE AND US MORNING HEADLINES
- A US Justice Department lawsuit seeking to block AT&T’s US$84.5bn takeover of Time Warner said the combined entity would use control of Time Warner’s content “as a weapon to harm competition”, costing rivals hundreds of millions of dollars each year and raising consumers’ bills.
- Charlie Rose suspended over sexual harassment claims.
- More trouble for UK PM, May as cabinet agrees to increase the divorce bill from the EU. Gone by Christmas.
- Merkel may follow given the collapse of coalition talks. Macron sitting pretty.
- Paris wins battle to host European banking regulator.
Henry Jennings has been involved in financial markets for over 35 years as both a trader and a broker in London and Sydney.
Starting his career in London trading derivatives and moving to Australia in 1989, Henry eventually settled at Macquarie Group, rising to become a Divisional Director responsible for Equity Trading in Australia. For the last decade, Henry has been involved in private client broking and now writes exclusively for the renowned financial newsletter Marcus Today. Henry regularly appears on ABC TV and Sky Business as a market analyst, commentator and strategist and has presented at various conferences most recently for the AIA on the Gold Coast.
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