ASX 200 rose 66 to 6727 as banks rallied hard after NAB result. US futures down points. Banks roared out of the blocks as shorts covered their NAB bets and the results drove a sign of relief. Dividend cut but not franking. No capital raise only DRP. It was enough to kick the shorts into life. NAB rose 2.2% and WBC up 0.7%. MQG also did well up 0.9% and ASX bounced slightly by 0.8%. Healthcare stocks improved after some profit takers led by CSL up 1.1%. Consumer stocks were also solid with WES up 2.4% and COL up 2.3%. Tech shares bounced following better than expected XRO results. The stock ran 9.56% higher dragging  WTC up 3.3% and ALU +3.3%. In the miners BHP fell 0.4% and golds rallied as did bullion. NCM up 2.1%In corporate news, NAB the focus but JHX also produced a decent set of numbers up 7.77% together with CTD which showed FLT how its done and fell 5.5%. Z1P locked in a deal with Amazon Australia and soared by 16.9%.  In economic news, the trade balance came in very bullish at $7.53bn surplus spurring bulls into action. Meanwhile 10-year bond yields dropped to 1.20% and the AUD lower at 68.64c. In Asian markets, Japan fell 0.1% and China fell 0.2%

Todays Highlights

• ASX 200 up 66 to 6727. Good volume.
• High 6728 Low 6660. Top of the day.
• Bank rally drives markets higher.
• NAB results cheer. Could have been worse.
• Healthcare back in the pink. Bond proxies bounce.
• Trade surplus stirs bulls.
• 10-year bond yields jump to 1.26%
• AUD lower at 68.64c
• Aussie gold higher at $2172
• Bitcoin steady at US$9288
• US futures down points.
• Asian markets slightly weaker, taking a breather with Japan down 0.1% and China down 0.2%.

STOCKS

• WTC +3.33% tech bounce
• Z1P +16.86% locks Amazon in.
• APT -1.16% Misses out on Amazon.
• PPH +4.93% rally continues.
• PRN -10.73% attacks in Burkina Faso.
• AVH -2.96% off the boil.
• PDL -3.05% broker downgrades.
• EHL -2.70% bounce over.
• CGC +1.45% Riverland hail event update.
• EGI +5.31% strategy to close discount.
• TLX +7.88% broker comments following program update Q32019.
• ALL +0.97% director appointment.
• ORI +2.04% ceasing to be a substantial shareholder.
• FLT -5.47% loses a wing on downgrade.
• BOQ -1.25% six–year low.
• MPL +1.29% broker says end of upgrade cycle.
• Speculative stock of the day: ECS Botanics (ECS) +41.46% after announcing WOW would stock its partners, Just Food, hemp oil products. Total revenue forecasts are hard to quantify.
• Biggest Risers: Z1P, XRO, JHX, BIN, MTS, PPH and VRL.
• Biggest Falls: PRN, FLT, IFT, PET, JMS, MP1 and PDL

TODAY

• James Hardie Industries (JHX) +7.77% report adjusted NOPAT of $98.6m, ahead of the expected $89.3m. Revenue for the quarter came in at $660.1m, slightly topping the estimates of $657.9m, while adjusted EBIT of $134.2m also beat the $123.4m expected. The company expects FY adjusted NOPAT of $340-370m (up from prior guidance of $325-367m) and anticipate the North American fibre cement segment EBIT margin to be 25-27%. FY volumes from the Australian business are projected to grow above market, despite the addressable underlying market being expected to continue to experience a high single-digit percentage contraction in FY20.
• National Australia Bank (NAB) +2.23% report FY cash earnings of $5.10bn, down 11% on last year and shy of the $5.33bn expected. Cash earnings ex-items rose 0.8% to $6.55bn, while statutory profit came in at $4.8bn, down 14%. H2 net profit was 22% lower than that in H1 at $2.10bn. A fully franked 83c final dividend has been declared, in-line with 6 months ago. The bank’s credit impairment charges rose 18% for the year to $919m, while operating revenue fell 4.2% and expenses rose 0.2%. FY revenue from ordinary activities fell 6.1% to $17.93bn.
• SKYCITY Entertainment Group (SKC) -0.56% Trading update in investor presentation; the company continues to expect some growth in FY20 Group normalised EBITDA vs pcp on LFL basis. Domestic and international economic environments continue to be challenging with increased cost pressures. YTD Normalised Group revenue (incl IB) flat vs pcp on a like-for-like basis. Domestic revenue (excl. IB) +1.5% vs pcp on a like-for-like basis. Positive start in Auckland with growth across all business activities, particularly EGMs which have continued positive momentum from FY19. Good performance in Hamilton and Queenstown, with both properties trading ahead of pcp. Weaker performance in Adelaide – construction disruption ongoing.
• Xero (XRO) +9.56% reports H1 NPAT of NZ$1.3m, up from a NZ$28.6m loss a year ago. Revenue came in marginally ahead of estimates at NZ$338.7m, while adjusted EBITDA of $65.9m fell just short of the $67.1m expected. Free cash flow (FCF) of NZ$4.8m is up from -NZ$9.8m a year ago, while average revenue per user fell 0.4% to NZ$30.96. The company expects FCF in the FY to March 31st 2020 to be a similar proportion of total operating revenue to that reported in the year prior.
• Zip Co. (Z1P)+ 16.86% enter into a strategic agreement with Amazon Australia that will see Zip available as a payment option. The deal makes Zip the first BNPL option available on Amazon Australia. As part of the deal, Zip has issued an affiliate of Amazon warrants to acquire up to 14.6m ordinary shares, with 25% of the warrants vesting at the time of the agreement and the remainder subject to vesting milestones based on processed volumes.

ECONOMIC NEWS

Balance on goods and services

• In trend terms, the balance on goods and services was a surplus of $7.53bn in September 2019, an increase of $169m on the surplus in August 2019.
• In seasonally adjusted terms, the balance on goods and services was a surplus of $7.180bn in September 2019, an increase of $563m on the surplus in August 2019.
• 
• Very strong result beating expectations of $5bn

BOND MARKET

• 2 – year bond yields down 2bps to 0.85%
• 3 – year bond yields down 1bps to 0.89%
• 10 – year bond yields up 1bps to 1.20%

ASIAN NEWS

• Softbank shares take a hit on WeWork dud investment. US$6.5bn operating loss.
• US and China cooperate on fentanyl smuggling. A dawn of a new era?
• One of China’s top chip makers has denied it has defaulted and says it has plenty of money. Tsinghua Unigroup tried to reassure investors as its debt fell heavily.
• GDP in the Philippines in the July-September quarter grew 6.2% from a year earlier, the country’s statistics agency said, exceeding the 6.0% median forecast in a Reuters poll.

EUROPEAN AND US NEWS

• Boris gets off to a great start on Day 1. Trump considering signing trade deal in London a week ahead of election. The latest polls have the Liberal Democrats with 15% support, well below Labour’s 31% and the Conservative Party’s 38%. The Brexit Party had 9% support.

• Baidu recorded stronger revenue than forecast in the September quarter amid growth in video streaming.
• Democrats make gains in US state elections.
• Xerox makes a bid for HP worth US$30bn. Copy that.

 

And finally…

Clarence

XXXX