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SHARECAFE COMMENTARY

Marcus Today End Of Day Report
BY HENRY JENNINGS - MARCUS TODAY COMMENTATOR - 23/01/2018
VIEW MORE ARTICLES BY HENRY JENNINGS

Market summary

  • ASX 200 closes higher at 45 to 6037.
  • High 6041 Low 5992 Light volume still.
  • Banks rebound; with healthcare led by RMD.
  • Energy stocks higher; BHP misses out.
  • AUD steady around 79.91c.
  • Bitcoin US$10,810 - down 44.6% from the top last month.
  • US futures up 69 as Government shut down is kicked down the road until Feb 8th.
  • Asian markets slightly mixed with CSI 300 up 0.45% and Japan down 0.99%.
  • Look out for Henry on Sky Business Live now - until 5.30pm.

Mt Stuff

  • MARCUS CALL – US government shutdown and market reactions. The rise and fall of Bitcoin, Netflix and its stellar run of results, and other eye-catching stuff.
  • TRADING PORTFOLIO - Two new trades. Both big boring quality stocks on the turn.
  • SMALL STOCK PORTFOLIO – Henry resurrects the funeral sector. Why the recent sell down. And is IVC now worthy of our watch list.
  • INSIDERS – The latest snapshot on results so far.
  • BROKER STUFF – TWE’s price target has been topped up generously by UBS.
  • INSIDERS 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:

https://marcustoday.com.au/webpages/images/report/20171016/askmarcusbutton.jpg https://marcustoday.com.au/webpages/images/report/20171016/tellusyourstockideas.jpg

FUTURES AND HIGHS AND LOWS

Advancers and Decliners

  • DHG +9.09% bounce is in as CEO successor speculation dominates.
  • FXJ +4.62% follows DHG higher.
  • CBA +0.51% first ASIC ruling.
  • RMD +8.42% bumper quarterly.
  • TWE +4.02% good wine exports to China.
  • KDR +7.89% PLS % relief rally in lithium stocks.
  • ORI +5.26% technical buying as resource spending increases.
  • HT1 -5.00% NZ ATO tax ruling.
  • SYD +2.37% TCL +0.83% bond proxies back in fashion.
  • IVC -1.81% broker downgrade.
  • ECG -46.43% Jessica’s suitcase unpacks.
  • Speculative stock of the day: AusTin Mining (ANW) +35.00% after a drilling update at Mt Colbalt. Results show 28.15m @0.29% Co and 0.73% Ni. Two higher grade intervals too of 6.65m @0.45% Co and 0.89% Ni.
  • Biggest risers – DHG, KDR, RMD, YAL, UPD and CLQ.
  • Biggest fallers – API, HT1, PGH, SWM and ZEL.

TODAY

  • Macquarie Atlas Roads (MQA) +0.87% Good toll road numbers today especially from the APRR in France with a 5.2% revenue rise. Interestingly the heavy vehicle traffic on the APRR increased by 8.2% on pcp. Plays into the European growth narrative. MQA owns 25% of APRR.
  • QBE Insurance (QBE) –0.57% The company has announced a combined operating ratio (COR) of 104% above the target range of 100-102%. Catastrophe activity coupled with adverse developments in Hurricane Maria added around $130m to the net cost. The company has strengthened claims provisions $110m in North America and the Asian Pacific. The company has also announced two significant one off non-cash items that will make the FY17 after tax loss around $1.2bn. The new US tax rate has had a $230m adverse effect and the carrying value of good will in the North American business has been written down by $700m. Outlook is for a COR range of 95%-97.5% and net investment return of 2.5%-3.0%.
  • Lynas (LYC) +7.39% Record cashflow from operating activity. Cashflow of $45.3m v $25m in the previous quarter. Senior debt reduction to US$170m from US$185m in the last quarter. The company has forecast strong demand for rare earths and prices have recovered from late December and are around the same levels as March 2017. The company has undertaken additional maintenance which has led to lower production at 1222 tonnes of NdPr and total REO production of 4174 tonnes. The company remains on track to produce 500 tonnes of NdPr a month from April. Volatility continues in the pricing of NdPr with a top of 510 RMB/Kg in mid-August falling to a low of 255RMB/Kg in mid-December which has since recovered to 330RMB/Kg.
  • Resmed (RMD) +8.42% Revenue for the quarter was $601m up 13%. Gross margin for the quarter was 58.2%. Even Apple would be impressed with that. US tax changes have resulted in an income tax expense of $126.6m. The company has also bought back 100,000 shares for a cost of $8.5m. Quarterly cash dividend of 35c paid in USD. Short-term pain in US tax changes should lead to long-term gain.
  • Thorn Group (TGA) +5.70% The company has settled its past misdemeanours with ASIC with a fine of $2m. The company has accepted an enforceable undertaking to remediate certain fees to consumers totalling $6.1m. The company has made provisions and cleaned up its game in recent months. Good to see past issues have been put to bed.
  • Senetas (SEN) – UNCH - Market update with NPBT now between $2.2m and $2.4m for HY18. The company is expecting further earnings growth. Results are scheduled for release 26 February.
  • CIMIC (CIM) –0.12% Selected to design and construct the Gunyama Park Aquatic and Recreation Centre with revenue generated to be around $84m.
  • Yojee (YOJ) +16.00% Announced SILA has chosen YOJ as its logistics software partner for an initial period of two years. SILA is the Sinotrans Integrated Logistics Australia part of Sinotrans which is China’s largest shipping and logistics company.

ANNOUNCEMENTS

ECONOMIC NEWS

  • Consumer confidence fell 3.3% last week following three strong reports recently. Potential sources of the weakness may be the possible train strike in Sydney, coupled with possible power outages due to the warm weather.

ASX 200 SECTOR SUMMARY

ASX 200 TOP MOVERS

ASX 200 BOTTOM MOVERS

ALL ORDINARIES SECTOR SUMMARY

ALL ORDINARIES TOP MOVERS

ALL ORDINARIES BOTTOM MOVERS

BOND MARKET

ASIAN NEWS

  • Bank of Japan says inflation is set to reach 2% by around fiscal 2019/2020, and will be maintaining short term interest rates at -0.1%. BOJ says its economy is expected to expand moderately. Maintains 10-year JGB target at zero.
  • The Philippine economy grew 6.6% for a 10th consecutive quarter, on rising consumption and government spending.

EUROPE AND US MORNING HEADLINES

  • US Government is back open for business. At least for now.
  • Trump has declared a war on imported solar panels with a tariff on imported equipment for four years. This also includes washing machines, of which are also the recipients of tariffs. South Korea is said to retaliate with levies.
  • Kevin Spacey has cost Netflix US$40m following allegations of misconduct, and the subsequent cancellation of House of Cards.
  • IMF upgrades global growth on Trump tax cuts by 0.2% to 3.9% for both 2018 and 2019.
  • William White, the Swiss-based head of the OECD's review board and ex-chief economist for the Bank for International Settlements, says the global economy is now more dangerous than in 2008. White is famous for predicting the 2008 GFC.
  • Confidence amongst UK business leaders has fallen 17% on last year according to findings from PwC, set to be presented at Davos. According to the data, only 34% feel confident.

MARKET MAP



View More Articles By Henry Jennings

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.

To gain further insights from Henry Jennings, Marcus Padley and the Marcus Today team of analysts, click here to register for a free trial of the Marcus Today daily newsletter.



Important note: Any financial product advice contained in this email is general financial product advice only and does not take into account any one person's objectives, financial situation or needs. Therefore, before acting on any financial product advice in this email, you should consider, with or without the assistance of an independent adviser, the appropriateness of the advice, having regard to your objectives, financial situation and needs.
 

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