The ASX falls 19 to 6173 on a good bounce off the bottom. Not sure why there was so much pessimism in our market, but some technical selling took us down and support found at 6100 took us back. Dow futures still down 117 points though. Banks led the declines with CBA down 0.5% and the Big Bank Basket falling to $126.84. Other financial off lows with MQG flat and SUN off 1.9%. Big miners were mixed, BHP up 1.0% and FMG falling 1.1%. Energy stocks back in the kennel on oil falls, STO down 1.9% and WPL down 1.6% on quarterly reports. CSL dominated healthcare down 0.3% though HLS had a good day up 9.3%. Bond yields inched higher to 0.82% taking the gloss off the proxy stocks like REITs with GMG down 0.2% and SCG down 3.0%. Industrials uneventful except CWN which held its AGM today, first strike, up 2.0%. In other corporate news, Z1P down 5.1% after WBC offloads its 11% stake at 665c. OZL up 3% on its 3Q update. AMP down 5.6%, total assets under management (AUM) $189.2bn vs quarter-ago $189.9bn. BEN down 3.8%, APRA increased its minimum liquidity requirement for failing to comply with liquidity guidelines. Nothing exciting to take away from RBA’s Debelle speech at FX Week Australia. The 10-year yield rose again to 0.82% on some safe haven buying and the AUD stirred with Bitcoin back from the dead, close to US$13,000. Asian markets await the colossal Ant Group IPO with Japan down 0.7% and China off 0.8%.
- ASX 200 falls 18 to 6173.
- High 6180 Low 6101 Good bounce off 6100 support.
- Big Bank Basket falls to $126.84
- All Tech Index down 0.17%
- Australia Post chief stood down over watches.
- 7 trading days until the US election. Debate Thursday night in US.
- Dow Futuresdown 117. Stimulus impasse.
- Gold flat at AUD$2700
- 10-year bond yield rallies to 0.82%. Bonds firm on haven buying.
- AUD rallies to 70.89c
- Bitcoin rushes to US$12750
- Asian markets weaker with Japan down 0.7% and China off 0.8%.
- ASB -0.93% response to media speculation
- TNT -2.60% WHK +18.92% cyber security in focus from speech.
- GSS +8.99% record quarterly revenues.
- CIM -0.53% S&P puts it in Credit Watch.
- OZL +5.27% good quarterly.
- EML +2.77% broker upgrade.
- NVX +15.45% Tesla result cheers.
- NTO +4.07% exploding higher.
- URW -9.28% board push ESET plan. Shorts back.
- RSG -6.42% quarterly report.
- KGN -6.03% management option issue perhaps?
- AMP -5.56% AUM losses.
- 4DX -% escrow shares released.
- Z1P -9.40% WBC pulls cord.
- IMM -9.09% quarterly report.
- DOU -11.76% profit taking.
- MCR +9.29% nickel gains.
- SWM +15.15% new season line up cheers.
- CBR +13.55% quarterly report. Big wheels keep on turning.
- CWN +2.03% AGM clears some air. Gets first strike.
- HLS +9.30% stellar quarter on CV testing.
- Speculative Stock of the Day: MyDeal (MYD) +75.00% New IPO today raised $40m at 100c. Furniture and garden marketplace. Sales results ahead of listing helped. Gross sales record of $56.7 million, up 317%
- Biggest Winners: HLS, OZL, NTO, MMM, YAL, GNE and CCL
- Biggest Losers: URW, RBL, CHN, RSG. KGN, AMP, Z1P and LOV.
- Bendigo & Adelaide Bank (BEN) -3.85% APRA has increased Bendigo and Adelaide Bank’s minimum liquidity requirement for failing to comply with its liquidity guidelines. The breaches are historical in nature and while material, do not impact the overall soundness of the business, BEN’s current liquidity position is comfortably above APRA’s minimum regulatory requirements. BEN points to incorrect system coding of three business rules used to categorise certain deposits for the purposes of the Liquidity Coverage Ratio calculation. APRA has advised the bank that an overlay of 10% will be added to net cash outflows from November 2 and will remain in place until all required reviews are completed and all findings addressed to APRA’s satisfaction.
- Westpac (WBC) -0.48% To divest its 10.7% stake in Zip Co. (Z1P) via fully underwritten bookbuild to institutional investors at an offer price of 665c/share. The decision reflects Westpac’s approach to simplifying its business and ensuring the efficient use of capital. The sale will add around 8 basis points to Westpac’s common equity tier 1 capital ratio. Management had this to say, “we are continuing to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our mobile banking apps across Westpac and our Regional bank brands. This would expand our offering to customers and broaden Zip reach.”
- AMP (AMP) -5.56% Q3 AMP Capital total assets under management (AUM) $189.2bn vs quarter-ago $189.9bn.Net external cash outflows of $1.11bn, primarily due to redemptions from public markets products. AMP Australia wealth management AUM $121.39bn vs quarter-ago $121.04bn. Net cash outflows of $1.95bn. AMP Bank total loan book decreased $303m to $20.6bn. Total deposits increased $52m to $17.0bn.
- APA Group (APA) -0.93% Reiterates FY21 EBITDA guidance of $1.63-1.67bn vs consensus of $1.65B at AGM.
- Crown Resorts (CWN) +2.03% Terminates agreements between Crown and Consolidated Press Holdings. The services agreement which enabled Crown to request services by key CPH executives at pre-agreed hourly rates. The Controlling Shareholder Protocol which enabled the sharing of confidential information by Crown to CPH and James Packer. CPH is the private firm of major shareholder James Packer.
- Laybuy Group Holdings (LBY) +1.75% Q2 gross merchandise value NZ$127.1m vs quarter-ago NZ$117m. Annualised GMV NZ$508.4m vs quarter-ago NZ$467m. Net transaction margin (as % of GMV) 2.3% vs quarter-ago 0.5%. Active merchants 6,323 vs quarter-ago 5,672. Active customers 568,000 vs quarter-ago 473,000. Following the launch of the global partner programme, Laybuy expects to see the growth in active merchants accelerate in Q3 FY21. It is expected that the business will perform in line with growth expectations in the next quarter in terms of customer, merchant and GMV expansion.
- Australian Unity Office Fund (AOF) -0.24% Reaffirms FY distribution guidance of 15.0cpu. Q1 occupancy 95.0% vs quarter-ago 93.7%. Rental collection, including payment of arrears was of 97% of the full rent roll in the quarter.
- Woodside Petroleum (WPL) -1.62% Q3 production 25.3MMboe vs year-ago 24.9MMboe. Sales revenue of US$699m vs year-ago US$1.21bn. Sales volume 26.7MMboe vs year-ago 24.2MMboe. Capital expenditure US$274m vs year-ago US$317m.
- Santos (STO) -1.93% Q3 production (mmboe) 25.1 vs quarter-ago 20.6. FY upstream unit cost guidance lowered from US850-900c to US825c-875c/boe . Sales volume (mmboe) 29.1 vs quarter-ago 24.6. Sales revenue US$797m vs quarter-ago US$785m. Capex US$219m. Generated US$143m in free cash flow in the quarter. Net debt at the end of September was US$3.68bn and gearing was 33.6%. Volume and production guidance maintained.
- Saracen Minerals (SAR) -0.16% Q1 gold production of 154.4Koz at AISC of $1,169/oz; on track for FY21 guidance of 600-640koz at AISC of $1300-$1400/oz.
- Whitehaven Coal (WHC) -2.76% Repeats FY guidance at AGM. Sees ROM coal production between 21.0-22.8Mt. Managed coal sales 18.5-20.0Mt. Cost of Coal $69-72/t.
- Resolute Mining (RSG) -6.42% Q3 gold production 87.3Koz, down 19% vs quarter ago. Q3AISC US$1,284/oz. Cash and bullion of $106m with net debt of US$234m. CY20 production is expected at the lower end of the guidance of 400-430Koz and costs are expected at the higher end of guidance of US$980/oz and US$1,080/oz. Operations at Mako and Syama are performing well and have achieved throughput and recovery at forecast levels during October. Full-year results are expected to meet the company’s guidance, with gold production at the lower end and costs at the upper end of the revised guidance range.
- Healius (HLS) +9.30% provides trading update and report Q1 revenue of $492.5m vs $419, a year ago. Underlying EBIT $81.2m vs $32.4m a year ago. Pathology revenues have been strong in Q1 FY21, with non-COVID revenues now ahead of the prior comparable period. Imaging revenues have fluctuated in Q1 FY21 due to the Victorian lockdown and outbreak clusters in other states. Revenues are currently up in all states other than Victoria. Day Hospitals revenues were materially ahead of the prior comparable period in Q1 FY21 and the division is continuing to perform strongly in October. CEO on the outlook: “given the uncertainty that remains around the extent and timing of the COVID-19 pandemic and the impact on us, we will continue to update the market periodically on our results. We caution against extrapolating from this quarter to the remainder of the financial year, as we do not expect this level of performance to continue”.
- Australian Pharmaceutical Industries (API)-0.93% reports FY underlying NPAT of $32.5m. Revenue $4.02bn versus expectations of $4.10bn. Underlying EBIT $56.3m vs expectations of $67.4m. Final dividend 2cps, fully franked, vs 4cps a year ago. From management: “While the on-going economic uncertainty persists, we cannot offer earnings guidance but the fundamentals to deliver strong forward momentum are all in place”.
- Mirvac (MGR) -1.76% provides Q1 update and notes that it does not have sufficient certainty to provide earnings and distributions guidance for FY21. Office occupancy at 97.4%, WALE of 6.5 years and rent collection rate of 93%. Industrial occupancy at 99.4%, WALE of 7.3 years and rent collection rate of 95%. Retail: rent collection rate of 64%, store openings of 92% (97% excluding CBD and Victorian centres). Residential: settled 483 residential lots, defaults 1.9% with pre-sales at $921m.
- Between the week ending 14 March and the week ending 3 October 2020 :
- Payroll jobs decreased by 4.1%
- Total wages decreased by 3.3%
Latest CV19 data from ABS
- Fewer businesses reported a revenue decrease in October (31%) compared to July (47%).
- Almost three quarters (73%) of businesses had not sought additional funds over the last 6 months.
- Almost one third (29%) reported that cash on hand could sustain operations for less than three months.
COVID – 19 NEWS
- Brazil’s President Bolsonaro said the people will not be guinea pigs for anyone, especially a Chinese vaccine.
- South Korea reported 121 more coronavirus cases on Thursday, up from 91 cases a day earlier.
- Uruguay’s government issued a 30-day ban on public events and private parties in the province of Rivera that borders Brazil.
- Czech Republic registered a daily record of 14,968 new Covid-19 cases on Wednesday.
- U.S. hospitalizations for Covid-19 hit the highest point since Aug. 22, with New York doubling its count from early September.
- Spain now the first EU country to have more than 1m cases.
- Italian cases jump to a new record.
- Alibaba will buy a fifth of all the Ant Shares. It will buy 730 m of about 1.67bn Shanghai-listed A shares as part of a placement to strategic investors
- The PBoC has fixed the midpoint of the Chinese yuan stronger against the US dollar for a sixth straight day.
- The yuan was fixed at 6.6556 against the US dollar compared to 6.6781 on Wednesday.
EUROPEAN AND US HEADLINES
- One US official says Iran and Russia are trying to interfere in US election.
- Ireland’s central Bank chief has warned on the twin threats of Brexit and Covid.
- Tesla delivers another profit. 5 in a row.
- Big Debate Thursday night. Our Friday morning.
- One report says investors are avoiding big directional bets ahead of election after being caught badly in 2016.
And finally…thanks Hans
A New York attorney representing a very wealthy art collector called and asked to speak to his client.”Saul, I have some good news and I have some bad news.”
The art collector replied, “You know, I’ve had an awful day, Jack, so let’s hear the good news first.”The lawyer said, “Well, I met with your wife today, and she informed me that she has invested only $500 in two very nice pictures that she thinks will bring somewhere between $15 and $20 million … and I think she could be right.”Saul replied enthusiastically, “Holy cow! Well done! My wife is a brilliant business woman, isn’t she? You’ve just made my day. Now, I know I can handle the bad news. What is it?
The lawyer replied, “The pictures are of you and your secretary.”
The following is an actual question given on a University of Arizona chemistry mid-term and an actual answer turned in by a student.
The answer by one student was so ‘profound’ that the professor shared it with colleagues, via the Internet, which is, of course, why we now have the pleasure of enjoying it as well:
Bonus Question: Is Hell exothermic (gives off heat) or endothermic (absorbs heat)?
Most of the students wrote proofs of their beliefs using Boyle’s Law (gas cools when it expands and heats when it is compressed) or some variant.
One student, however, wrote the following:
First, we need to know how the mass of Hell is changing in time. So we need to know the rate at which souls are moving into Hell and the rate at which they are leaving, which is unlikely. I think that we can safely assume that once a soul gets to Hell, it will not leave.
Therefore, no souls are leaving. As for how many souls are entering Hell, let’s look at the different religions that exist in the world today.
Most of these religions state that if you are not a member of their religion, you will go to Hell. Since there is more than one of these religions and since people do not belong to more than one religion, we can project that all souls go to Hell. With birth and death rates as they are, we can expect the number of souls in Hell to increase exponentially.
Now, we look at the rate of change of the volume in Hell because Boyle’s Law states that in order for the temperature and pressure in Hell to stay the same, the volume of Hell has to expand proportionately as souls are added.
This gives two possibilities:
1. If Hell is expanding at a slower rate than the rate at which souls enter Hell, then the temperature and pressure in Hell will increase until all Hell breaks loose.
2. If Hell is expanding at a rate faster than the increase of souls in Hell, then the temperature and pressure will drop until Hell freezes over.
So which is it?
If we accept the postulate given to me by Teresa during my Freshman year that, ‘It will be a cold day in Hell before I sleep with you,’ and take into account the fact that I slept with her last night, then number two must be true, and thus I am sure that Hell is exothermic and has already frozen over.
The corollary of this theory is that since Hell has frozen over, it follows that it is not accepting any more souls and is therefore, extinct leaving only Heaven, thereby proving the existence of a divine being which explains why, last night, Teresa kept shouting ‘Oh my God.’
THIS STUDENT RECEIVED AN A+.