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Sums up reporting season really…the bigger the write off the biggest the positive move!!!!Makes perfect sense!!!

This is why!

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ASX 200 fell 20 points to 5542 as banks slid coupled with resources. Results continue to dominate coming thick and fast. Consumer stocks tried hard to lift the negativity. Asian markets down with Japan off 0.2% and China down 0.93%. AUD better at 76.26c and US futures up 2.

STOCKS AND SECTORS

  • Banks sagged today after a couple of days of gains, Westpac Bank (WBC) 1.27-% the worse of the bunch. Wealth manager Platinum (PTM) -8.58% had a day to forget post the results.
  • Materials and resource stocks came in for a battering following a stronger USD overnight. BHP -1.82%, RIO -1.45% and Fortescue Metals (FMG) -3.98%. Base metals and lithium stocks on the nose too. Galaxy Resources (GXY) -3.66%, Pilbara Minerals (PLS) -2.80% and Independence Group (IGO) -3.42%. Reality bit today for Western Areas (WSA) -13.23% following the results underwhelming and falls in the nickel price recently.
  • Gold shares hit hard with Gold Road (GOR) -6.02%, Beadell Resources (BDR) -10.34% and Lithium Orocobre (ORE) -5.11% finding few friends.
  • In energy stocks Woodside (WPL) +1.39% bucked the trend on broker upgrades and Caltex (CTX) +3.18% after further analysis.
  • Industrials were mixed as Blackmores (BKL)-4.20% continued to slide. Consumer stocks took their cue from Woolworths (WOW) +3.92% with Wesfarmers (WES) +2.42% getting dragged along for the ride together with Metcash (MTS) +6.31% following a successful capital raise and purchase of HTM. Not so much fun though in the media sector with Ooh!Media (OML) -5.10% savaged after the results sank in. Village Roadshow (VRL) 9.32-% reported and wished they hadn’t. Macmillan Shakespeare (MMS) -6.95% dropped like a rock.
  • Speculative stock of the day: Ausdrill (ASL) +37.08% after announcing a significant business turnaround late last night. Profits of $58.2m with the focus on serving the gold sector paying off.

CORPORATE NEWS

  • Woolworths (WOW) +3.92% Underlying net profit fell 64.4% to $803.5m. The dividend was slashed by 54%, from 72c to 33c. Importantly for the market, the company has now solved the hardware question with a three-pronged solution. They have sold Home, Timber and Hardware to Metcash (MTS) +6.31% sold the actual property to a consortium and will conduct a fire sale of the inventory. Job done. The three way will raise around $1.5bn but after costs around $500m. Not bad for a $3.3bn investment in the business. Expensive lesson. Seems there is other stuff you don’t learn at MBA school.
  • Billabong (BBG) -10.19% announced a FY loss of $23.7m. The bottom line has also been hit by reducing excess inventory in the US. The company boosted revenue by 4.5% to $1.1bn.
  • Breville (BRG) -0.63% net profit rose 7.5% to $50.2m last financial year, with revenues up 9.4 % at $576.6 m. Breville will pay a final dividend of 14c a share. The region continued to face challenges.
  • Nine Entertainment (NEC) +0.98% has reported $120m in net profit, a decline of 7%, with earnings from television decreasing 11% while digital profits increased nearly 20%. Nine will pay a fully franked final dividend of 4c. According to the report the little incident in Lebanon on 60 Minutes cost around $7m to sort out.
  • Amcor (AMC) +4.44% has announced a US$671.1m net profit for the 2016 financial year for its underlying business, up 7.5% in constant currency terms. The company declared a final unfranked dividend of US22c.
  • Flight Centre (FLT) +0.64% revenue rose 11.2% to $2.7bn, underlying profit was down 3.8% $246.7m due to lower margins in Australia and investment in new businesses and technology. The result was below expectations of a profit of $254 m. Final dividend of 92c, which was 5c lower than the previous year.
  • South32 (S32) -1.95% Impairments of $US1.7bn recorded in the first half. Underlying earnings of $US138m, down 76% from $US575m beating estimates of us$105m. Maiden annual dividend of US1c.
  • Retail Food Group (RFG) +7.54% which owns brands like Donut King and Brumby’s Bakery, will pay $88m for food manufacturer Hudson Pacific Corporation. RFG also announced a 79.1% rise in net profit to $61.3m.
  • AWE -15.08% has posted a heavy $363m full-year loss as the collapse in oil hit hard. The loss was deeper than the $230.2m deficit the previous year and came on sales that dropped 28% to $204.1m.
  • Mesoblast (MSB) -2.14% reported a much narrowed full year loss of $US4.1m, down from $US96.2m, although this was mostly due to an $86.7m tax benefit. The company has $US80.9m in its cash reserves.
  • MYOB (MYO) +10.07% has moved into profit posting an interim net profit of $26m. The company is on track to achieve the guidance given when it floated.

 

ECONOMIC NEWS

  • Treasurer Scott Morrison has warned gross debt will exceed $1 trillion in a decade under a worst case scenario. Debt and deficit will continue to worsen and there is no realistic prospect of a return to balance. Back to ‘debt and deficit’ from ‘jobs and growth’. Love three word slogans.

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The three debt scenarios:

  • I am Deputy PM hear me roar. Agricultural minister Barnaby Jovce has launched a thorough investigation into the dairy industry in an effort to get to the bottom of this ‘fiasco’. Much of the investigation will focus on Murray Goulburn (MGC) -%.

ASIAN NEWS

  • GDP is dead. Long live Nominal Expansion it seems. At least in China. This number has risen by 1.3% might explains why the authorities have not added more stimulus measures to the fire.

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  • Nominal expansion is a measure that’s unadjusted for price swings.
  • Seems it is a global problem with the Bank of Korea worried about the explosion in debt to fund apartment speculation. Household debt including credit purchases rose by 33.6 trillion won ($30.1bn) in the second quarter to 1,257.3 trillion won. The government will introduce risk management practices for some types of real estate loans with stricter loan screening for so-called collective loans by buyers of new apartments.

EUROPE AND THE US

Weaker opening in store for Europe .

  • Looks like traders are not the only thing on holiday. Volatility has dropped dramatically with the VIX not moving by a point in a single session since the day after the Brexit vote.

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  • Volume too has gone AWOL from the US.

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  • The feud between the US and the EU continues as Brussels demands tax from Apple and others. The US Treasury Department has warned the European Commission about taking action against US companies over tax avoidance allegations. The regulator said action by Brussels would make it into a “supra-national tax authority” overriding the tax codes of its member states.

And finally….

A wise person once said:

1. We all love to spend money buying new clothes but we never realize that the best moments in life are enjoyed without clothes.

2. Having a cold drink on hot day with a few friends is nice, but having a hot friend on a cold night after a few drinks – PRICELESS.

3.. Arguing over a girl’s bust size is like choosing between Fosters, Carlsberg or Carling.
Men may state their preferences, but will grab whatever is available.

AND

4. I haven’t verified this on  Google but it sounds legit.  A recent study found that women who carry a little extra weight live longer than the men who mention it.

are we there yet

Reporting season!

Clarence

XXXX

NT Markets

Get a Global take on things at http://www.ntmarkets.com

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