ASX 200 kicks 54.5 points to 6741 after RBA cuts rates 25bps as expected. US futures up . China struts its tanks and bombs. After a meandering day up until the RBA decision, the market took off led by a recovery in the banking sector. CBA up 0.6%, WBC up 0.2%. Bond yields fell and pushed proxies higher led by SYD up 2.7% and TCL up 2%. Consumer stocks too in focus as lower rates and better consumer sentiment helped. House prices too bringing a warm and fuzzy feeling to consumers with WES up 1%, TWE up 1% and WOW up 0.8%. Even TLS rose 0.8% today and healthcare stocks continue to bubble away. In Corporate news, KMD is buying Rip Curl for $350m, MSB is raising $75m and OSH fell 1.8% after announcing Peter Botten’s successor. 10-year bond yields fell heavily to 0.93% after rate cut with some economists now suggesting a move to 0.25% by mid next year. In Asian markets, China flexed its military muscles with ist biggest Parade ever and Japan rose 0.66%.
- ASX 200 up 54.5 points to 6741
- High 6741 Low 6688. Same range as yesterday. Coincidence. Think not.
- RBA cuts by 25 bps as expected.
- Consumer confidence and house prices rise. Market kicks.
- Banks head higher after rate cut. Consumer stocks in focus.
- Even materials work higher. Gold under pressure.
- Bond proxies rise on rate cut.
- AUD lower at 67.18c
- 10-year yields 0.93%
- Aussie gold lower at $2182
- Bitcoin rallies hard to US$8441
- US futures up 78.
- China closed and Japan up 0.69%. Parade dominates as HK protests.
- ISX +14.44% business update.
- FMG -0.57% broker downgrade.
- NUF +15.25% broker upgrades
- OPT +6.87% tax refund.
- JIN +6.24% Hits jackpot again.
- PET +3.08% new China contract
- FLC +11.70% gets a China contract too.
- SPL +6.09% change in director’s interest.
- WGX -7.20% gold loses lustre.
- CVN -1.28% drilling update.
- WEB -3.57% MS cuts price target.
- OSH -1.78% Peter Botten to step down. Next year.
- ALL +1.14% change in substantial holding.
- WES +0.98% DRP allocation price.
- BYE -9.72% MEL issues shares as bonus.
- CBA -0.56% completion of Count Financial sale
- OSX +9.90% kicks higher.
- MSB – trading halt but looking to raise $75m in capital raising.
- Speculative stock of the day: Actinogen Medical (ACW) +466.67% after a report that its Xanamem treatment for Alzheimers disease.
- Biggest Risers: NUF, ISX, PGH, OPT, TNE, JIN and OML
- Biggest Falls: WGX, HT1< MGX, HUB, WEB, IMD and VGI.
- Oil Search (OSH) –1.78% Managing Director Peter Botten to retire, effective 25 August next year. Botten will be succeeded as Managing Director by Dr Keiran Wulff.
- Westpac (WBC) +0.20% Ceases talks with American International Group over the sale of its life insurance business, following the departure of AIG’s global head of M&A.
- Suncorp Group (SUN) +0.95% To sell its smash repair business, Capital S.M.A.R.T Group to AMA for $420m. Suncorp will also retain a 10% stake in Capital S.M.A.R.T and a subsidiary Board seat. The after-tax profit on sale is expected to be in the range of $275-$295m.
- iSignthis (ISX) +14.44% Has seen a 360% lift in actual transactions processed on its Paydentity service. GPTV (gross processed turnover volume) exceeded $1.9B to 30 Sep 19.
- Kathmandu (KMD) – To buy surf brand Rip Curl for $350m. KMD will raise NZ$145M via an entitlement offer & use debt facilities to fund the acquisition.
- Phoslock Environmental Technologies (PET) +3.08% Has signed a contract to commence work applying its water treatment product, to the East Lake in Wuhan City, central China.
- GUD Holdings (GUD) +2.78% Outlook update at investor presentation; FY20 is expected to focus on medium-term value rather than short term EBIT growth. Modest EBIT growth is expected in FY20. Cash conversion still expected to remain near 80%. Regarding the automotive outlook, challenging trading conditions are expected to persist in the near term, although planned mitigation actions are in progress.
- Downer EDI Limited (DOW) +0.38% Has won a $200m, 2-year contract to provide mining and related services at the Goonyella Riverside coal mine, in central Queensland. The contract has provisions for a further three-year extension.
- RBA has cut the cash rate by 25bps to 0.75% as expected. The decision marks the third cut in 2019. The Aussie dollar initially jumped on the news but has since moved lower, currently sitting around US67.35c.
From the statement: The board revealed,
Reasonable to expect extended period of low rates.
The outlook for global economy reasonable, risks tilted to downside.
- Will ease further if needed to support growth and meet inflation target.
- Gentle turning point for the economy appears to have been reached.
- Outlook supported by low interest rates, recent tax cuts, infra spending, signs of stabilisation in housing.
- Outlook for consumption remains main domestic uncertainty.
- The board took the decision to lower interest rates further today to support employment and income growth.
- Forward-looking indicators of labour demand indicate that employment growth is likely to slow from its recent fast rate.
- Economy still has spare capacity and lower interest rates will help make inroads into that.
- Recent outcomes suggest Australian economy can sustain lower rates of unemployment and underemployment.
- Board also took account of the forces leading to the trend to lower interest rates globally.
- A$ at its lowest levels of recent times.
- In both headline and underlying terms, inflation is expected to be a little under 2 percent over 2020 and a little above 2 percent over 2021.
- Signs of turnaround in established housing markets, but new dwelling activity has weakened.
- Credit conditions, especially for small and medium-sized businesses, remain tight.
AMP Capital’s Shane Oliver predicts RBA will cut to 0.25% headline rate by March next year. Now that is scary.
- CoreLogic Home Value Index for September; National prices +0.9% (biggest rise since March 2017) Capital city prices +1.1%.
ANZ – Roy Morgan Consumer Sentiment looking positive.
- Confidence jumped by a solid 4.2% last week, closing above its long term average. The gain was broad-based with all the subindices rising.
- 2 – year bond yields tumble 9bps to 0.67%
- 3 – year bond yields fall 7 bps to 0.67%
- 10 – year bond yields down 5 bps to 0.96%
- China celebrates 70 years since it became the PRC. More a military warning though than a celebration. Very impressive. Markets now closed for a week.
- President Xi says the rise of China is unstoppable. Talks of a united China. Means Taiwan and HK watch out.
- Japan’s Government Pension Investment Fund, which manages nearly US$1.5tn in assets has re-appointed Hiromichi Mizuno as its chief investment officer.
- Exports from South Korea slumped for the tenth month in a row. Sentiment among Japan’s large manufacturers fell to its lowest level in more than six years.
EUROPEAN AND US NEWS
- Futures indicate a positive opening for Euro markets despite WTO tariff ruling to come.
- Credit Suisse scandal continues as COO resigns on corporate espionage scandal continues.
Here is September:
Investors around the world are obsessed with yield. In September companies issued US$434bn of new debt. A new record.
More Brexit discussions at Tory Conference in Manchester.
I asked my wife“ , what would you do if I won lotto?”
She said“ I’d take my half and then leave you!”
I told her “ Actually I won $12 today..
….so here’s $6, ..and I hope we can keep in touch….”
This was after this dinner part exchange….
Woman at cocktail party says to a man, who has annoyed her,
“ If you were my husband I’d poison your coffee!!”
He replies, “Ma’am, if you were my wife, I’d drink it!”