| World Overnight | |||
| SPI Overnight (Sep) | 6262.00 | – 18.00 | – 0.29% |
| S&P ASX 200 | 6293.10 | – 17.80 | – 0.28% |
| S&P500 | 2896.72 | – 4.80 | – 0.17% |
| Nasdaq Comp | 8091.25 | – 18.29 | – 0.23% |
| DJIA | 25952.48 | – 12.34 | – 0.05% |
| S&P500 VIX | 13.16 | + 0.30 | 2.33% |
| US 10-year yield | 2.90 | + 0.05 | 1.72% |
| USD Index | 95.42 | + 0.29 | 0.30% |
| FTSE100 | 7457.86 | – 46.74 | – 0.62% |
| DAX30 | 12210.21 | – 136.20 | – 1.10% |
By Greg Peel
Handicapped
It looked like a soft day on the local market yesterday but this month, and into the next, we have to take into account every day the ASX200 will begin with a handicap to a varying extent due to companies going ex-dividend.
In the case of Whitehaven Coal ((WHC)), which fell -7.6% to top the ASX200 losers’ board yesterday, ex-special as well. Second place went to Spark Infrastructure ((SKI)) and fifth to Nine Entertainment ((NEC)), which also went ex.
Oil Search ((OSH)) was another ex, helping the energy sector down -1.0%, but the current trade situation seems to be more influential in that sector at present given WTI crude hit US$70/bbl again on Monday night.
There were no exes in bank land, rather a -0.7% fall in the financials sector reflected a $35m (plus costs) fine imposed on Westpac ((WBC)) by ASIC for irresponsible lending. That’s about the size of the bank’s petty cash tin, but Westpac fell -0.8% and peers fell in sympathy, wondering who and what is next.
The bulk of the index loss yesterday can be attributed to financials.
Materials managed a 0.2% gain despite exes in the sector thanks to big gains for Ausdrill ((ASL)), which rallied 9.2% on an independent expert’s report, Sims Metal Management ((SGM)), up 7.0% now the Turkish situation has settled down, and Evolution Mining ((EVN)), up 5.2% after issuing better than expected cost guidance when all in the sector are complaining the other way around.
Telcos rose 0.7% yesterday but given the current volatility in that sector (once called “defensive” – no, really) that’s as good as flat.
IT posted the biggest loss in falling -1.2% but barely a day goes by now without one or two of the sector’s high flyers seeing wild share price swings.
In economic news, Australia’s current account deficit widened in the June quarter to 2.9% of GDP, up from 2.5% in March, due to a lower trade surplus than last quarter and widening in the income deficit. Net exports are expected to contribute 0.1 percentage points to today’s GDP result, down from 0.3ppt in March.
The RBA set up the Roneo machine and handed out copies of last month’s policy statement.
The GDP result will be the prime focus downunder today, with forecasts suggesting 0.7% quarterly growth for 2.9% annual, down from 3.1% in March.
Macro headwinds are nevertheless being provided by lack of progress in the trade war, with Canada still hanging in the balance and China still an unmovable object. The LME had its first chance last night to respond to the failure to reach a new NAFTA deal late on Friday and it wasn’t a pretty sight.
The futures are down -18 points this morning.
Don’t do it
The first day of September trade opened weakly on Wall Street as trading desks began to refill following the long summer break. Initially US stock markets took the lead from Europe and dropped, probably again a response to increasing trade nervousness.
The Dow was down -160 by the time Europe closed and leading the average down was Nike. The iconic shoemaker decided to celebrate the 30th anniversary of the company’s “Just Do It” campaign by rekindling the catch phrase and using an American footballer as its poster boy.
That footballer happens to be the guy most embroiled in the “failing to stand for the national anthem” scandal that upset the president earlier in the year. Wall Street was somewhat unnerved by Nike taking a political stance and sent the stock down over -3%.
The other talking point of the day was Amazon which, if only briefly, hit the trillion dollar market cap level last night. It closed just off that level but either way Wall Street now counts both Apple and Amazon as trillionaires.
Amazon listed back in the 90s at just under US$500m so you do the math – my calculator can’t do trillions.
In economic news, the US manufacturing PMI hit 61.3 in August to mark its highest level since 2004 and just shy of the highest level seen in 35 years of the survey.
The PMI had the US ten-year yield moving up 5 basis points to 2.90%, sparking some talk of whether or not a move back over 3% might spook Wall Street into correction. But that hasn’t happened the last couple of times and there’s no real reason to believe it would next time.
So Wall Street managed to rally all the way back through the afternoon and focus is on the NAFTA talks with Canada, which resume tonight.
Commodities
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 1191.10 | – 9.80 | – 0.82% |
| Silver (oz) | 14.14 | – 0.32 | – 2.21% |
| Copper (lb) | 2.64 | – 0.07 | – 2.45% |
| Aluminium (lb) | 0.93 | – 0.01 | – 1.55% |
| Lead (lb) | 0.94 | – 0.02 | – 1.91% |
| Nickel (lb) | 5.63 | – 0.13 | – 2.19% |
| Zinc (lb) | 1.10 | – 0.02 | – 1.79% |
| Iron Ore (t) futures | 66.64 | – 0.52 | – 0.77% |
Blood on the streets.
Another 0.3% gain for the US dollar index didn’t help but it is the trade situation that has commodity markets nervous once more.
Having been stuck at 1200 for several sessions, gold finally gave in last night.
The Aussie is nevertheless back under 72 ahead of today’s economic growth result, at US$0.7177.
Today
The SPI Overnight closed down -18 points or -0.3%.
The GDP result will be out late morning.
Services PMIs around the globe are in the spotlight today/night, and US trade numbers are now interesting to note.
Locally, FAR ltd ((FAR)) reports earnings today and Monadelphous ((MND)) hosts an investor day.
Some of the bigger names going ex today are Iress ((IRE)), InvoCare ((IVC)), Medibank Private ((MPL)), Qantas ((QAN)), Ramsay Health Care ((RHC)) and Treasury Wine ((TWE)).
The Australian share market over the past thirty days…
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| FNP | FREEDOM FOODS | Upgrade to Hold from Reduce | Morgans |
| NST | NORTHERN STAR | Upgrade to Buy from Neutral | Citi |
| Upgrade to Accumulate from Lighten | Ord Minnett | ||
| SDG | SUNLAND GROUP | Downgrade to Hold from Add | Morgans |
| SFR | SANDFIRE | Upgrade to Neutral from Sell | Citi |
| Upgrade to Buy from Hold | Deutsche Bank | ||
| TPM | TPG TELECOM | Upgrade to Add from Hold | Morgans |
| VAH | VIRGIN AUSTRALIA | Downgrade to Underperform from Neutral | Credit Suisse |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
