Tuesday 29th September – Australian Market Wrap

he ASX gave up 0.2 points to 5952 (0%) after early optimism evaporated in a wave of bank selling. Dow futures rose points. Another quiet day or indecision. After a storming out of the gate on a good US lead in the sellers ambushed the market as it approached 6000. Banks went all soggy on the BOQ write down with the Basket falling to $117.84 as CBA dropped 0.7% and ANZ fell 0.7%. Other financial fared better, MQG added 0.6% and MFG up 2.4%. Miners were mixed as BHP fell 0.65% and RIO down 0.8% with a rally in FMG up 1.9%. Gold miners under pressure with NCM down 0.7% although CHN up 8.0% on continued optimism. Energy found some buyers with WPL up 0.9% and STO flat. Healthcare better, CSL up 0.2% and travel stocks were encouraged by CV19 restrictions being lifted and further government support for the sector. QAN rose 2.2%, WEB down 0.3% and FLT up 0.1%. CTD in a trading halt as it raises money to buy an Omaha based company for $275m. Tech is back, the All Tech Index rose 2.14% as APT rose 2.5% and XRO rallied 3.0%. APX joined the party up 3.6% with WTC putting in a good day at the crease up 3.4%. In corporate news, PAR enjoyed a good run up 14.5% on an exclusivity agreement, BOQ dropped 7.2% after a $175m write down on problem loans, not helping sentiment in the banking sector at all and A2M fell another 4.0% on broker downgrades. The 10-year bonds were yielding around 0.78% with the AUD slightly higher at 70.87c. Asian markets firm with Japan up 0.2% and China up 0.2%. Asian markets firm with Japan up 0.2% and China up 0.2%.

Today’s Highlights

  • ASX 200 down 0.2 points to 5952 as early gains evaporate head of debate.
  • High 5995 Low 5935. Narrow range, low volume.
  • Big Bank Basket sees seller return down to $117.84.
  • All Tech Index up slightly by 2.14
  • 23 trading days until the US election.
  • Dow Futures up 100
  • Gold rises to AUD$2651
  • 10-year bond yield fall to 0.78%
  • AUD better at 70.85c
  • Bitcoin steady around $10689
  • Asian markets firm with Japan up 0.2% and China up 0.2%.

STOCKS

  • MYQ +14.78% develops World first In-Device DEXA Imagery capability.
  • PLS unchanged completion of refinancing.
  • PAR +14.52% extension of exclusivity agreement.
  • LOV +11.14% L1 Capital a substantial holder.
  • CHN +8.00% buyers are back.
  • AFG +5.26% responsible lending relaxation boost.
  • BRN -8.64% reality continues to bite.
  • BOQ -7.24% $175m in provisions.
  • MSB -5.64% profit taking.
  • COF -5.12% ex dividend.
  • A2M -4.01% broker downgrades.
  • 3DP -11.48% profit taking.
  • BID +21.21% signs 4-year deal with JLL.
  • RCE -12.30% capital raising weighs
  • OVH -7.32% cash offer still 43c.
  • PNR +7.89% AGM date announced.
  • URW unchanged EGM 10th November.
  • PLL +38.18% good run in US.
  • Speculative Stock of the Day: Botanix Pharma (BOT) +11.11% good volume and good gain but ASX query solicits nothing new.
  • Biggest Winners: PAR, LOV, CHN, OML, PNI, MAH, AFG, TPW and MOE.
  • Biggest Losers: BRN, BOQ, ADH, MSB, AEF, SM1, ADI and RBL.

TODAY

  • Corporate Travel Management (CTD) – Launch $375m entitlement offer to fund the $274.5m acquisition of Travel & Transport (a North American corporate travel business). Shareholders will be able to subscribe for one share, for every 4.03 shares they own at an issue price of 1385c, reflecting a 14.3% discount to the last traded price. The transaction is expected to be ~10% EPS accretive on a Pro-forma CY19 basis excluding synergies (and ~30% EPS accretive including synergies). Over July and August, CTD generated an average revenue of $14m per month and an average underlying EBITDA loss of $5.7m. Average cash burn was $7.5m per month over the period.
  • Bank of Queensland (BOQ) –7.24% Has launched a probe into its payroll process after finding multiple instances of over and underpayments of current and former staff. The ATO, and the Fair Work Ombudsman were also notified on Monday. Calculates an FY20 pre-tax loan impairment of $175m, equates to ~37bps of gross loans and includes a COVID-19 related provision of $133m. The provision is expected to reduce the CET1 ratio by 39 basis points (bps). A pre-tax expense of $11m from a pro-active review of historical employee pay and entitlements will also be included in the FY20 financial statements.
  • Ampol (ALD) 2.15% Speculation Alimentation Couche-Tard may again look to bid for Ampol following its move to hire Ampol chief commercial officer Louise Warner.
  • Woodside Petroleum (WPL) +0.87% Thought to be looking at Shell’s 16.67% interest in the North West Shelf. The article notes this would be in addition to its pursuit of Chevron’s 16.67% stake, which Woodside is believed to be the frontrunner for.
  • Kalium Lakes (KLL) – Appoints Antony Beckmand as CFO.Robert Mencel appointed as General Manager Operations
  • Mayne Pharma (MYX) +1.30% Appoints interim CFO Peter Paltoglou as CFO on a permanent basis.

ECONOMIC NEWS

  • Consumer confidence increased by 1.6% last week, the fourth consecutive gain. All subindices rose aside from ‘time to buy a household item’ (−1.0%).
  • The overall gain was driven by another big jump in ‘current economic conditions’ (+10.3%), while ‘future economic conditions’ edged up 0.5%.
  • Financial conditions improved with ‘current finances’ up 1.0% and ‘future finances’up0.3%.
  • ‘Inflation expectations’ edged down to 3.3% (four-week moving average).

COVID – 19 NEWS

  • South Korea added 38 coronavirus cases in 24 hours, down from 50 a day earlier.
  • Mexico reported 3,400 new Covid-19 cases, bringing the total to 733,717.
  • President Donald Trump announced plans to distribute millions of Abbott Laboratories’s 15-minute Covid-19 tests in the coming weeks.
  • Germany will face more than 19,000 new Covid-19 cases a day by the end of December if the current trend in infections isn’t halted, Chancellor Angela Merkel warned.

Here is the CV19 deaths compared to a normal year of deaths. 1m dead but could be double or more that according to WHO. 

BONDS

ASIAN NEWS

  • Japan’s NTT is set to take DoCoMo private in a deal worth up to US$38bn.
  • China reduced the pace of its purchases of U.S. goods in August. The value of U.S. goods bought by China declined from the previous month, led by a slowdown in energy products according to Bloomberg. By the end of August, China had purchased about 33% of the full-year target of more than US$170bn plenty then to make up with the purchase of  $115bn of goods in the remaining four months of the year to comply with the Phase 1 trade agreement. Lucky Amazon has its Prime Day in October. Perfect opportunity.

EUROPEAN AND US HEADLINES

  • Democrats unveil a new $2.2 trillion package.
  • LVMH takes Tiffany’s to court as it walked from Breakfast there.
  • It’s on, the Cleveland Ohio Presidential debate.
  • Nikola’s former CEO and founder Trevor Milton has been accused by a second woman of sexual assault.
  • Brexit discussions continue. Only been 4 years. Does anyone care anymore?

And finally…

I was walking down the street when someone hit me over the head with a pack of joss sticks. I was incensed…!!

My Grandad started walking 5 miles per day at the age of 80.

No idea where he is now.

Clarence

XXXX