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ASX 200 recovers a precious 34.4 points to 5509.2.Banks lead the rebound. China strong, up 4 % on stimulus measures.US futures up 47 points.
Todays’ market action
A nervous start gave way to a positive day today after the horror of last week. Unfortunately the positive vibes did not extend to Ansell (ANN) -15.8 % which despite releasing ok numbers sacred the market stupid with their outlook statement. Currency volatility and global growth outlook. Small bounce from their lows with a modest rebound but brokers will now twist the knife in downgrades to come.
Ansell did bounce a little
Meanwhile over in the poor old banks, National Bank (NAB) 1.52% popped out its third quarter trading update which went some way to reassure the market. Commonwealth Bank (CBA) + 0.96 % , the subject of much media speculation on capital raisings ,was also on the front foot today with a statement saying they are looking at a range of options to address new capital adequacies. A number of broker upgrades too for Australia and New Zealand Bank (ANZ) + 1.49% also restored some faith in our financials.
A slightly different story in resource stocks with BHP +0.42 % recovering at the close and South32 (S32) – 0.59% although RIO +0.90 % continued to find favour following results last week. Base metals stocks Oz Minerals (OZL) – 2.72% and Independence Group (IGO) -3.13% continued to lose ground as did Alumina (AWC) – 1.06 %. Gold stocks were a little shunned with Gold Road (GOR) – 2.94 % and Ashanti Gold (AGG) – 7.1 % the worst hit although Newcrest (NCM) -1.0 % seem to be sliding back to under 1000 cents. Energy stocks better today led by the majors Woodside (WPL) + 0.47 %, Oilsearch (OSH) + 1.17 % and Origin Energy (ORG) + 1.40 %.
In the industrial space telecoms were in favour TPG Telecom (TPM) + 2.2%, M2 Group (MTU) + 1.82% and Spark NZ (SPK) + 1.55% all outperforming as did Telstra (TLS) + 0.64 %. Utilities bounced back on bargain hunting as did consumer discretionary with Harvey Norman (HVN) + 3.83 % basking in the reflective glory of JBH.
Results are dominating the bourse today, JB Hifi (JBH) + % was a very welcome positive surprise as the May Budget seems to have had an immediate effect. A ‘solid result’ with more sales growth in July continuing with like for like sales up 5.7%Dividend also above expectations at 90 cents and a small buy back to boot.
National Bank (NAB) + 1.52% numbers this morning showed cash earnings of around $1.75bn for the quarter in line with forecasts. Underlying profit was up 2% below forecasts as the net interest margin declined but importantly the bad debt provision also fell heavily to a mere 0.13% below consensus of 0.17%.The tier one ratio was a healthy 9.94% and they look well placed to deal with APRA’s increased mortgage risk weightings from July 2016.
In second line banks, Bendigo and Adelaide Bank (BEN) – 2.62% has just beat consensus forecasts with a cash profit for 2015 of $432 million, up 13 per cent on the previous financial year, helped by another big jump in income from its unique Homesafe product. Statutory profit came in at $423 million, up 13.9 per cent, with income at $1.55 billion, up 7.4 per cent. The bank will pay a final dividend of 33c per share on September 30. Total dividends for the year are 66c per share.
CBA also announced today that they would be curbing loans on new housing developments for lots until all preliminary work had been completed. This will hit the first home buyers and seems to be in line with the whispers from the RBA and APRA to slow riskier lending in particular.
In corporate news G8 Education (GEM) – 1.28 % posted half yearly results up 73% to $28.2m as revenue rose 66% to $310.9m. EPS was up 60% with the dividend at 24 cents paid quarterly. A handy 7.77% yield. And fully franked.
Turning a corner as the battle for Affinity continues?
Last years’ darling has been stuck in the naughty corner this year on fears of paying too much for centres and echoes of ABC learning together with government moves on sector reforms. Perhaps the worst has been seen and with the takeover of Affinity , this one could see a rerating.
Big changes are afoot in Ruby League land with Nine Network (NEC) – 2.78 % today announcing they had paid a whopping $185m a year double what it is currently paying, for four live games weekly and State of Origin moving to a Sunday.
Long-time Kathmandu (KMD)- 1.93 % COO Mark Todd seems to have seen the writing on the wall and has exited stage left to be replaced by CFO Reuben Casey.
In economic news commercial loans fell 1 per cent to $47.62 billion, while lease finance rose 1.6 per cent to $546 million, according to the ABS. Housing finance for owner occupiers rose 5.5 per cent to $18.56 billion.
In Asia, the Japanese confidence indicator was the worst result since January at 40.3 versus 41.7 in June. The second lowest reading of the year. A reading below 50 means that the majority of households think that things are getting worse. It has not been above 50 since February 2006! However in positive news for the Uranium sector they said they would bring a nuclear reactor at Sendai online for the first time in two years under post Fukushima rules.
Quick round up of weekend Chinese data in case you missed it. It all points to continued economic weakness enabling the PBOC to stimulate the economy perhaps?
Exports fell 8.3 per cent year-on-year, versus expectations of a 1.5 per cent drop. It was the biggest fall in four months.
Imports fell 8.1 per cent, roughly in line with expectations. However the fall suggests domestic demand could struggle to offset the drop in exports.
Trade surplus shrank to $43.03bn from $53.25bn in June.
CPI rose 1.6 per cent rise in July from a year earlier as the price of pork increased. However producer prices slumped 5.4 per cent.
In Europe tonight we should get some more news on Greece and the negotiations on the EUD$86bn deal. And there is something rotten in the state of Norway as their reliance on oil income starts to bite.Unemployement has hit an 11 year high and with few other industries to keep the money rolling in looks like they will have to dip into their savings.
And finally just to give some background on the US market as we head into tightening, the spread in the extra yield bond investor require is at the most since 2012. Yield premiums on investment-grade debt widened to 1.58 percentage points from 1.10 a year ago, according to Bank of America Merrill Lynch index data. Now 70% of the time since 1996 the S&P has fallen by around 10%.Just something to bear in mind. As Evan Esar once said though ‘the definition of Statistics: The science of producing unreliable facts from reliable figures’.