The ASX 200 traded in a narrow range, closing down 7 to 6132 as miners tumbled and CBA reported a 11% drop in profits and a 98c dividend. The Big Bank Basket was slightly higher at $129.66 though CBA gave up some early gains to close down 0.5%. The other three saw buyers on a relative value basis, WBC up 2.3% and NAB up 2.2% on reports of cost cutting. The mining sector was a sea of red with iron ore miners under the thumb despite price rises in the commodity, BHP lost 0.7% and FMG down 1.4%. Energy stocks were becalmed with WPL up 0.9% and STO down 0.9%. Golds were ugly as expected as the bullion price tumbled in any currency. NCM lost 3.2%, NST down 5.3% and EVN down 5.3%. Base metal stocks fared in a similar fashion as OZL lost 3.5% and IGO down 1.9%. In healthcare CSL rose 0.3% late and industrials were mixed. We saw some losses in the tech stocks, rotation seems to be setting in, XRO lost 1.6%, WTC down 8.4% and blue chips SEK and REA fell hard too. The All Tech Index fell another 1.8%. Consumer staples remained in favour on defensive buying, WES up 0.85% and WOW up 0.6%. In corporate news, MFG improved 2.8% on its results, average FUM up 26% to $95bn. SLC up 1.8% on management changes. SEK down 8.6% on its FY results. CPU down 3.3%, FY NPAT down 44% to US$232.7m. TCL down 1.1%, average daily traffic -8.6% due to COVID-19. DOW improving 2.9%, underlying NPATA $215.1m vs consensus $178.8m. On the economic front the RBNZ kept rates on hold and says it will do whatever it takes. Locally wage growth was the worst on 27 years. Hardly a surprise. The 10-year yield has improved to 0.91% and the AUD under a little pressure to 71.15c. Asian markets weaker with HK down 0.3% and China down 2.1%. Tokyo put on a modest gain of 0.2%. Dow futures up 69 points.

Today’s Highlights

• ASX 200 down 7 to 6132
• High 6154 Low 6101. Narrow range. Average volume.
• Big Bank Basket rallies to $129.66
• All Tech Index down 1.81%
• 58 trading days until the US election.
• Dow Futures up 69.
• Gold tumbles to AUD$2636.
• 10-year bond yields rise to 0.91%.
• AUD slips lower to 71.15c.
• Bitcoin flops back to $11330 with gold.
• Asian markets weaker with HK down 0.3% and China down 2.1%. Tokyo put on a modest gain of 0.2%.

INSIGHTS FROM THE MARCUS TODAY TEAM

• MARCUS STRATEGY: A lot going on in the market today. We highlight the very interesting rotation, a rotation that started three days ago with the US jobs numbers, out of the “COVID hedge” sectors (Gold and Technology) and into the cyclical recovery sectors. We could wait for confirmation of that trend but we have decided to participate before these sold down sectors get away from us. We have added banks, feeling a bit safer now the CBA results are out of the way. Financials are a recovery sector and if bond yields rise they are going to have another spike as they did in March and April. Meanwhile we have launched the “Re-aligned” Marcus Today Growth and Income Portfolios today. The STRATEGY section is now your centrepiece for our strategy, our ideas, themes and calls. All in one place, completely transparent. No more guessing what we’re up to.
• HENRY’S TAKE: One stock added yesterday but there is change in the wind. A look at the gold and silver collapse and why and more importantly what it means for the rest of the market. Remind me not to punch the air again. Less conviction more humility. Ask the Analyst Friday at 5 PM.

STOCKS

• WAF -10.84% BGL -7.69% and DEG -5.26% small gold pummelled.
• SEK -8.63% not found. Results disappoint.
• AEF -9.71% selling continues on valuation issues.
• MSB -8.63% D-Day 13^th in US with the FDA discussion.
• AVH -6.63% selling resumes.
• URW +7.59% one for the reopening traders.
• FCL +3.49% placement complete for acquisition.
• NEC +4.08% Ten in trouble. Seriously.
• DOW +2.87% results.
• RUL +14.80% Motley Fool write up apparently.
• PET +18.42% finding support.
• DUG +7.41% new IPO with cloud exposure.
• VIP -17.65% gloves off on profit taking.
• TWE +2.69% analysts sceptical on demerger.
• BFG +2.02% profits up.
• NAB +2.24% cost cutting initiatives.
• SVL -12.77% tarnished.
• GGG -9.09% pregnant with approval news.
• Speculative Stock of the Day: Wide Open Agriculture (WOA) +31.78% company has been presenting on the opportunity offered by Sweet Lupins and technology with CSIRO for plant-based proteins through Dirty Clean brands. One for the watch list.
• Biggest Rises: URW, VUK, RFF, BUB, SSM, AZV and NEC.
• Biggest Falls: WAF, AEF, ALK, SEK, MSB, WTC and PLS..

TODAY

• Transurban Group (TCL) –1.08% Full-year EBITDA ex-items down 6.4% to $1.89bn vs consensus $1.93bn. Statutory NPAT -$153m. Revenue down 13.2% to $3.62bn vs consensus $2.69bn. Free Cash down 3.3% to $1.48bn. Will pay a distribution of 16.0cps, as previously reported. Given the short-term uncertainty, the board has issued guidance that it anticipates the FY21 distribution will be in line with free cash excluding capital releases. Group CFO Adam Watson to resign mid-November 2020, to pursue a career opportunity with another ASX listed company. Average daily traffic -8.6% due to COVID-19. Transurban had $2.3m in cash at the end of June and $2.8m of undrawn bank facilities.
• CBA (CBA) –0.48% Full-year cash NPAT down 11.3% to $7.3bn vs consensus $7.39bn. Operating income $23.76bn vs consensus $24.28bn. Net interest margin 2.07% vs year-ago 2.09%. Final dividend 98c/share, fully franked. Common Equity Tier 1 (CET1) capital ratio was 11.6%, up 90 basis points on 2019, remaining above APRA’s benchmark of 10.5%. 135,000 COVID-19 related home loan deferrals and 59,000 related business loan deferrals at July 31, both down from their peaks earlier in the year.
• Computershare (CPU) –3.29% Full-year NPAT down 44% US$232.7M vs consensus US$228m. Revenue down 2.9% to US$2.28bn vs consensus $2.26bn. Management EBITDA US$650m. Management EPS US56.3c, down 19.8% vs year ago. Final dividend 23c/share. In FY21, expects EPS to be down by around 11%, EBIT ex margin income growth to be up by around 10%.
• Downer EDI (DOW) +2.87% Full-year underlying NPATA $215.1m vs consensus $178.8m. Revenue down 0.2% to $13.42bn vs consensus $12.82bn. Underlying EBITA $416m vs consensus $414.2m. Decided not to declare a final dividend. In the current environment not providing FY21earnings guidance.
• Seek Limited (SEK) -8.63% reports FY NPAT (ex-significant items) of $90.3m, down sharply from $184.8m a year ago. The company declared it will not pay a final FY20 dividend, in order to preserve capital, with management noting that “once economic conditions improve, we intend to resume payment of dividends”. Revenue came in at $1.58bn vs consensus of $1.57bn on 12 estimates. EBITDA came in at $414.9m vs expectations of $403.0m. The company did not provide an outlook statement but said the following; “Our near-term profits will be impacted by COVID-19 but our focus is on executing and investing for the long-term. We are confident our investment and long-term focus is the right approach as SEEK’s revenue opportunity remains large and under-penetrated”.
• Goodman Group (GMG) -1.12% Nearing sale of $300m office building in Sydney to Keppel Capital.
• Superloop (SLC) +1.84% Appoints Paul Tyler as CEO effective October 1.
• APA Group (APA) -0.35% Appoints Adam Watson as next CFO. Watson will replace Peter Fredricson who is retiring, as announced in December 2019.
• Evolution Mining (EVN) -5.30% Operations at the Red Lake gold mine have been temporarily suspended following an evacuation. Residents of the Red Lake community in Ontario, Canada, were evacuated due to the threat of a nearby forest fire.
• Magellan Financial (MFG) +2.80% Full-year adjusted net income $438.3m vs consensus $436.4m. Adjusted revenue $692.9m vs consensus $688.4m Dividend 122c/share, 75% franked. Adjusted net profit after tax grew by 20% to $438.3m. Average funds under management up 26% to $95.5bn. Management and services fees revenue up 25% to $591.6m.

ECONOMIC NEWS

• The seasonally adjusted Wage Price Index (WPI) rose 0.2% in June quarter 2020 and 1.8% through the year, according to figures released today by the Australian Bureau of Statistics (ABS).

• The June 2020 quarter was the first full period in which COVID-19 social and business restrictions were captured in the WPI.

• Reserve Bank of New Zealand has held the country’s official cash rate at 0.25% and will expand its asset purchase program to NZ$100bn.

COVID-19 NEWS

• Japan’s economy won’t recover ground lost during the pandemic until the year starting April 2024, according to the Japan Centre for Economic Research.
• Vietnam indefinitely extended the suspension of passenger flights to and from the coastal tourism hub of Danang.

BONDS

ASIAN NEWS

• Cathay has warned it does not expect to see any meaningful recovery for some time. First half net loss of US$1.3bn. Cathay flew 4.4m passengers in the first six months, compared with 18.3m people a year earlier.

EUROPEAN NEWS

• European futures pointing to a soft opening.0.5% -1%.
• Sleepy Joe wakes up with Kamala Harris as running mate. Interesting that Kanye has come in to 100-1.

• Sputnik V set to save the world. Russian vaccine has not even done Phase III trials yet. Would you take a Russian vaccine?
• US government is buying 100m doses of a yet to be approved vaccine from Moderna for $1.5bn
• Tesla announces stock split with five for one. Robinhood traders will be pleased.
• UK GDP Q2 -20.4% v -20.5% forecast.

And finally…

Don’t forget the AGM for The Weak Bladder Society tonight people. If you can’t make it, give me a tinkle.

If you drive an electric car do you need a current licence?

I have just had a calculator tattooed onto my back – you can always count on me ….

Covid 19 update. Should locksmiths be regarded as key workers?

“My wife made me join a bridge club. I jump off next Tuesday”.

I wouldn’t touch the metric system with a 0.9914m pole.

 

Try the fish, I’m here all week.

Clarence

XXX