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A snapshot of today:
What happened today?
ASX 200 closes up 1.5 points at 5269.7. Chinese GDP data fails to inspire after early gains fade. Shanghai up slightly with US futures showing a loss of 52 points.
- Resource shares dragged the market down today despite better than expected GDP numbers from China.
- Banks were dominated by moves in Westpac Bank (WBC) +3.66% coming back on stream after the fundraising from institutions was completed. The company revealed better than expected numbers plus a significant interest rate increase when it announced its $3.5bn right issue last week. A higher dividend and positive outlook statement meant the stock was playing catch up today. The rest of the sector was unable to match the strong lead from WBC and languished with small moves, either positive or negative. Insurers and wealth managers were mostly firmer led by QBE+2.58% and Challenger Financial (CGF)+3.41%. Insurance brokers were also in demand, Clearview Wealth (CVW) +2.73%, Austbrokers (AUB) +0.5%, Steadfast Group (SDF) +1.69%.
- Telstra (TLS) -2.57% continued to slip on news it would take a $80m hit due to ACCC changes. While Hutchison Telecom (HTA) +1.15% rose as investors switched to Vodafone from Telstra.
- In other industrials, consumer discretionary stocks retreated. Crown Resorts (CWN) -1.0%, Flight Centre (FLT)-1.81%, Harvey Norman (HVN) -1.81%, CIMIC(CIM)-1.03% and Seven West Group (SVW) -1.57%. Cabcharge (CAB) -5.4% continues to trend lower as industry anti-Uber app ‘ihail’ is blocked by ACCC as it does not allow any payments apart from cabcharges.
- In the miners BHP -1.16%, RIO -0.63% and Fortescue Mining (FMG) -4.17% all fell but South32 (S32) +2.03% bucked the trend.
- Gold stocks eased back after their stellar run today. Newcrest Mining (NCM) -3.38%, Evolution Mining (EVN) -5.77% and OceanaGold Corp (OGC) -4.71% all pausing for breath.
- Energy stocks were mixed – Woodside (WPL) +2.04% and Oil Search (OSH) +0.41% the winners, while WorleyParsons (WOR) -3.85% and Santos (STO) -1.44% fell back to earth.
- Westpac Bank (WBC)+3.66% after the entitlement offer resumed trading today. The offer allows shareholders to buy one new share for every 23 held at $25.50 a share, a discount of 13.6% to the dividend-adjusted pre-raising price of $29.50.
- Arrium (ARI) +14.29% shipped 2.2 million tonnes of iron ore from its South Australia operations in the three months ended September 30, down 20% on the prior quarter. Arrium slashed its production heavily this year by mothballing its higher cost South Iron mine, taking its iron ore export business from 13 million tonnes a year to between 9 million and 10 million tonnes a year. The company said that it realised an average sales price of $US48 a tonne during the quarter, down $US4 a tonne. In Australian dollar terms, the average sales price was $66 a tonne, a decrease of just $1 a tonne.
- Treasury Wine Estates (TWE) +14.63%, a strong performance as the stock resumed trading today. The market appears very happy with the Diageo acquisition, and the demand for the capital raising was very strong. The rights closed at 170c.
- Commonwealth Bank (CBA) -0.16% will refund $7.6m to thousands of agribusiness customers who were hit with unfair fees on one of the bank’s products.
Local property specialist SQM Research has predicted Sydney prices will grow 4%-9% next year compared with 18.9% this year. Melbourne is predicted to grow around 8%-13%.
Japan down 0.73% while Shanghai up 0.15% and Hong Kong 0.53% down.
- Chinese GDP numbers at lunch time helped buoy the market after losses mid-morning. September quarter GDP came in at 6.9% from a year earlier, or a smidgen below Beijing’s 7.0% guidance. It was above economists’ expectations of 6.8% growth and well above ANZ’s gloomy forecast.
- Chinese industrial production rose 5.7% from a year earlier, below predictions of a 6.0% rise, while retail sales rose a healthy 10.9%, a tad ahead of the predicted 10.8% growth. And fixed asset investments growth was 10.3%, again below forecasts of a 10.8% rise.
- Economic forecaster Fathom Consulting carries out its own measurements of the Chinese economy as it feels the official numbers do not offer a true picture of the economy. Using industrial indicators and credit growth they come up with the Li index of what concerns the party machine. Currently their index is showing the economy is growing at around 3%, not the 6.9% announced today.
- China’s richest cities are generally regarded as Beijing and Shanghai as well as the southern manufacturing hubs of Guangzhou and Shenzhen. Experts say there are signs that Shanghai and Shenzhen, in particular, are overheating. Average new home prices in Shenzhen are up 31.3% yoy in August, according to official data, much higher than the next highest yoy growth of 5.6% recorded in Shanghai.
Disposable Income in China:
- Urban Per Capita (+8.4%) to $3698
- Rural Per Capita (+9.5%) to $1305
Ahead in Europe and US
- President Xi Jinping will start a state visit to the UK today, as a number of huge deals look set to be announced. Nuclear power plants and the new Silk Road are high on the agenda.
- The UK and China are on the verge of signing a new nuclear power station deal in what is being hailed as a ‘Golden Era’ of Anglo-Sino relations. UK Chancellor Osborne announced that the government will provide a guarantee of 2 billion pounds (US$3.1 billion) for the construction of the UK’s first new nuclear power plant in three decades to be built in Somerset. China General Nuclear Power Corp. and China National Nuclear Corp. are poised to invest in the project being led by Electricite de France SA.
- The US government has announced new curbs on oil and gas exploration in Arctic waters off Alaska’s northern coast. It comes after oil giant Royal Dutch Shell last month stopped its Arctic activity citing “disappointing” tests. The US interior department said it was cancelling two potential Arctic offshore lease sales and would not extend current leases.
- Big changes ahead at Deutsche Bank as the group looks to be splitting in two. Deutsche said that its investment bank, which is Europe’s largest, will be divided into two divisions: a new unit called Global Markets, comprising sales and trading activities, and another called Corporate & Investment Banking, incorporating its corporate finance and global transaction banking operations.The new CEO Cryan is due to update the market on his five-year plan at the end of the month.
Ahead in European Markets
- FTSE down 5 at 6373
- DAX down 17 at 10088
- CAC down 7 at 4696