ASX 200 jumped another 49 points to breach the 6100 level at 6113 (+0.8%). Dow futures slightly negative down points. Banks, industrials and defensives back in fashion as Tech stalls. The BIg Bank Basket up to $122.04 with MQG doing well too up 2.0% and MFG up 4.1%. Insurers were slightly better led by IAG up 1.4% and SUN up 1.9%. Healthcare too in the pink led by CSL up 1.3% and SHL up 1.5%, industrials firmed as defensives came back in favour, SYD up 2.3% and TCL up 3.2%. WOW up 0.9% and ALL up 2.7%. In the tech space, XRO dropped 2.5% as a big block trade went through the market at $100. The BNPL sector was still suffering from a hangover with APT up 1.6% and SZL down 3.9%. Z1P grinds out a 0.8% rise. The All Tech Index unchanged. In the miners, despite a lower dollar and higher commodity prices, punters took money off the table as BHP went ex div falling 2.3% and FMG steady up 0.7%. Energy stocks remain mixed and PNG now looking a potential fly in the ointment. WPL up 0.9% but OSH down 0.9%. Travel stocks had a resurrection despite cases in Victoria above 100 again. FLT up 3.8%, WEB up 2.8%, HLO up 4.8%. SKC improving 7.4%, reported a NZ$66.3m normalised profit, in line with guidance. Notes domestic businesses have recovered quicker than anticipated during the period from June 1 to August 11. No dividend. On the economic front, the trade surplus fell to $4.61bn in July from a revised $8.15bn in June vs market consensus of $5.4bn surplus. Imports surged 7%. Exports tumbled 4%. The 10-year yield fell to 0.90% and the AUD under a little pressure back down to just above 73c. In Asia, China largely unchanged whilst Japan up 1%.

Today’s Highlights

  • ASX 200 up 49 points to 6113.
  • High 6131 Low 6067.
  • Volume again solid
  • Big Bank Basket rallies again to $122.04
  • All Tech Index eases 0.1% APT finds tentative support. XRO finds a seller.
  • 40 trading days until the US election.
  • Dow Futures down 20.
  • Gold eases to AUD$2652.
  • 10-year bond yield down to 0.90%
  • AUD drops to 73.07c
  • Bitcoin down to $11342
  • In Asia, China largely unchanged whilst Japan up 1%

MARCUS TODAY TEAM INSIGHTS

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STOCKS

  • BRN +5.26% another good day but well off highs.
  • SKC +7.36% good results.
  • 360 +5.19% media coverage on new fund.
  • DXS +4.70% takeover speculation.
  • BUB -4.92% another capital raising weighs.
  • SZL -3.91% BNPL still a little soft.
  • GXY -0.69% profit taking.
  • FNP – Still suspended with provisions set to rise.
  • BTH -7.42% change of director’s interest.
  • 3DP +22.22% magic carpet ride continues.
  • YOJ +13.89% new SE Asian agreement signed.
  • SOM +18.07% stirring.
  • XRO -2.47% another big block trade around $100
  • Speculative Stock of the Day: Opyl (OPL) +76.92% achieves major milestone with its AI platform able to forecast CV19 clinical trial outcomes. Early days and much hope.
  • Biggest Winners: SKC, JIN, CCP, ABC, NIC, AVH, BRN and 360.
  • Biggest Losers: SKI, BUB, MMM, SZL, DEG, SM1, PRU and CTD.

TODAY

  • PointsBet Holdings (PBH) – To raise ~$303m through Bell Potter and MST Financial Services. $153.2m at 650c/share via a 1 for 6.5 entitlement offer. Eligible shareholders will also receive one new option for every 2 shares issued under the entitlement offer, exercisable at 1300c and expiring on September 30, at no further cost. ~$150m institutional placement. Terms will be determined after completion of a bookbuild process. Funds raised to help the US business development and marketing costs.
  • Sezzle (SZL) -3.91% Announces the release of its virtual card for shoppers, enabling customers to pay using interest-free instalments both in-store and online. The Virtual Card will allow brick and mortar retailers that already support Apple Pay and Google Pay an easy way to offer Sezzle’s Buy Now, Pay Later solution to their customers. The Sezzle Virtual Card is launching on both Apple Pay and Google Pay.
  • Skycity Entertainment Group (SKC) +7.36% Full-year normalised NPAT NZ$66.3m, line with guidance NZ$65-67m. Normalised Revenue (incl Gaming GST) NZ$779.5m vs year-ago NZ$1.03bn. Normalised EBITDA NZ$200.7m, in line with guidance NZ$199-202m. No final FY20 dividend. Domestic businesses recovered quicker than anticipated during the period from June 1 to August 11. Observes significant improvement in operating margins, with EBITDA and cashflow materially ahead of expectations. SkyCity Adelaide opened at the end of June in a staged manner with reduced operating hours and is tracking ahead of expectations. NZ Online Casino continues to trade positively after strong growth during April and May. In FY21, expects normalised EBITDA to be above FY20 but still well below pre-COVID-19 and FY19 levels. Dividend policy to be reviewed during H1 FY21 – no interim dividend, but expecting to pay a final dividend for FY21 in September/October 2021 assuming no meaningful further Covid-19 disruptions.
  • Dexus (DXS) +4.70% Blackstone running the numbers for potential takeover of Dexus. Blackstone has reportedly hired JPMorgan to assist in assessing the potential acquisition although it is noted that a deal does not appear imminent. Dexus currently has a market value lower than the price of their overall assets which has helped increase Blackstone’s interest.
  • AMP (AMP) +2.79% KKR makes an informal approach to AMP about acquiring its investment platform business.
  • Eclipx Group (ECX) -0.67% Targeting an annualised $15m reduction in its core fleet operating expense base from $99.5m in FY19 to $84.5m by the end of FY21. Novated monthly volumes are tracking above 80% of average pre-COVID-19 levels. End of lease income in 2H20 is expected to be about 90% of 1H20 end of lease income.

ECONOMIC NEWS

Balance of Trade – July key points

  • The balance on goods and services surplus fell $3,542m to $4,607m in July 2020.
  • Goods and services credits fell $1,604m (4%) to $34,496m.
  • Goods and services debits rose $1,939m (7%) to $29,890m.

Goods and services summary

In seasonally adjusted terms, goods and services credits fell $1,604m (4%) to $34,496m.

  • Non-rural goods fell $1,527m (6%)
  • Rural goods fell $539m (15%)
  • Net exports of goods under merchanting fell $18m (38%)
  • Non-monetary gold rose $1,252m (53%)
  • Services fell $772m (12%).

In seasonally adjusted terms, goods and services debits rose $1,939m (7%) to $29,890m.

  • Capital goods rose $999m (18%)
  • Consumption goods rose $608m (7%)
  • Non-monetary gold rose $300m (37%)
  • Intermediate and other merchandise goods rose $165m (2%)
  • Services fell $133m (3%).

COVID – 19 NEWS

  • The U.K. government is “anxiously monitoring” increasing hospital admissions in France and Spain.
  • South Korea recorded 195 new infections for the past day, the least since Aug. 14.
  • The UK has committed GBP500m for testing.
  • Let us just concentrate on this number

BONDS

ASIAN NEWS

  • The Ant Mega IPO is on. It will raise US$30bn in HK and Shanghai. This will value the company at around US$225bn about the same as Bank of America. Tencent is its nearest rival as it boasts the killer app WeChat.
  • It is known as the K Shape recovery: A Bloomberg study of 17 emerging markets found a 42% correlation between gross domestic product per capita and stock performance since the virus-fueled risk sell-off began on Jan. 20. The correlation between GDP per capita and currency returns was 31%. Richer emerging economies are likely to gain access to effective coronavirus vaccines sooner, following the steps of wealthy developed nations.
  • China records fourth straight month of positive service sector PMI. The Caixin/Markit services Purchasing Managers’ Index (PMI) slipped to 54.0 from July’s 54.1, dipping for the second month after June’s decade high, but staying above the 50-mark that separates monthly growth from contraction.

EUROPEAN AND US HEADLINES

  • France set to announce a EUR 100bn stimulus fund. Cue Dr Evil.
  • Mildly positive opening expected for European markets.
  • DHL has warned of potential delivery issues with a CV19 vaccine. 2/3rds of the World would need to have frozen storage.
  • US Farmers will get a budget busting US$39bn in government handouts this year.
  • Switzerland has moved on form CV19 lockdowns and says we must learn to live with it.

And finally …

“How many tickles does it take to make an octopus laugh? Ten tickles.”

“Why can’t you hear a psychiatrist using the bathroom? Because the ‘P’ is silent.”

“I ordered a chicken and an egg online. I’ll let you know.”

Clarence

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