The ASX 200 rose 19 points to 6094.5 in average volume. Dow Futures are slightly positive. Another convictionless day of trade. Banks ended mixed as we await news from APRA next week on dividends. CBA fell 0.5% and the Big Bank Basket fell slightly to $128.66. The economy took centre stage with the $185bn deficit widely expected. Its bad but could have been worse and we all know its necessary. The surging AUD is the other big story as the USD falls. Good time to go overseas. If only. Miners sagged on the stronger dollar as did CSL down 0.1%, BHP down 0.7% and RIO off 1.0%. Even FMG fell 0.3% with gold miners suffering despite higher bullion prices. Quarterly results and business updates continue to come thick and fast, STO rose 3.5% after its quarterly. Elsewhere industrials were mixed as consumer stocks fell slightly WOW down 0.5% and COL down 1.3%. WES fared better, closing up 1.0% and the REITs were positive as GMG closed up 1.6%. Tech was an interesting place to be as some second liners too off. YOJ up 42.9% after its platform proved scalability, QFE up 15.8% as a BNPL for accountants and legal services. 3DP had a stunning day following its quarterly and TNT exploded higher on an acquisition up 50%. The All Tech Index flatlined as WSP had a strong day up 9.5%. In economic news it was all about the July Economic and Fiscal Update (JEFU). Big deficit but not unexpected or unwarranted. The AUD rising slightly to 71.52c. The 10-year yield is becalmed around 0.86%. In Asia ,Japan was closed for its Ocean Day. Snorkelling compulsory and China down 0.7%

Today’s Highlights

• ASX 200 rallies 19 to 6094.5.
• High 6103 Low 6052. Below average volume.
• JEFU takes centre stage and in line with expectations.
• Big Bank Basket $128.66.
• AUD strength hurts big miners.
• All Tech Index fell 2.1%
• 71 trading days until the US election.
• Dow Futures up 20.
• 10-year bond yield steady at 0.86%
• AUD steady at 71.52c
• Aussie gold better at $2614 little muted given strong AUD.
• Bitcoin rallies to US$9501
• In Asia, Japan closed for the Day of the Ocean and China down 0.75%

STOCKS

• EOS +10.82% buyers are back.
• DDR +7.23% AGM presentation
• PBH +4.41% details of results presentation.
• NEA -3.61% profit taking.
• BGL -3.64% SPP sellers take profits.
• MMM -8.86% fails to deliver for once.
• HLO -5.83% retail offer opens.
• NVX +12.15% webinar tomorrow.
• CCL +5.41% rallies on write down.
• MQG -0.15% JP Morgan remains overweight.
• QFE +15.79% results of meeting.
• BRN +13.64% scientific advisory board appointment.
• TNT +50.00% explodes on Canberran acquisition.
• 3DP +15.15% off highs but still solid.
• RED +11.11% gold price rise.
• FXL +4.51% playing some catch up.
• AMX +13.39% trading update.
• CBR +17.57% cashflow.
• OPT +16.09% to present its OPT-302 DME at ASRS 2020.
• Speculative Stock of the Day: Traka Resources (TKL) +250.00% the company has secured a Mt Caitlin gold project in exchange for its 20% free carry in the Galaxy Resources (GXY) project.
• Biggest Rises: OPT, EOS, NWH, DDR, DEG, CCL, WEB and TAH.
• Biggest Falls: SIG, BGL, NEA, MFG, JLG, TPG and TNE.

TODAY

• Cooper Energy (COE) +1.22% Full-year production 1.56mboe vs guidance 1.2mboe. Q4 production 0.61mboe vs quarter-ago 0.28mboe. Q4 revenue $24.1m vs quarter-ago $15.0m. Anticipates a substantial increase in production in FY21.
• Megaport (MP1) -1.49% Q4 revenue $17.0m, up 12% vs quarter ago. MP1 is looking to achieve EBITDA breakeven by the close of Fiscal Year 2021.
• Tabcorp (TAB) +4.93% MD and CEO David Attenborough to retire in H1 of CY21. Steven Gregg to succeed Paula Dwyer as Chairman.
• Superloop (SLC) -2.54% Midpoint of FY20 EBITDA $12-15m guidance achieved. Group revenue of $107m up 37% vs year ago. Supported by strong growth in underlying recurring fibre connectivity revenue. Notes a $50m reduction in capital expenditure as a result of major network infrastructure completed in FY19.
• Galaxy Resources (GXY) +9.55% Q2 production volume 30.9K dry metric tonnes (dmt) vs quarter-ago 14.3K dmt. Guides FY20 total material mined between 1.6-1.8m bank cubic metres (bcm), unchanged. Remains on track to achieve the key operating parameters of the mine and processing plan for 2020. Concentrate production volume for Q3 2020 is expected to be between 26,000- 1,000 dmt. Forecast H2 production volumes plus existing final product stocks are sufficient to meet Galaxy’s customer requirements in 2020.
• Northern Star Resources (NST) – Q4 gold mined 262,717oz at AISC of $1,475. In FY20, Australian operations sold a record 727,352oz at AISC of $1,350/oz (US$887/oz), vs guidance of 720,000oz – 800,000oz.
• Santos (STO) -0.19% Q2 production (mmboe) 20.6 vs quarter-ago 17.9. Sales volume (mmboe) 24.6 vs quarter-ago 17.9. Sales Revenue US$785m vs quarter-ago US$883m. Liquidity of over $3bn at the end of the quarter. Narrows FY production guidance to 83-88mmboe vs prior 81-89. Sales volume guidance cut to 101-107mmboe vs prior 101-109. Capex ~$750m, unchanged. Upstream production costs expected between 8.50-8.90/boe.
• Coca-Cola Amatil (CCL) +5.41% Expects to incur non-cash impairments in the range of $160m $190m (post-tax) in its 1H20 accounts. Experienced improvement in trading conditions in its major markets in June, reflecting the gradual easing of COVID-19 related restrictions.
• Evolution Mining (EVN) -2.02% Q4 gold production 218,104oz at AISC of $1,088/oz. Full-year gold production came in at 746,463oz at an AISC of $1,043/oz. Australian operations produced 719,035oz vs guidance of 725,000oz and AISC of $1,008/oz vs guidance of $940-990/oz.

ECONOMIC NEWS

Budget update:

• Budget deficit estimated at $85.8bn in 2019/20, $184.5bn in 2020/21
• Real GDP is expected to be down 0.25% in 2019/20 and 2.5% in 2020/21
• Unemployment rate 7% in 2019-20, expected to peak at 9.25% in the December quarter this year, 8.75% in 2020/21.
• Forecasts for metallurgical and thermal coal were lowered to US$110/t (FOB) and US$54/t respectively. Iron ore forecasts were maintained at $US55 a tonne before freight charges.
• The government assumes a Tapis oil price of $US34 a barrel, down from $US64 a barrel.
• Net debt predicted to hit $677.1bn in 2020-21, at 35.7% of GDP.

• Inflation and wages are both seen rising 1.25% in fiscal 2021
• Iron ore is assumed to fall to $55 a ton at the end of this year. The spot price is currently trading above $100. Gives the government plenty of upside surprise.
• Moody’s expect us to keep our AAA rating despite budget issues.

COVID-19 NEWS

• China will provide a US$1bn loan for Latin American and Caribbean countries to have access to its Covid-19 vaccine.
• Three cases linked to a seafood processing plant have emerged in Dalian.
• Hong Kong’s government issued a statement correcting the number of imported cases on Wednesday to 11 from 8.
• Buenos Aires province, the epicentre of the pandemic in Argentina, will give people with mild cases of coronavirus 500 pesos (US$6.97) a day if they stay for 10 days in government facilities.
• California is now the state with the most CV19 cases.

BONDS

ASIAN NEWS

• China bans EPL coverage.
• South Korea has officially fallen into recession as GDP fell 3.3% from the previous quarter.
• Japanese Happy Ocean Day. Markets closed.
• MS has blocked remote access for Chinese interns.
• China considers cutting HK US consulate in retaliation.
• UBS says Chinese economy will grow 2.5% this year.

EUROPEAN NEWS

• Mitch McConnell may unveil the GOP stimulus plan today.
• Houston we have a problem. US closes Chinese consulate.. More retaliation to come. Maybe China closes Wuhan consulate.
• Twitter subject to another cyber attack.
• Former Wirecard CEO rearrested, accused of fraud again.
• Tesla hits milestone and Elon gets a lazy US$2.1bn bonus. S&P 500 inclusion pending. Index funds will have to buy it here. That will hurt.
• Pfizer deals at US$20 a dose gives others benchmark and a cap on pricing. Let’s hope it works.

And finally….

I saw the lead singer from Nirvana’s wife fishing by the river this morning “ Courtney Love “ I shouted. “Not yet, buts it’s still early” she replied….may need to think about that or be English

Started my job as a carpenter today. We’ve only just begun but I’m feeling top of the world.

 

Was everybody really King Fu fighting?

Clarence

XXXX