The ASX 200 traded in a very narrow range falling 16 points to 6179 (0.3%). Dow futures up 54. The market shook off early negative leads but like the duck paddling all the action was below the surface as AGM season continues. The banks came under a little pressure after a meteoric run recently, the Big Bank Basket fell back to $125.77 with insurers under pressure too. Looks like the short covering in the banks has taken a pause. WBC fell 1.4% and QBE off 2.9%. PDL rose 2.8% after its FUM announcement and AEF also did well putting on 4.9% after its FUM rose slightly. Miners were once again bypassed. BHP fell 0.8% and FMG down 1.4% on iron ore falls, gold miners off slightly and energy stocks remain unloved with WPL down 1.2% and STO flat. Healthcare stocks doing well though with CSL upgrading forecasts rising up 1.4% and SHL up 2.3% on its guidance, whilst industrials were mixed. Consumer stocks did well on rising sentiment, COL up1.0 % and WES up 0.5% though, SYD slipped 1.1% on more NSW cases taking travel stocks lower, WEB down 4.1%. In tech, we saw APT push up towards the magic ton up 1.7% on a clean(ish) bill of health from AUSTRAC and the All Tech Index up 1.1%. In corporate news, SSG up 5.4%, Q1 unaudited NPAT $4.9m, up 185% vs year ago. Z1P lost 4.0% on its quarterly update. AZJ losing 4.5%, Q1 above rail volume 63.2Mt vs year-ago 64.4Mt. BOQ up 5.2%, FY cash earnings of $225m versus expectations of $210m. Final dividend cut 82%. JHX up 1.6%, FY NPAT now expected in the $380m-$420m range, up from $330m-$390m. The big four banks are all down between 0.9% and 1.5%. FLT dropped 7.7%, downgraded by Credit Suisse and NSW cases rising. “The seasonally adjusted estimate for the total number of dwelling units commenced fell 5.6% in the June quarter, 2020,” according to the ABS. Westpac-Melbourne Institute Consumer Confidence index lifted 11.9% to 27-month highs of 105 points. In more economic news, Dwelling commencements fell 5.6% in the June quarter. The 10-year yield steady at 0.83% with the AUD little changed at 71.72c. In Asia, Japan flat and China slightly weaker down 0.6%.
- ASX 200 down 16 to 6179.
- High 6198 Low 6175. Narrow range.
- Market becalmed but plenty going on underneath.
- Big Bank Basket falls back to $125.77
- All Tech Index up 1.08%.
- 12 trading days until the US election.
- Dow Futures up 54.
- Gold falls to AUD$2644
- 10-year bond yield slips to 0.84%
- AUD steady at 71.72c
- Bitcoin steady at US$11,427.
- Asian markets saw HK closed as a Typhoon hit. Japan and China barely changed.
- EML +11.31% tech presentation.
- NEA +8.47% presentation.
- BSX -11.34% completes scoping study.
- MYQ -7.35% placement
- BOQ +5.16% cuts dividend.
- Z1P -4.05% core business moderates.
- SFR -0.23% ups guidance
- WBC -1.37% consolidate international operations.
- AEF +4.88% FUM rise.
- DUB +11.61% Q1 revenue up 26%
- BLD -0.41% releases info sharing protocols for directors.
- WEB -4.08% vaccine issues perhaps? NSW cases?
- FLT -7.71% broker downgrade.
- ILU -0.42% production flat.
- IKE +22.35% US 5G winner.
- 4DX +12.02% buyers back.
- SZL -1.34% director sells down.
- AFG -1.75% business back to normal.
- Speculative Stock of the Day: Douugh (DOU) +52.38% big volume again and social media favourite. No news.
- Biggest Winners: EML, NEA, KGN, RBL, JIN, BOQ, TPW and AEF
- Biggest Losers: FLT, OPT, LTR, CIM, CRN, AZJ and WEB
- Zip Co. (Z1P) -4.05% Q1 revenues $71.7m, up 88% vs year ago. Quarterly transaction volume $943.1m, up 96% vs year ago. Customer numbers 4.5m with 628k added in the quarter. Merchants 34.4k up 69% vs year ago. AU monthly arrears reduced from 1.33% in June to 0.91% in September. QuadPay reported $322.5m in transaction volume, $23.4m in revenue and closing the quarter with 2.2m customers.
- CSL (CSL) +1.36% Forecasts FY21 revenue growth between 5-10% vs year ago. In FY21 sees,NPAT $2.170-2.265bn at constant currency vs prior guided $2.100-2.265bn. Implies a growth of 3 to 8%, which is a slight tightening of the range advised at the Company’s results announcement in August – the low end was zero, which is now raised to 3%. Expects revenue growth between 6-10% at constant currency vs prior year’s $9.15bn, implying $9.70-10.07bn. Observes continued strong demand for plasma and recombinant products. Seqirus’ product differentiation and COVID-19 expected to drive strong demand for influenza vaccines. Albumin sales to normalize following GSP transition. COVID-19 restrictions expected to restrain plasma collections.
- Fortescue Metals (FMG) -1.38% Accused of “routinely” failing to honour agreements with Indigenous group. Newswires report thatduring the parliamentary inquiry into Rio Tinto’s Juukan Gorge, the Wintawari Guruma Aboriginal Corporation disclosed that the relationships with miners were very difficult. FMG CEO Gaines was quoted saying, “we are committed to open and transparent engagement to facilitate the outstanding royalty payment, in accordance with the contractual agreement and the obligations of both parties.”
- Michael Hill International (MHJ) +12.05% Q1 same-store sales $116.7m, up 7.3% vs year ago. Observes margin growth in all markets and channels between 100 and 200 bps for the quarter, against FY20Q1. Adds gross profit growth outpaced sales. Online sales up 29% vs year ago with digital channels now representing 5.3% of total sales. Branded collections represented 43.3% of total product sales for the quarter.
- Challenger (CGF) +2.14%Q1 total life sales $1.58bn vs year-ago $1.78bn. Life annuity sales $1.23bn vs year-ago $842m. Funds Management net inflows of $3.58bn. Total assets under management $88.80bn, up 4% vs quarter ago. Reaffirms FY21 guidance, sees normalised profit between$390-440m vs consensus $409.9m. Earnings are expected to be weighted toward H2 of FY21.
- Afterpay (APT)+1.73%Cleared by AUSTRAC following its review of the final audit report from independent auditor Neil Jeans, who looked at the APT’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. AUSTRAC noted that APT had uplifted its AML/CTF compliance framework and financial crime function, and satisfactorily completed all required remediation activity.
- Galaxy Resources (GXY) +3.24% September quarter Mt Cattlin production of 30,067 dmt at a grade of 5.92% Li2O and recovery of 57%, in line with FY guidance (Mt Cattlin shipped 16,753dmt of lithium concentrate during the quarter and 15,700 dmt at the beginning of October. Sal de Vida remains on track for first production in late 2022.
- Bank of Queensland (BOQ) +5.16% reports FY cash earnings of $225m versus expectations of $210m. Cash EPS 51.1cps vs 79.5cps a year ago. NIM 1.91% vs 1.89% a year ago. CET1 ratio 9.78% vs 9.04% a year ago. Loan impairment expense $175m, as previously reported. On the outlook the CEO said, “Although difficult to predict in this environment, we expect to broadly deliver neutral jaws in FY21 driven by above system growth in lending, margin management to within 2-4bps decline, and cost growth of c.2%. Our prudent collective provision sees us well placed to withstand anticipated lifetime losses arising from COVID-19”. The CEO also said that the business understands the importance of dividends to shareholders.
- James Hardie (JHX) +1.59% provides trading update and upgrades guidance – the share price should react positively; FY NPAT now expected in the $380-420m range, up from $330-390m. The business delivered record Group Net Sales, Group Adjusted EBIT and Group Adjusted NOPAT which was facilitated by having all three operating regions deliver growth above market with strong returns in Q2 of FY21. The LEAN manufacturing transformation and Zero Harm-focus enabled the company to meet growing demand for its fiber cement and fiber gypsum building materials.
- Adbri (ABC) +0.63% Provides trading update, noting that all sites remain operational. Victorian sites have been allowed to continue operating under stage 4 restrictions, although demand is volatile as construction site staffing is limited. Demand in Victoria is approximately 80% of pre-lockdown restrictions during August and September. Concrete, cement and concrete products sales were within 5% of 3Q19 volumes despite the impact of Victorian stage 4 restrictions. Selling prices are stable, with movement for 1H20 period reflected in 3Q20.
- Propel Funeral Partners (PFP) +3.97% Q1 operating EBITDA A$10.5, up 18% vs previous corresponding period (pcp). Average revenue per funeral growth on FY20 within its target range of 2-4%. Total funeral volume growth vs pcp. Notes funeral attendee limits in Australia and NZ have eased, which has contributed to an increase in the average revenue per funeral in Q1 FY21 to $5,835 vs quarter-ago $5,421.
- Shaver Shop (SSG) +5.38% Q1 unaudited NPAT $4.9, up 185% vs year ago.Total sales $49.1m vs year-ago $41.0m. Online sales represented 32.4% of total sales v year-ago 13.3%. Total sales (excluding Victoria) up 31.2% vs year ago, like for like sales (inc. online sales) up 23.0%, online sales growth up 192% vs year ago. Given the importance of Q2 to Shaver Shop’s annual sales and earnings result, as well as the ongoing uncertainty caused by the COVID-19 pandemic, Shaver Shop’s board is not in a position to provide annual sales and earnings guidance at this time.
- Pendal Group (PDL) +2.79% Total group funds under management (FUM) $92.4bn as at September 30 vs $89.4bn at the end of June.
- Sonic Healthcare (SHL) +2.31% Q1 EBITDA of $580m vs year-ago $340m. Revenue $2.14bn vs year-ago $1.66bn. The majority of Sonic’s divisions grew (excluding COVID-19 testing) revenues during Q1, and cost savings initiatives that were implemented during the early days of the pandemic continue to provide benefits to earnings and margins.
- Boral (BLD) -0.41%CFO Ros Ng steps down, he will stay on to assist with the transition. Ng will be replaced by Tino La Spina as Chief Finance & Strategy Officer.
- Aurizon (AZJ) -4.46% Q1 above rail volume 63.2Mt vs year-ago 64.4Mt. FY21 guidance for Coal volume remains at 210-220m.
- Cleanaway Waste Management (CWY) -1.35% Notes conditions remain mixed throughout the country. Q1 EBITDA was in line with FY20 full year run rate, with conditions further improving in September. Expects FY21 full year EBITDA to be moderately higher than FY20, subject to a recovery in economic conditions in H2.
- The Westpac-Melbourne Institute index of consumer sentiment surged by 11.9 per cent to 105 in October.
- Dwelling commencements fell 5.6% in the June quarter. New private sector house commencements fell 0.8% to 25,397 dwellings, while private sector other residential commencements fell 14.1% to 15,966 dwellings. The value of total building work done fell 3.8%.
- RBNZ assistant governor Christian Hawkesby says discussions around introducing negative interest rates are ‘not a bluff’ and it remained committed to cutting the official cash rate further if required.
COVID – 19 NEWS
- China’s Qingdao said it has taken more than 5.6m samples in less than two days after the city reported a new cluster of infections on Sunday. They plan to test the whole 10m in the city in five days. No stuffing around there.
- Northern Ireland will put in place a “circuit breaker” lockdown for four weeks, with schools closing for two of them.
- Mexico reported 4,295 new Covid-19 cases, bringing the total to 825,340.
- Boris is under pressure to go to a circuit breaker lockdown as pressure builds on growing numbers.
- The Dutch prime minster ordered a partial lockdown, Italy had the most new cases since March and France reported a surge in patients needing intensive care.
- Chinese stocks are within a cooee of all-time highs as Xi Jinping takes the stage in Shenzhen. October is generally a good month for Chinese stocks, with the CSI 300 rising by an average 3% each year since 2010.
- Ant Group under scrutiny over exclusive sale of IPO shares.
EUROPEAN AND US HEADLINES
- European futures showing a slight positive start.
- IMF weighs in on valuation debate. One IMF official said there ‘could be a pullback’. Lots of variants going forward.
- ACB vows she will bring no agenda to her duties as part of SCOTUS.
- EU and UK keen to tie up agreement by Thursday.
- Paypal is taking it up to Klarna in UK with its new ‘Pay in 3’ service.
- ‘New Era’ for iPhones. 5G.
- Goldman Sachs and Morgan Stanley results tonight.
Table Football Italian style
Brother John entered the ‘Monastery of Silence’ and the Chief Priest said, “Brother, this is a silent monastery, you are welcome here as long as you like, but you may not speak until I direct you to do so.”
Brother John lived in the monastery for a full year before the Chief Priest said to him:
“Brother John, you have been here a year now, you may speak two words.”
Brother John said, “Hard Bed.”
“I’m sorry to hear that” the Chief Priest said. “We will get you a better bed.”
The next year, Brother John was called by the Chief Priest. “You may say another two words Brother John.”
“Cold Food.” said Brother John, and the Chief Priest assured him that the food would be better in the future.
On his third anniversary at the monastery, the Chief Priest again called Brother John into his office. “Two words you may say today.”
“I Quit.” said Brother John.
“It is probably best.” said the Chief Priest. “All you have done since you got here is complain.”
A middle-aged guy is out to dinner with his wife to celebrate her fortieth birthday. He says, “So what would you like, Julie? A Jaguar? A sable coat? A diamond necklace?”
She says, “Bernie, I want a divorce.”
“My goodness,” he says, “I wasn’t planning on spending that much.