Marcus Today End Of Day Report

By Henry Jennings | More Articles by Henry Jennings

 Today’s Headlines

  • ASX 200 up 47 to 6300.
  • High 6309 Low 6253.
  • No time for Turkey. Risk on back.
  • NEG passes party room.
  • Results mostly disappoint.
  • Banks and big miners bounce back as risks wane.
  • Financials at a five-month high.
  • AUD steady at 72.78c.
  • Bitcoin hit again at US$5976.
  • Aussie Gold slips to $1643.
  • US futures up 60.
  • Asian markets mixed as China down 0.56% and Japan up 1.63%.

FUTURES AND HIGHS AND LOWS

MT STUFF

  • MARCUS CALL – A check up on our current holdings and what to do in light of the Turkish turmoil.
  • TRADING IDEAS – No new trades.
  • SMALL COMPANIES – Nasty day for us in CVN yesterday with some ground being made back today. A look too at a couple of stocks suffering after the Monsanto court loss in the US.

POINTS

STOCK STUFF

Movers and Shakers

  • ELD +2.04% and NUF +3.21% bounce back from glyphosate issues.
  • WHC +1.33% record profit and special div.
  • CVN +6.17% letter to shareholder soothes some nerves.
  • JBH +5.77% broker upgrades.
  • A2M +3.38% extends deal to China.
  • NWS +2.89% positive broker calls.
  • CGF -6.91% results at the lower end and soft guidance.
  • DMP -6.52% Don Meij goes on a charm offensive. Miss due to hot weather.
  • KGN -4.53% reverses rally from yesterday.
  • BAL -3.05% becoming a substantial shareholder.
  • KDR +3.51% SQM media release.
  • RAP +6.06% bargain hunting.
  • ORG +0.93% becoming a substantial shareholder.
  • Biggest risers – APT, JBH, A2M, GWA, NUF.
  • Biggest fallers – CGF, DMP, MFG, BAL, COH.

BEST AND WORST

TODAY

  • Challenger (CGF) –6.91% FY18 results. Normalised NPAT increased 6% to $406m underpinned by 16% growth in assets under management to $81m, and successful broadening of its product offerings. However, statutory NPAT was down 19% to $323m as it included investment experience. The full-year dividend grew 3% to 35.5c per unit, fully franked. FY19 normalised pre-tax return on equity is expected to lift from FY18 but not reach the 18% target; FY19 normalised net profit before tax is expected to be between 8%-12%, and the FY19 full franked dividend payout ratio is to be between 45%-50% of normalised NPAT.
  • National Australia Bank (NAB) +1.50% Q3 trading update. Unaudited statutory net profit of $1.65bn and cash earnings growth fell 3% pcp due to higher investment spending and credit charges. Revenue was up 1% however expenses grew 2% after higher compliance costs. NAB also expect to recognise additional provisions in 2H FY18. The CET1 capital ratio is at 9.7%, down from 10.2% in March but NAB is confident they will meet APRA’s 10.5% ratio by January 2020.
  • Domino’s Pizza (DMP) –6.52% FY18 result. Full-year NPAT increased by 15% to $136.2m and the fully franked full-year dividend grew by 15.5% to 107.8c driven by higher sales in all markets which grew 11.7% to $2.59bn. The company averaged almost 6 store openings a week in FY18. The outlook statement provided FY19 same-store sales guidance of between +3% to +6%; 225-247 organic new store openings; EBIT of between $227-$247m and net CAPEX to be between $60-$70m.
  • Cochlear (COH) –3.03% FY18 results. Net profit up 10% YoY to $245.8m and Sales revenue rose by 9% to $1.35bn on new product launches and a focus on sales force expansion. Their implant business grew with units +8% (+11% excluding Chinese Tenders). Final dividend of $1.60 per share, up 14% supported by increased cash flow generation, full-year dividend is up 11%. Cochlear expects FY19 net profit to increase by 8-12% on stronger revenue growth in developed markets over emerging markets.
  • Whitehaven Coal (WHC) -1.30% 43% rise in full-year underlying profit to $525.5 million, and confirmed that shareholders would be paid a 14¢ final dividend plus a 13¢ special dividend. Analysts had expected Whitehaven to report an underlying profit of $539.3m.
  • Australia and New Zealand Banking Group (ANZ) +1.60% Trading update. 3Q18 Credit impairments charge down $85m on quarter, and provision charges at their lowest point since 2014 due to several one-off recoveries and a high level of write-backs in the institutional business. Impaired assets down $164m on quarter. The CET1 capital ratio at 11.07%, an increase of 3bps from March-18.
  • Iselect (ISU) -0.60% Revenue down 2% to $181.4m. Net loss after tax of $13.5m. Balance sheet remains strong, with no debt and $33.0m cash at 30 June 2018. Company take on the outlook.

ECONOMIC NEWS

  • ANZ Roy Morgan consumer confidence fell 0.6% to 118.2 last week, adding to the 0.8% decline from the previous week. Geopolitical tensions involving the US, China and Turkey impacted confidence despite upbeat RBA commentary and solid domestic conditions.

  • NAB Business confidence index up 1 to 7 index points.
  • Business conditions down 2 to plus 12 pts.

BOND MARKETS

ASIAN MARKET NEWS

Chinese July activity data:

  • The surveyed jobless rate in urban areas rose to 5.1% from 4.8% in June.
  • Industrial output rose 6% in July from a year ago.
  • Retail sales expanded 8.8% from a year earlier.
  • Fixed-asset investment rose 5.5% year-on-year in the first seven months.

  • Nio, a Chinese electric automaker backed by Tencent Holdings, has filed for an IPO of its American depositary shares.

EUROPEAN AND US HEADLINES

  • Musk is now working with Silver Lake and Goldman to take Tesla private.
  • Turkish lira steadies. Crypto turns to Crapto as Bitcoin sinks below US$6000. Now down 23% in August. The total market capitalisation of cryptocurrencies dropped to US$190bn, from a peak of around US$835bn in January.
  • Saudi Arabia drops oil production in July.
  • The future is coming faster than we think. Googles AI can detect eye disease more accurately than a doctor.
  • UBS is trialling Netflix style algos for traders. Much like the suggestions we all have on the streaming service. Short DMP why not short this too. Scary.

ANNOUNCEMENTS

MARKET MAP

 
Henry Jennings

About 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.

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