ASX 200 closes down 20, to 6533, but far from out, as early falls give way to a late rally. Dow Futures up 198 points. Ex dividends knocked the index together with US markets. Banks bore the brunt early before some late buying, as brokers have been looking at Net Interest Margins (NIM) and pressure on banking profits. CBA dropped 0.1% and WBC down 0.3%. Other financials showed losses with MQG down 0.45% and MPL down 3.95%. Big miners were under some pressure as BHP fell 0.3% but FMG managed a rally up 2%. Gold miners were a bright spot today, NCM rose 2.5%, EVN up 3.1% and NST up 3.1%. Healthcare was a little under the weather led by CSL down 1.5%. TLS slipped 1.1% and CIM resumed its downturn falling 4.6%. In economic news GDP came is as expected at 0.5% making it 1.4% for the year and confirmed a slowing economy. AUDfirmed on the news as it could have been worse. 10-year bond yields down slightly at 0.91%. Asian markets were quiet and mixed Japan fell 0.26% and China rose 0.17%. HK’s Carrie Lam has withdrawn extradition bill. Market up 2%.

Today’s Highlights

• ASX 200 down 20 to 6533
• High 6559 Low 6504. Stronger volume today.
• Plenty of stocks ex-div and index changes helping some.
• Banks suffer as brokers question NIM.
• Miners mixed. Gold stars.
• Healthcare weakens.
• Energy sector softens. Industrials mixed.
• AUD lower at 67.77c
• 10-year yields 0.93%
• Aussie gold slightly higher at $2269
• Bitcoin slightly higher to $10536
• Dow futures up 198.
• Asian markets were quiet and mixed Japan fell 0.26% and China rose 0.17%.

STOCKS

• MTS +3.53% broker upgrade.
• WSA +0.99% nickel price hanging in.
• DDR +4.23% research piece.
• AVH +11.96% US listing.
• Z1P +9.22% index changes.
• GOR +4.23% gold price rise.
• CSR -6.55% broker downgrade.
• PET -3.59% buyer of director’s stake revealed
• CIM -4.58% sell-off resumes.
• SPT +6.12% investor webcast
• DUB +6.35% chart break out.
• BGL +8.77% gold price.
• M7T -7.86% profit-taking.
• HE8 -7.69% Presidio 141 No 2 well update
• CVN -unchanged- drilling results Dorado 3.
• Speculative stock of the day: Big Star Energy (BNL) +12.50% good rise. Good volume. Helium gas survey news lifting shares higher.
• Biggest Risers: AVH, Z1P, GOR, DDR, APE and SWM
• Biggest Falls: CSR, EHL, PNV, BVS, CIM and PPT

TODAY

• Bank of Queensland (BOQ) –0.88% ASIC has started legal proceedings against BOQ in the Federal Court relating to unfair contract terms in certain small business contracts entered into between November 2016 and June 2019.
• PIlbara Minerals (PLS) – executed a Share Subscription agreement with China’s largest EV battery manufacturer CATL who will emerge with a 8.5% stake following completion of a $55.0m strategic placement at 30c. The company will also do a placement to instos at 30c and an SPP (can subscribe for $30K) to raise a total of $91.5m. Equity raising will strengthen the company’s balance sheet and provide increased working capital during the remaining ramp-up of the Pilgangoora operation to nameplate capacity, as well as funding for PLS’s participation in the POSCO Downstream JV chemical conversion plant, Stage 1 improvement projects and Stage 2 expansion studies.
• Phoslock Environmental (PET) -3.59% Substantial shareholder notices lodged. 5.55% to ZZl as Link Traders (Laurence Freedman) sells down to 12.4% from 16.7%
• Reece Holdings (REH) +0.10% has expanded its presence in the US with the $US160m ($236 million) acquisition of Todd Pipe & Supply. REH will pay $US112m, with an additional $US38m deferred until December 2021 and dependent on the business reaching certain milestones. The acquisition is debt and cash funded.

ECONOMIC NEWS

• The AIG Performance of Services Index rose 7.5 points to 51.4 in August (seasonally adjusted), marking the return to mildly positive conditions following a weak month prior.

GDP

• The economy expanded by 0.5% in the June quarter, taking year-on-year growth to 1.4%. Government spending was the main contributor to growth in domestic final demand, reflecting ongoing delivery of services in disability, health and aged care. (That’s not a great thing in terms of productivity)

 

BOND MARKET

• 2 – year bond yields rose 2bps to 0.76%
• 3 – year bond yields rose 1bps to 0.71%
• 10 – year bond yields down 2bps to 0.91%

ASIAN NEWS

• JP Morgan has forecast that Hong Kong house prices could fall 30% in a worst-case scenario with retail sales falling by a similar amount and prime office rents sinking 40%. Activity in Hong Kong’s private companies fell to a new decade-low.
• China softened its tone toward Hong Kong’s protesters, saying peaceful demonstrations were allowed under the law. China also strongly backs Chief Executive Carrie Lam, saying an emergency law could be implemented if necessary and pledging support for the economy.

EUROPEAN AND US NEWS

• Hurricane Dorian heads for US.
• Hurricane Boris heads to Parliament. When they talk about the Westminster system, not sure this is what they meant. Another huge day in Parliament in the UK. Boris expected to lose crucial vote but may not have the numbers for the General Election to be called. Meanwhile the UK Chancellor is set to reveal new spending plans. More like an Election spend. Could be in limbo until next week because of how the election mechanism works. 21 Tory MPs sacked last night after siding with Rebel Alliance.
• The Speaker of the House is the Headmaster I always wanted.
• More importantly the Ashes resumes at Old Trafford today. Archer against Smith. Stokes against everyone.

And finally…………

Clarence

XXX

Heading off for three weeks in Italy and Croatia.

Mind how you go.