And with that its goodnight from me and goodnight from Glenn.
Let’s start with some worrying news from Europe
French wine growers fear that this year’s vintage may be entirely spoiled due to the grape treaders’ sit-in.
OK back to normal!
ASX 200 drops 16 points to 5414 in quiet trade with RBA the focus. Resources continue to shine ahead of industrials as banks a little mixed. Asian markets post modest rises with Japan up 0.26% and China up 0.79%. AUD hits 76.24c as RBA stays its hand as Glenn bows out. and US Futures up 15.
STOCKS AND SECTORS
- Resources were patchy with iron ore miners positive with BHP +1.08% and Fortescue Metals (FMG) +2.99% and RIO +0.89% whilst golds slipped again led by Newcrest (NCM) -2.04% and Ramelius Resources (RMS) -2.50%.
- Coal stocks though back in demand as brokers are upgrading their forecasts on key coal prices. Whitehaven (WHC) +8.50% and small cap winner Stanmore Coal (SMR) +18.75% one to watch.
- Banks reversed some of the gains of yesterday although Bank of Queensland (BOQ) +1.60% managed to eke out some gains. REITS on the nose today though as some of the froth gets taken off the top accelerating after the RBA rate decision. GPT -0.96% and Stockland (SGP) -1.66%.
- Industrials weaker with pockets of positives. In the negatives were high flying Altium (ALU) -5.36% following a UBS downgrade due to the huge 60% run in the shares since mid-June and Aconex (ACX) -2.22% also slipped whilst other tech stocks did well. Class Limited (CL1) +5.04%, Adacel Technologies (ADA) +14.84% and Hansen Tech (HSN) +2.41%.
- Emperor stocks in the infrastructure sector appear to be losing some shine as Sydney Airport (SYD) -0.57%, Auckland Airport (AIA) -1.34% and Transurban (TCL) -1.87%.
- Telcos appear to be in the doldrums. Telstra (TLS) -0.58% continue to flop as the competition for NBN subscribers picks up. Also news today from Foxtel (50% owned by TLS) was not great as they try to compete with the new streaming services like Netflix. Plus, Optus has the EPL of course.
- Good bounce today from the aged care providers with Estia Health (EHE) +5.40%, Regis Healthcare (REG) +3.51% and Japara Heathcare (JHC) +6.03%.
- Speculative stock of the day: Big news in little China today with news that the Erdenet to Ovoot rail project in Mongolia has received an EOI from the China Development Bank to fund up to 75% of the project. Who benefits Aspire Mining (AKM) +66.67% which has a met coal project searching for a way to get to the lucrative Chinese markets.
- JB Hi-Fi (JBH) +5.57% has denied it has finalised plans to buy The Good Guys. It has said it has made no decision on the potential acquisition and will only pursue a takeover if it makes compelling sense for shareholders.
- NEXTDC (NXT) will conduct an accelerated non-renounceable pro rata entitlement offer to raise approximately $100 million at 374c and will raise a further $50m from institutional investors at 406c.
- Domino’s Pizza (DMP) -0.89% after news that Private Equity firm, Allegro had teamed with some former Maccas executives to take on Pizza Hut. Remember 94811111 seemed to be a household word some years ago and the Pizza Hut franchise still accounts for 10.7% of the market.
- Iluka Resources (ILU) -0.79% provided an update to the Sierra Rutile transaction which is conditional on the German Antitrust Authority saying ‘Ja’. The authority has deferred the decision for three months.
- Consumer confidence fell for the second week in a row, down a sharp 3.5% in the week ending 4 September. The decline in confidence was largely driven by households’ views over the economic outlook. Households’ views of the 12-month economic outlook fell a sharp 7.6%, while views of the five -year economic outlook dipped 2.7%.
- The AUD has taken the Current Account data in its stride with the RBA and the GDP numbers far more important. Post the numbers today the AUD has firmed slightly to 76.18c
- The current account deficit increased $636 million (+4%) to $15.535bn in the June quarter in seasonally adjusted, current price terms, according to latest figures from the ABS.
- Exports of goods and services rose $1.551bn (+2%) and imports of goods and services rose $0.899bn (+1%). The primary income deficit rose $1.351bn (+23%).
Following today’s slew of economic data, a number of high profile economists are now upgrading their GDP forecasts. Yes, upgrading.
- UBS has revised up their Q2 GDP growth to 0.6% from 0.4%, which would take year-on-year growth to 3.5%, the fastest since 2012.
- JP Morgan has similarly upgraded their quarterly forecasts.
- Citi’s Q2 GDP estimate is 0.7%. They do see risk though to the upside with 0.8% possible.
- CBA economists now see real Q2 GDP growth of 0.5%, boosting annual growth to 3.4%.
So will the RBA cut rates again? Probably not.
Back in 2006 when Glenn assumed the role the AUD was around 75c. Fast forward 10 years nothing has changed. Interest rates maybe? In 2006 the US rate was 5% and the RBA had 6%. Net a 1% difference. Here in 2016 a 1% difference. Proof that it is all relative.
The average house price in Auckland has surged above NZ$1 million for the first time.
- PM Abe told reporters at the close of a Group of 20 meeting in Hangzhou, China, that buying foreign bonds is illegal under the Bank of Japan Law if they are meant as a form of currency intervention. the BOJ said in July that it would undertake a “comprehensive assessment” of its stimulus program ahead of its policy meeting Sept. 20-21.
EUROPE AND THE US
Mildly positive European opening expected around 0.2% higher
- Theresa May may consider banning EU migrants from entering the UK unless they have a job.
- Daniel Craig has been offered US$150 to play James Bond for two new movies.
- Meanwhile a poll in the UK (there are a lot) showed that the dominant service sector rebounded by the biggest amount in 20 years. The Markit/CIPS UK services purchasing managers’ index rose to 52.9 in August, from 47.4 in July. The GBP jumped up to a seven year high.
- Bayer is in advanced talks to buy Monsanto for up to US$127.50 a share valuing the company at US$65bn.
A man was marooned on a desert island. One day a beautiful woman arrives in a wet suit. ‘When did you last have a smoke?’ she asks. ‘Five years ago.’ So she gets out a cigar and he smokes it. She unzips her wet suit a bit and says, ‘When did you last have a drink?’ He said, ‘Five years ago.’ So she gets out a bottle of Scotch and he has a drink. Then she unzips her wet suit a bit more and says, ‘And when was the last time you played around?’ He looks at her in amazement and says: ‘You’re not telling me you’ve got a set of golf clubs in there?’
For some time, my wife’s had this ridiculous idea that I’m playing too much golf. Actually, it came to a head at about 11.30 last night. She suddenly shouted at me: “Golf, golf, golf. All you ever think about is bloody golf!”. And I’ll be honest, it frightened the life out of me. I mean, you don’t expect to meet somebody on the 14th green at that time of night.
A grandfather has gone missing after eating four cans of baked beans, two cauliflowers and a jar of gherkins. His family have made an emotional appeal for him not to come home for at least a fortnight.