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ASX 200 Down 91.1 points at 5382.1.CBA rights issue weighs. China surprises again (and again). Results under deliver.US futures down 123.AUD 72.62.
Oops I did it again! This seemed to be the refrain from the PBOC today as the ‘Yuan Off’ revaluation yesterday turned into a ‘two off’ revaluation with another one this morning of around 1.6%. This was enough to once again send the market into a spin. After opening up relatively calmly considering the negative sentiment from a falling US, falling commodity prices and more importantly a well telegraphed rights issue from Commonwealth Bank. The banks even opened up which was a positive sign but all this peace was shattered again at around 11.30am as the PBOC moved the goalposts, again.
CBA issue and bad results then PBOC moves at 11.30am
- Results are coming thick and fast and they are not particularly inspiring. Computershare (CPU) -9.32% joined the naughty children in the corner as did Oz Minerals (OZL) -5.12% and Carsales (CAR) – 6.41%. CSL -2.22 % also reported today and were mildly underwhelming but hardly surprising given the massive run they have had recently.
- There was nowhere to run in the market today as resource stocks were very weak early RIO (ex dividend 144.41 cents) -5.4% , BHP -4.33 % and Fortescue Mining (FMG) -7.97 %.Energy shares also fell into a barrel with OPEC production increase hurting the oil price, Woodside (WPL) -3.77 %, Oil Search (OSH) -3.13 % and Santos (STO) – 4.85 %.The only green on screen in the resources, and most sectors ,was the gold stocks which proved a slight hedge against the market falls. Northern Star (NST) + % and OceanaGold (OGC) + % were the best of the best.
- Meanwhile in the industrials only the healthcare showed any signs of not throwing in the towel. Resmed (RMD) -0.4 %, Sonic Healthcare (SHL) + 2.77 % and Cochlear (COH) + 1.72 % all green. Financials struggled manfully to throw off the CBA result and capital raising (Result was goodish) but succumbed to the inevitable with National Bank (NAB) – % the worst and the others off around 1.5%.The ASX 200 performance would have been worst too had Commonwealth Bank reopened after the trading halt.th result was a huge $9.14bn, a record, but maybe this is as good as it gets for banks. The profit result is up five per cent from last year’s $8.68 billion result and is largely in line with expectations and lifted the final dividend four cents to $2.22 per share, fully franked, which is slightly below expectations of a $2.25 pay out.
- Gaming stocks took a battering following Echo Entertainment’s numbers with Echo (EGP) -2.35 %, Crown Resorts (CWN) -3.77 % and Aristocrat leisure (ALL) -2.83 %.Crown has its results tomorrow. The Echo results were good but not good enough to sustain the huge rally they have had this year. Echo’s net profit rose to $169.3 million in the year to June 30, up 59.3 per cent from$106.3 million a year earlier. Looks like the new year has started well with Asian whales continuing to stream into the Gold Coast and Sydney. However, refurbishments and expansions at Jupiters Gold Coast and The Star were likely to cause some disruption to business.
- Financial solutions provider FlexiGroup (FXL) – 6.61 % continues to fall, down as much as 7.8 per cent to its lowest since June 2012. Seems the sudden resignation of the CEO and CFO is having a nasty effect on confidence in this one plus some profit downgrade issues as they lose business to outright buyers of technology on the tax breaks offered now.
- REA Group (REA) – 3.81 % has reported underlying net profits after tax of $185.4 million for the full-year, up 24 per cent, on revenues 20 per cent higher at $523 million. Sales for the online real estate giant, which is paying a final dividend of 40.5 cents per share, were slightly below consensus forecasts of $528 million.
- Origin Energy (ORG) -3.05 % will take a further $337 million of write-downs on its oil and gas business due to the slump in prices and cuts to reserves, but its $24.7 billion Australia Pacific liquefied natural gas project in Queensland has escaped any hit.
- In economic news the Westpac-Melbourne Institute Consumer Sentiment Index rose by 7.8% in August from 92.2 in July to 99.5 in August. A surprising result but experts put it down to a Greek resolution and Chinese equities improving, plus we suspect the government being away for their winter break.
- The Australian Bureau of Statistics said this morning private sector wages, excluding bonuses, grew just 0.5 per cent in the June quarter, or 2.2 per cent over the year. This is the slowest rate of growth in the history of the data series, which started in the September quarter of 1998
- One of the results of the now ramped up currency wars is the peripheral currencies. Some of the biggest losers are listed below. For those with long memories of the Asian Currency Crisis back in 1997 this will resonate. Vietnam has widened the trading band on its own currency, citing the move by China’s central bank as a reason, which underscores the risk that the yuan’s drop could spark a round of competitive devaluations.
Currency wars are back!
From the Wall Street Journal
Yuan more reason to let the currency fall
- In Asian markets, Japan down 1.58 %,Hong Kong down 1.96% and Shanghai down 0.19% with China’s retail spending, industrial production & investment data a little weaker than expected.
- This is one to avoid but says something about the state of the market. Citrus fruit grower Dongfang is hoping to list on the ASX whilst seeking $400m from new shareholders, they are a growing number of Chinese companies looking to list a Chinese business here. Straight to the pool room.
- Another big day tomorrow as Telstra delivers its’ first set of results under Andy Penn. They look to deliver a $4.2 billion net profit for the 2015 financial year and a 30.5c per share dividend. Any miss will be punished.
- Suspect there will be screaming from the US corporates tonight on the PBOC moves and more weakness from the likes of Apple on increased costs and a weaker Chinese economy. Donald Trump will have plenty to say no doubt.