ASX 200 down 72 points to 7511.
- HIGH 7581 LOW 7494. Results disappoint.
BHP RESULTS JUST OUT: Huge announcement; Merging its oil and gas assets with WPL. Scrapping Dual listing. Massive $US17bn underlying profit, the third biggest since Australia’s BHP merged with London-listed Billiton in 2001. Shareholders will receive a better than expected final dividend of $US2 per share, taking total dividends in the year to a record $US3.01. Iron ore contributed around 80% of its profit. BHP will enter the potash market too. Mike Henry very excited about this move. UK holders will be happy with the collapsing of the dual listing and ASX will be its primary listing. Up 8.2% in London trade early but that may be the dual listing bounce. Early days
Winners: OCL, ASM, DHG, AEF, PSI, SDF, FPH
Losers: AXE, 88E, SZL, SYA, MFG, SWM, BRG, GWA
- POSITIVE SECTORS: Healthcare Defensives.
- NEGATIVE SECTORS: Most
- BIG BANK BASKET: Down to $180.32. CBA ex div.
- ALL -TECH INDEX: Down 0.7% APT down 0.2%
- GOLD: Rallies hard to AUD $2449
- BITCOIN: US$46361 Drifting lower
- AUD: Eases to 73.05c
- 10-YEAR YIELD: Steady at 1.14%
- ASIAN MARKETS: Tokyo down 0.49%, Hong Kong down 1.94%, China down 1.81%
- US FUTURES: Dow futures down 132. NASDAQ down 21
ASX 200 slides 72 points to 7511 (0.9%) as results drop thick and fast. Seems some disappointment emerging on outlook statements and cost pressures perhaps. The Big Bank Basket fell hard today as CBA went ex-dividend, the basket dropped to $180.32. Other financials were also on the nose as MFG collapsed 10.2% on a lack of performance fees. Miners were also on the nose as BHP fell 1.4% ahead of its results after hours and more news on the potential WPL deal with the energy company dropping 2.1%. Gold miners shrugged off a positive AUD bullion price to stay neither shaken nor stirred. Industrials were mixed with some defensives holding up as WOW, COL and WES all in the green. Healthcare better with CSL up 0.2% in a late flurry with the rest of the sector looking ok. Tech stocks weakened and high valuation stocks flew too close to the sun, and we saw some wax melting in the likes of AXE, crashing 21.7% and lithium stocks a little depressed. In corporate news, BRG boiled over falling 9.0%, LYC was hit by Malaysian concerns, down 7.6% and GWA saw some downgrades falling 8.00%. On the economic front, RBA minutes revealed the bank considered delaying the tapering of bond purchases. Weekly consumer confidence rose 2.5% last week, breaking back through the 100 level. The recovery was driven by a 7.5% increase in confidence in Queensland as the lockdown in its southeast ended.
STOCKS ON THE MOVE
- AXE -21.72% the axe falls.
- 4DS -18.60% technical update.
- 88E -19.61% punters pull pin after oil update.
- SZL -14.84% SEC Form 10-Q.
- MFG -10.15% performance fee tumbles.
- BRG -8.97% cities supply chain problems.
- LYC -7.59% profit taking and Malaysian political risk.
- PLS -5.58% lithium stocks a little depressed.
- GWA -7.99% broker downgrades.
- DHG +4.71% pays a dividend.
- AEF +4.60% leverage to market.
- SDF +3.84% completion of insto placement.
- SPL +3.46% VIRALEZE well tolerated in multiple dose clinical study.
- MNY +3.24% good results.
- ALK +3.19% bouncing from yesterday’s sell off on drill results.
- RMD +2.33% rally continues.
- CAR +3.45% broker upgrades
- DSE -12.77% capital raise.
- Speculative Stock of the Day: Nothing on any great volume. Bowen Coal (BCB) +19.05% strong bounce after sell-off.
- Westpac Banking (WBC) -1.32% Third quarter CET 1 ratio 12.0% vs quarter-ago 12.3%. Board considering a return of capital, with an update expected at its FY21 results. Australian mortgages and Australian business lending grew at 1x system. Provisions to credit risk-weighted assets 155bps vs quarter-ago 159bps. Second half margins are expected to be lower than the first half. FY21 expenses are expected to be higher vs a year ago.
- Galaxy Resources Now ORE (GXY) -2.75% First half profit US$64.3m vs year-ago -US$$22.2m. Profit includes impairment reversal gain of US$60.2m, pre-tax. Revenue US$38.7m vs year-ago US$23.3m. EBITDA before inventory write-down -US$2.6m vs consensus -US$1.0m. Free on board cash cost per tonne produced US$352 vs year-ago US$469.
- Domain Holdings Australia (DHG) +4.71% Revenue $289.6m vs consensus $289.1m. EBITDA (ex-accounting change) $102m vs consensus $98.8m. Final dividend 4.0c/share, fully franked. FY22 year to date, national listings are slightly up on last year. While listing volumes have been impacted by lockdowns, particularly in Sydney, July continued to deliver strong national depth performance. Remain confident in the resilience of the market, as evidenced by consistent patterns of sharp rebounds when restrictions ease.
- Santos (STO) -0.81% First half underlying profit US$317m vs year-ago US$212m. Revenue US$2.04bn vs US$2.12bn. Free cash flow US$572m. Net profit US$354m vs year-ago -US$289m. Interim dividend 5.5c, fully franked. Sales volume guidance maintained in the range of 100 to 105 mmboe. Production guidance maintained in the range of 87 to 91 mmboe.
- Charter Hall Retail REIT (CQR) -1.84% Full-year operating EPS 27.3c vs guidance 27.3c and consensus 27c.Property portfolio value $3.65bn vs year-ago $3.25bn. Second half distribution 12.7c, in-line with guidance. Not providing FY22 guidance. Specialty sales and customer traffic have rebounded strongly and quickly after lockdowns, our expectations are that this pattern will continue.
- Sims (SGM) -3.00% Reports Full-year underlying earnings before interest and tax (EBIT) of $386.6m at the upper end of the guidance range $360-380m. Consensus EBIT was $366.2m. Reports FY: Underlying net profit $284.1m vs consensus $262.0m, revenue $5.92bn vs consensus $6.48bn. Announced a final dividend $0.30/sh, 50% franked. Outlook: “FY22 has started very well continuing the trend of consecutive strong quarters in the second half of FY21. The business is expected to benefit from positive medium and long-term drivers including stimulus in USA and China.”
- Sezzle (SZL) -14.84% Reports Q2 earnings per share of – US$0.1 vs year-ago – US$0.02 Reports Q2: Total income US$27.8m vs year-ago US$12.6m. Operating loss – $17.8m vs year-ago – $2.8m.
- Breville Group (BRG) -8.97% Reports Full-year earnings before interest and tax (EBIT) of $136.4m vs guidance $136m and consensus $142.8m. Reports FY: Net profit $91.0m vs consensus $90.6m, revenue $1.19bn vs consensus $1.17bn. Announced a final dividend of 13.5cps. Chairman Steven Fisher to step down with Tim Antonie appointed replacement, effective 11-Nov-21.
- SCP Property Group (SCP) -1.13% Reports Full-year funds from operations of $0.148 per unit vs guidance of at least $0.142 and consensus $0.14. Reports FY: Net profit $462.9m vs year-ago $85.5m, Net property income $190.5m vs consensus $200.6m. Announced a distribution 12.40c/unit. FY22 outlook: “Due to the continued uncertainty created by the COVID-19 pandemic, will not provide FY22 guidance at this time. Will continue to target a Distribution payout ratio of approximately 100% of AFFO. Target is to return AFFO per unit to the pre-COVID level of 7.5cpu per half (or 15.0cpu per annum) once the impacts of the COVID-19 pandemic have ended.”
- Magellan Financial Group (MFG) -10.15% Full-year adjusted profit $412.7m vs consensus $429m.Adjusted revenue $699.1m vs consensus $673.4m. Crystallised performance fees before tax $30.1m vs year-ago $81m. Final distribution $1.141 (75% franked).
- Dexus Property Group (DXS) -1.59% Full-year funds from operations 66.1c vs consensus 67c. Revenue $1.02bn vs consensus $824.9m. NTA per unit 11.42 vs year-ago 10.86. Distribution 23.0cps, as previously indicated. Total distributions 51.8cps vs year-ago 50.3. Expects FY22 distribution per security growth of not less than 2% on FY21.
- ARB Corp. (ARB) +0.17% Full-year pre-tax income $150.0m vs guidance $145-150m and consensus of $147.1m. Revenue $623.1m vs consensus $623.6m. Final dividend 39c vs year-ago 21c. Maintains a positive short-term outlook based on strong global sales since the end of the financial year. Observes a strong customer order book and increasing new car sales in Australia.
ECONOMIC NEWS/ BOND MARKETS
- NSW records 452 new local cases. ACT cluster is getting bigger.
RBA meeting minutes – click here for the full text
Members considered the case for delaying the tapering of bond purchases to $4 billion a week currently scheduled for September 2021. They noted that the outlook for the economy is for a resumption of strong growth in 2022. Members judged that any additional bond purchases would have their maximum effect at that time, with only a marginal effect at present, which is when the extra support might be required.
The Board reaffirmed the existing policy settings, namely:
- Maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances of 0%
- Maintain the target of 10 basis points for the April 2024 Australian Government bond
- Continue to purchase government securities at the rate of $5 billion a week until early September 2021 and then $4 billion a week until at least mid November 2021.
Weekly consumer confidence rose 2.5% last week, breaking back through the 100 level. The recovery was driven by a 7.5% increase in confidence in Queensland as the lockdown in its southeast ended.
- NZ has worryingly found one CV19 in the community.
- Vaccine Tracker: 4.74bn doses in 183 countries. 37, doses a day.
- Australia now administering 230,826 a day. 3 months to get to 75%.
- Looks like US will approve a booster 8 months after last vaccination.
- Supply chain issues continue. Increasing CV19 cases are closing ports and disrupting production.
US AND EUROPEAN NEWS
- European futures pointing to a soggy open across the region.
- Latest UK jobs data show a headline unemployment rate of 4.7% better than estimates of 4.8%
- President Biden defends his decision to abandon Afghanistan. China stepping into the diplomatic breech.
- Michael Burry (The Big Short) is betting against Cathie Wood, buying puts in ARK Innovation ETF. He has around US$31m worth of puts. He also has increased his bets against Tesla with puts over 1,075,500 shares.
- The biggest US trade gateway in LA and Long Beach California is clogged with 37 ships awaiting berth space. That is almost double the length of the queue since mid-July.
- Glencore is backing a UK battery startup with plans to supply cobalt to a new giga factory.
- Oatley revenues jump with the appetite for dairy alternative still growing strongly.
- US market now up 100% from lows in the fastest rally since the Second World War.