The ASX dropped 42 points to 5823 as banks sagged yet again. Dow Futures down 161 points. The awesome foursome led us down yet again, the Big Bank Basket fell to $113.79 with CBA down 1.35% and WBC off 1.4%. Other financials also on the nose with MQG down 1.2% and MFG down 3.4% on news it was funding a new Investment Bank, Barrenjoey Capital. Miners too in the doghouse with BHP down 1.2% and FMG down 1.2% with gold stocks also under pressure, NCM down2.10% and NST off 2.0%. Energy stocks held the line on better oil prices with WPL up 0.60% and STO down 0.2% with Healthcare better as CSL rose 0.2%. Industrials showed modest losses with bond proxies TCL down 0.9% and SYD continuing the slow descent falling 0.55%. URW took another leg down as the company appears pregnant with an equity issue that has no details as yet, down 7.1%. In the tech space, APT dropped 1.2% and XRO down 1.15% dragged the All Tech Index down 1.0%. In corporate news, DWS received a takeover bid from HCL at 120c in cash rising 30%, EVN down 2.6% reaffirmed guidance at Denver gold forum. IAG up 0.2% appoints Deputy CEO Nick Hawkins as CEO. CBA revises economic forecasts. GDP now forecast to rise by 2.0% in Q3 20 vs the previous estimate which centred on a broadly flat outcome. The 10-year yield fell to 0.85% and the AUD slightly firmer at 73.13c. Asian markets weaker as Japan closed with China down 0.6% and Hong Kong down 1.1%.

Today’s Highlights

  • ASX 200 down 42 to 5823.
  • High 5868 Low 5808. Average trade.
  • Big Bank Basket fell slightly to $113.79
  • All Tech Index down1.0%
  • 29 trading days until the US election.
  • Dow Futures down 160
  • Gold steady at AUD$2668
  • 10-year bond yield rise to 0.88%
  • AUD rises to 73.17c
  • Bitcoin firms to $10960
  • Asian markets weaker as Japan closed with China down 0.6% and Hong Kong down 1.1%.

STOCKS

  • URW -7.14% drop continues as ‘mystery’ equity issue weighs.
  • WHC +10.17% coal turning.
  • BRN +8.14% India software development centre
  • BBN +1.78% change in substantial holding
  • SOL +2.49% coal exposure.
  • VUK -9.15% UK heading for a lockdown.
  • SBM -7.12% conference presentation.
  • PBH -4.88% change in director’s interest.
  • PET -% suspension continues on accounting investigation.
  • BYE -33.33% SM58 drill results disappoint on no commercial oil or gas.
  • MYQ -13.87% profit taking.
  • ANO -10.88% CV19 sales update.
  • TTM +24.00% concession reinstated in Ecuador.
  • BBX -3.00% profit taking.
  • SVM +34.48% triples mineralisation at Kasiya.
  • DWS +30.00% takeover agreed at 120c cash.
  • KMD +2.56% results due this week.
  • Speculative Stock of the Day:  Lake Resources (LKE) +50.00% big volume after report last week on battery quality lithium carbonate production.
  • Biggest Winners: WHC, BRN, MYX, NWS, CGC, GWA, SHL, KMD and MMS.
  • Biggest Losers: RED, VUK, URW, SBM, AFG, AX1,RBL and MMM.

TODAY

  • Harvey Norman (HVN) +2.07% Comparable aggregated sales for the period between July 1 and September 17 up 30.3% vs year ago. Australian franchises comparable store sales up 34.5%, New Zealand up 18.0% vs over the same period. Unaudited preliminary accounts between July and August indicate PBT ex-items $178.1m vs year-ago $62.3m. Excludes the impact of AASB 16 and property revaluation adjustments.
  • Evolution Mining (EVN) -2.56% Repeats FY21 guidance in Denver gold forum presentation. production guidance expected between 670-730koz. AISC guidance (provided as the midpoint of range) $1,270/oz. Production planned to increase to >800koz over the next 3 years.
  • Insurance Australia Group (IAG) +0.22% Appoints Deputy CEO Nick Hawkins as CEO, effective November 2.
  • Openpay Group (OPY) -1.01% August total transaction volume (TTV) $22.7m, up 88% vs pcp. Revenue was $2m, up 63% vs pcp. Net bad debts as a percentage of TTV have remained stable at 1.53%. Plan mix is strongly skewed to comparatively longer-term and higher-value plans with plans 3 months and longer accounting for 91% of TTV at the end FY20. Active Plans up 237% vs pcp. Active Customers up 147% vs pcp. Active Merchants up 40% vs pcp. CEO comments, “we have seen strong competitive dynamics in major retail and consumer markets around the globe over the last few months.”
  • Praemium (PPS) – Intends to compulsorily acquire the outstanding Powerwrap (PWL) share on issue. Praemium has a relevant interest in 92.31% of Powerwrap Shares.
  • Rhipe (RHP) -To acquire NZ based IT services provider, Parallo for NZ$4.25m.In addition to the upfront cash price, the vendors will be entitled to additional consideration tied to the financial performance over the next year. The acquisition is expected to deliver EPS accretion in FY21.
  • ResApp Health (RAP) – SleepCheck pre-Submission lodged with the US FDA.
  • Village Roadshow (VRL) +0.95% May not have its Warner Bros. theatrical distribution renewed. The contract is currently scheduled to expire at the end of December 2020. After overheads, the EBITDA contribution from the Warner Bros. theatrical distribution arrangements was not material to VRL in FY20. VRL does not anticipate that any material impairment or write-down of assets as a result of the expiry.
  • IOOF Holdings (IFL) -0.96% Completes its retail entitlement offer. Participation rate ~3%. 85.1m shares not taken up will be allocated to sub-underwriters. Share purchase plan raised $3.8m.
  • Phoslock Environmental Technologies (PET) – Notes an ongoing independent investigation initiated by the Chairman and Managing Director has revealed certain accounting irregularities relating to PET’s China Operations. PET will seek to leave the current voluntary suspension of trading in place until the investigation and resulting KPMG report is completed and the impact of any irregularities is quantified.
  • Austal (ASB) -0.31% Appoints Ian McMillan as COO effective 1st January 2021.McMillan joins Austal from BAE Systems Australia, where he held several senior executive roles.

ECONOMIC NEWS

  • CBA revises economic forecasts. GDP now forecast to rise by 2.0% in Q3 20 vs the previous estimate which centred on a broadly flat outcome. GDP in 2020 forecast to contract by 3.3%, sees growth of 2.5% in 2021.

COVID – 19 NEWS

  • South Korea will strengthen social distancing rules from September 28 to October 11.
  • China’s north-eastern city of Changchun found coronavirus particles on the packaging of frozen squid tentacles from Russia.
  • Brazil reported 16,389 cases, a 0.4% rise compared with the average 0.7% daily increase over the previous seven days.

BONDS

ASIAN NEWS

  • Jack Ma is looking at raising around US$35bn in its IPO of Ant Group. This would value the business at US$250bn. Simultaneous listing in Hong Kong and Shanghai.
  • HSBC shares have fallen to a 25-year low as it could be named as an ‘unreliable entity’ which aims to punish firms, organisation or individuals that damage National Security.

EUROPEAN AND US HEADLINES

  • Nikola executive chairman Trevor Milton has stepped down. The plot thickens.
  • Supreme Court battle in focus as Trump moves to appoint a replacement for RBG.
  • Cadbury maker Mondelez is seeking acquisitions of so-called Healthy brands.
  • HBO has dominated the Emmys with Succession and Schitt’s Creek taking out a batch of awards.
  • China’s pork reserves are running out as prices rise.
  • Goldman Sachs says value not cyclicals will be big winners on any vaccines.
  • UK weighing new lockdown.
  • Deutsche Bank back in the spotlight for all the wrong reasons.

And finally…

I am thinking of starting a hokey pokey society…who’s in?

The new trainee engineer looked smart and turned up keen and ready. The boss said hi but “sorry we need help urgently, there has been an accident and we need a mess sweeping up, here is the broom”.

The new trainee looked lost and said “no I can’t do that”. The boss said “why not?” The new engineer lost his nut and screamed “I am an elite graduate, first class degree from Cambridge, top of my class and got straight A☆s at a top Grammar School”

The boss then said “sorry I see your problem. I will get one of the shop hands to show you how to use a broom.

I started my new job today.
My boss handed me a fiver and said, “First things first, I need you to go down to the shops and buy me a long stand a glass hammer, a skirting board ladder and a bubble for a spirit level and a sky hook.”
I laughed out load and said, “Do you really think I’m that chuffing stupid?”
“What do you mean ?” He sniggered.
I said, “That lot is going to cost alot more than a fiver.

This is a classic…

A couple who work in the circus go to an adoption agency.
Social workers there raise doubts about their suitability.
The couple produce photos of their 50 ft motorhome, which is equipped with a beautiful nursery.
The social workers then are doubtful about the education that the child would get.
“We’ve arranged for a full-time tutor who will teach the child all the usual subjects along with French, Mandarin and computer skills.”
Then there are doubts about raising a child in a circus environment.
“Our nanny is an expert in paediatric welfare and diet.”
The social workers are finally satisfied.
They ask, “What age child are you hoping to adopt?”
“It doesn’t really matter, as long as he fits in the cannon”

Clarence

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