The ASX 200 dropped 73 points to 5883 (1.22%) as job numbers beat forecasts. Dow futures down 245. Tech under pressure. Across the bo0ard selling as SPI expiry boosted volumes, the Big Bank Basket fell to $116.43 as mixed fortunes for the sector, CBA down 1.1% but WBC up 0.3%. Insurers were weaker with QBE down 2.9% and IAG down 2.1%. Miners got whacked on iron ore price falls, FMG down 6.4% on a MS downgrade and MIN dropped 9.4% on the same downgrade. RIO fell 3.4% and BHP fell 1.8%. Gold miners slipped slightly with NCM down 0.8% and NST down 0.9%. In the techs we saw some carnage as APT dropped 5.4% and WTC dropped 4.0% with XRO down 2.1%. The All Tech Index fell 2.48%. Industrials were weaker too as expected, TCL down 1.4%, WOW down 0.7% and ALL down 1.2%. In corporate news, CCX down 6.2% after its was unsuccessful in its bid for the eCommerce assets of US retailer Catherines’. NWL up 0.2%, takes a 25% stake in fintech data solutions provider Xeppo. URW down 5.3%, to raise €3.5bn as part of a €9bn reset plan to strengthen the global mall owner’s balance sheet. Elsewhere, WBC is forecasting a 15% jump in house prices over two years following a correction that lasts until the end of 2021. In economic news, NZ suffered its worse GDP decline since the 30s and the local jobless number dropped to 6.8%. The 10-year yield steady at 0.85% and the AUD slipped to 72.67c. In Asian markets, Japan the Suga hit has worn off falling 0.6% and China down 1%

Today’s Highlights

  • ASX 200 down 73 to 5883. The Grand ol Duke of York market.
  • High 5956 Low 5886. Jobs number cheer.
  • SPI Expiry boosts volumes only slightly.
  • Big Bank Basket fell slightly to $116.43
  • All Tech Index up 3.02% as tech rallies on Nasdaq moves.
  • 31trading days until the US election.
  • Dow Futures down 225.
  • Gold steady at AUD$2672
  • 10-year bond yield steady at 0.85%
  • AUD slips to 72.67c
  • Bitcoin firms to $10894
  • In Asian markets, Japan the Suga hit has worn off falling 0.6% and China down  1%

STOCKS

  • MIN -9.44% FMG -6.4% MS downgrade.
  • QFE – JV with SPT and cap raise.
  • PET – trading halt pending audit investigation.
  • HGH -0.94% reverse mortgage surge.
  • DEG +5.26% rally resumes.
  • ALK +2.58% pushing higher.
  • BRN -10.64% more profit taking.
  • Z1P -7.14% Quadpay deal.
  • CRN -6.12% WHC -5.46% coal back in black
  • SCG +2.20% giant hybrid issue.
  • LBY -1.69% more growth as 69k new active customers added.
  • MAH unchanged signs Calidus mining deal.
  • APT -5.37% BNPL under pressure again.
  • CCX -6.21% misses out on US expansion.
  • EM1 +19.44% good move on esports exposure.
  • MYQ -9.64% reality bites – another deal announced.
  • Speculative Stock of the Day:  Cyclopharm (CYC) +34.36% after its Techegas USA trial successfully meets primary endpoint.
  • Biggest Winners: IAP, DEG, SHV, JMS, ORA and FBU
  • Biggest Losers: BRN, SZL, MIN, PPC, BRG, Z1P and FMG.

TODAY

  • Zip Co (Z1P) -7.14% QuadPay to provide its payment service to GameStop’s 3,300 US locations.
  • Catapult Group International (CAT) -1.00% To modestly elevate R&D investment while maintaining positive free cash flow in FY21. A significant proportion of sales that would otherwise have been made in 4Q20 are now expected to be made in 1H21. Observes the long-term underlying revenue growth rate has not been impacted by COVID-19, although it’s too early to comment on the short term (FY21) impact of COVID-19
  • Netwealth Group (NWL) +0.20% Makes a strategic investment in fintech data solutions provider, Xeppo. As part of the new partnership NWL has purchased an initial 25% stake and has an option to increase its investment to 50%. Details of the purchase price not provided.
  • Platinum Asset Management (PTM) -1.22% To extend its on-market share buy-back for up to 10% of issued capital for a further period of 12 months, commencing 4 October.
  • Westpac (WBC) +0.30% Planning to sell its general insurance operations early next year. IAG and QBE named as potential bidders. Both are currently looking for new CEOs. CBA is looking divesting its general insurance business with QBE and IAG also believed to have made their interest known.
  • Prospa (PGL) -1.41% Appoints Ross Aucutt as CFO effective October 7. Aucott joins Prospa from FlexiGroup where he was CFO for almost four years.
  • City Chic Collective (CCX) -6.21% Bid for Catherines’ eCommerce assets was unsuccessful. The winning bid of US$40.8m was above City Chic’s assessment of the value of these assets.

ECONOMIC NEWS

Jobs data

The headline rate of 6.8% was a significant beat on forecasts of 7.5%- 7.7%. Too far away we suspect as economists will now try and justify why they were so far out. For the equity market it does take some of the impetus for further stimulus off the table and no doubt the government will comment further.

Australia’s seasonally adjusted estimate of employment increased by 111,000 people in August 2020, with:

  • the number of unemployed people decreasing by 86,500 people;
  • the unemployment rate decreasing by 0.7 percentage points (pts) to 6.8%;
  • the underemployment rate remaining at 11.2%;
  • the underutilisation rate decreasing by 0.7 pts to 18.0%;
  • the participation rate increasing 0.1 pts to 64.8%; and
  • the employment to population ratio increasing 0.5 pts to 60.3%.
  • Gross domestic product plunged 12.2% from the first quarter, Statistics New Zealand said today. worst economic slump since the Great Depression. GDP fell 5.3% in 1931 and a further 7.1% in 1932.
  • Westpac is now forecasting a 15% house price boom. Be nice if they could make up their minds.

COVID – 19 NEWS

  • South Korea added 153 more coronavirus cases in 24 hours versus 113 a day earlier.
  • Trump says Robert Redford the director for the CDC made a mistake and he thought he had misunderstood the question when asked about his vaccine timetable.
  • Texas hospitals reported an almost 2% drop in virus hospitalizations in a 24-hour period.
  • Deutsche Bank AG told its New York City employees that they can continue working from home until mid-2021.
  • NSW boost stadium capacity to 50%.
  • Qantas said its seven-hour scenic flight over Australia’s Outback and Great Barrier Reef had sold out in 10 minutes. 

BONDS

ASIAN NEWS

  • TAB Food Investments is exploring the sale of its China business in a deal worth around US$1.2bn.

EUROPEAN AND US HEADLINES

  • European futures pointing to a soft opening across the region.
  • BOE meets today. No change expected but should be a nice lunch.
  • Trump doesn’t like TikTok deal.
  • Snowflake doubles on first day. Warren still got it. Worth more than Goldman Sachs and six times its valuation pre CV19. Buffet makes US$800m from IPO. Last time he invested in an IPO in 1956  when Ford went public.
  • China-US investment falls to the lowest in a decade.
  • BA is dropping its troubled fire and rehire policy.

And finally…

A man accompanied by his wife goes to the doctor after some disturbing symptoms had presented. At the end of the appointment the doctor asks to speak to his wife alone.
After the man leaves the room the doctor says, “The situation is very serious but he will be ok. You will need to do everything you can to minimize his stress. He needs to relax as much as possible. Once you get home don’t let him get out of his recliner. Bring all of his food and drink to him. Let him choose all the TV shows and doing anything else he needs. Do you have any questions?”
The man’s wife responded, “I think I understand.”
On the way home the man’s wife was very quiet. The man turned to his wife and asked, “well, what did the doctor say?”
She quietly responded, “I’m sorry, Honey, he said you’re not going to make it.”

Clarence

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