ASX 200 off early lows as RBA keeps rates on hold and supports banks. ASX 200 falls 107 points to 5953 (1.8%) to a four week low. Dow Futures down points. Early losses dominated the big caps as some index rebalancing and worries on the AUD at 74c took their toll. Chinese data helped buyers find some confidence with some bargain hunting in the run into the close with the banks though still under the kosh with the Big Bank Basket down to $119.01 and CBA off 2.2%. BNPL stocks woke up to a brave new world, one where a big gorilla is flexing its muscles, as Paypal announced it was entering the market sending the sector into a tail-spin. SZL dropped 14.7%, OPY down 7.2% and Z1P down 12.8%. The behemoth APT dropped 8.0%, leaving the All Tech Index down 2.2 %. Miners also sagged although FMG picked up slightly rising 1.1% after its ex div move yesterday. Selected gold stocks rose with WAF up 5.3% and RSG up 3.2%. Energy stocks fell again as STO dropped 3.7% and WPL down 2.9%. Industrials too under pressure across the board with WOW down 4.2% and TLS finding few friends falling 2.1%. Healthcare not so rosy today as CSL slipped 1.5% and FPH dropped 3.9% as ventilator orders are being cancelled around the world. In corporate news, TPW down 3.0%, after CEO selldown. ALD lost 1.5%, Chevron filed proceedings in the Federal Court over non-compliant signage. HLO is down 1.5%, NPAT -$70m vs year-ago $38m and consensus $13.9m. QBE down 6.3% after the sacking of CEO Pat Regan, following an external investigation concerning workplace communications. SPL rose 12.2%, creates a soluble version of Gilead COVID treatment. WOW down 4.2%, trading ex-dividend. On the economic front, the current account for the June quarter recorded a surplus $17.7bn, above expectations of $13bn. Net exports to add 1ppt to GDP (as expected). Building approvals for July lifted 12% vs expectations of a 2% fall. National home prices fell by -0.4% over the month, up 5.8% on the year according to CoreLogic. REA up 1.1%. ANZ Roy Morgan Consumer Confidence Index fell -2.7% to 90.2 last week. The 10-year yield steady at 0.97% and the AUD broke through 74c. Asian markets barely changed.
- ASX 200 down 107 to 5953.
- August gains nearly gone in a day.
- RBA keeps rates on hold.
- High 6046 Low 5909.
- Golds shine. Industrials flop.
- Big Bank Basket falls to $119.01
- All Tech Index down 2.23% as BNPL stumbles on Paypal entry.
- 42 trading days until the US election.
- Dow Futures down 10.
- Gold steady at AUD$2685.
- 10-year bond yield down to 0.97%
- AUD firms to 74.06c
- Bitcoin rallies to $11716
- In Asian markets, Japan up 0.83% and China up 0.48%
- SPL +12.21% positive announcement on delivery system.
- UWL +5.32% debt facility agreement.
- WGX +4.23% RSG +3.17% SLR +2.76% gold miners firm.
- SZL -14.70% broker downgrades after results and paypal.
- Z1P-12.77% completes Quadpay buy now.
- QBE -6.31% CEO sacked after serious issue.
- IEL -5.03% CV issues remain.
- EVT -5.05% no respite for CV19 impacts.
- NCZ -18.42% IGO sells out.
- ADT -10.04% Resource estimate.
- BUD -11.70% green light for US sales.
- QFE -7.41% BNPL fall out.
- 3DP +38.89% good business update. Written up as a buy on July 15th at 9.3c.
- ST1 +12.50% completes acquisition.
- EMV +6.57% strong rally continues.
- Speculative Stock of the Day: Nothing significant.
- Biggest Winners: SPL, RBL, COE, UWL, WAF, RED and NIC.
- Biggest Losers: SZL, Z1P, RMC, APT, SPT, EML and MGX.
- Helloworld (HLO) –1.54% Full-year NPAT -$70m vs year-ago $38m and consensus $13.9m. Revenue $282.2 vs year-ago $357.6m and $262.3m. Underlying EBITDA $44m vs year-ago $73.5m and consensus $46.9m. Not able to provide any meaningful guidance at this time. Continues to process the billions of dollars of refunds and credits due to customers for pre-booked, pre-paid travel arrangements. Overheads are at around $4-5m per month (circa 80% reduction on previous levels), a net cash burn of circa $2m per month. Liquidity position is strong and with a significantly lower cost base across key business operations, are confident they can continue to adapt the business to the circumstances and ride out the “perfect storm”.
- QBE Insurance Group (QBE) -6.31% CEO Pat Regan to depart the organisation. Follows the outcome of an external investigation concerning workplace communications that the board concluded did not meet the standards set out in the group Code of Ethics and Conduct. Mike Wilkins will assume the role of Executive Chairman. An internal and external search process is underway to appoint a new Group CEO.
- Panoramic Resources (PAN) –4.11% Full-year NPAT -$87.4m vs consensus $51.2m. As a result of the suspension of operations at the Savannah Nickel Mine, an impairment of $32.9m was recorded. Revenue $69.1m vs consensus $62.5m.
- Westpac (WBC) –2.79% Reportedly in late stage talks regarding the divestment of Pacific Bank. Bank South Pacific or BRED names as logical buyers of the asset.
- Brambles (BXB) -1.71% To propose a 12-month extension to its on-market buyback at AGM. It announced its intention to return up to $2.4bn (from proceeds of the sale of its IFCO RPC business) by way of an on-market share buy-back in Feb 2019.
- Ampol (ALD) -1.54% Chevron issues proceedings against Ampol in Federal Court over alleged trademark licence agreement breaches. The proceedings refer to non-compliant signage at 177 Ampol sites together with an unspecified number of third party sites operating under a sub-licence from Ampol.
- Temple & Webster Group (TPW) -2.99% CEO comments on share sales, “I have taken the opportunity to cover my tax obligations and also rebalance a portion of my investments while continuing to have the majority of my wealth tied to the company.”
RBA MEETING- No change to rates
Here is the link to the full statement.
- Major change to text is this: extending the term lending facility from $95bn to $200bn which the banking sector can draw on…so far drawn down $52bn.
- This extension will ensure that all ADIs continue to have access to the Term Funding Facility after the end of September, when the window for drawings under the initial allowance of 3 per cent of outstanding credit closes.
- The future path of that recovery is highly dependent on containment of the virus. High or rising infection rates have seen a recent loss of growth momentum in some economies.
- In the Bank’s central scenario, the unemployment rate rises to around 10 per cent later in 2020 and then declines gradually to be to still around 7 per cent in two years’ time..
- The economy is being supported by the substantial, coordinated and unprecedented policy easing over the past six months.
- The Board is committed to do what it can to support jobs, incomes and businesses in Australia.
- It will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band. Could be a long long way off.
Other Economic News
- ANZ Roy Morgan Consumer Confidence Index fell -2.7% to 90.2 last week.
- Building approvals for July lifted 12% vs expectations of a 2% fall.
- Current account for the June quarter recorded a surplus $17.7bn, above expectations of $13bn. Net exports to add 1ppt to GDP (as expected).
- CoreLogic house price index for August: National home prices -0.4% over the month, up 5.8% on the year.
- Sydney falls at slower 0.5% pace. Prices in Melbourne have declined 4.6% since onset of pandemic.
- Jobkeeper2.0 gets the nod.
COVID – 19 NEWS
- India’s gross domestic product fell by almost 24% last quarter.
- HKs CEO has encouraged all 7m people to get tested for CV19.
- The Trump Administration is canceling contracts for ventilators with three companies, including a $650m deal signed in April with Philips.
- Caixin PMI best number since January 2011. Activity rebounding at fastest rate 53.1 in August on a rebound in the US. Fourth consecutive positive month.
- South Korea plans record bond sales in 2021 to fund stimulus.
EUROPEAN AND US HEADLINES
- European markets poised to open slightly higher. UK schools reopen this week.
- JP Morgan says investors should get used to a Trump victory.
- Apple is prepariung 75m new 5G phones. launch in October.
- Tesla is now worth over US$400bn. More valuable than Toyota, VW, Nissan, GM and Hyundai combined. Tesla sells 360,000 cars against the other car makers 40m cars.
- Facebook threatens to cut off Australians from sharing news and cat videos.
- TikTok has chosen its preferred bidder.
- Neck and Neck as Kanye firms.