Marcus Today End Of Day Report
VIEW MORE ARTICLES BY HENRY JENNINGS
- ASX 200 up 18 to 6263 as rally fades into the close.
- High 6274 Low 6243.
- Strong jobs number help the dollar.
- Afterpay hits afterburner.
- Banks firm as Resources rally on quarterlies.
- CSL (+0.6%) tops $200 again. CIM soars +16.6%.
- AUD firms to 74.06c on best jobs in five-years.
- Bitcoin slips a little to US$7318.
- Aussie Gold weaker at $1651.
- US futures -2.
- Asian markets a tad weaker with Japan down 0.09% and China down 0.49%.
FUTURES AND HIGHS AND LOWS
- MARCUS CALL - A win in the SMA, why everyone is buying BHP and RIO, and what to do with Technology One.
- TRADING IDEAS - No new trades. Four stop losses raised.
- SMALL COMPANIES - A look at MSB and what is happening in the US with its uranium industry, plus a great insider’s recommendation on CVN, a huge winner yesterday on a new oil find on the NW Shelf.
Movers and Shakers
- CIM +16.63% results very good last night.
- APT +23.90% a behemoth in the making. Worth more than JBH.
- HUB +12.98% FUA kicking lights out.
- BGA -5.99% loses impetus. Broker downgrade.
- EVN -4.44% gold miners ease on stronger dollar.
- PLS -2.48% profit taking continues.
- OZL +2.56% commits to dividends.
- WPL -0.87% Browse gas deal close.
- Z1P -3.35% quarterly report.
- PEN -9.68% US moves on Uranium. Should be good for them.
- AZJ -1.83% ACCC takes action on collusion.
- TCL -0.50% in limbo on WestConnex.
- CVN +23.64% good work from Insiders on a new oil find.
- AKP +13.42% on 6k shares. Joke.
- Speculative stock of the day: Osprey Medical (OSP) +33.33% shareholders newsletter highlights progress on DyeVet plus in kidney care.
- Biggest risers – APT, CIM, HUB, MIN, UPD and LYC.
- Biggest fallers – CUV, BGA, EVN, WPP, SAR, AAC and NST.
- South32 (S32) +1.96% June quarterly production report. S32 took advantage of rising manganese prices with Australia Manganese production rising 10% in FY18. Payable nickel production was also strong +20% YoY. However, most other production measures were negative year on year (YoY). Alumina was down 3% to 5.1Mt; Aluminium was flat YoY at 983Kt, Energy coal was down 6% to 28.4Mt, Met coal was -44% to 3.2Mt. The company also said it is managing the South Africa Energy Coal business as a stand-alone and will incur one-off redundancy and restructuring charges of US$60m pre-tax to be recorded in the FY18 results.
- Oz Minerals (OZL) +2.56% Second Quarter production report. Copper production is on track to hit FY18 guidance with 1H production at 54.6Kt (guidance is 100Kt-110Kt), however, 2Q production was 1% lower than Q1 at 27,131t. Gold production is slightly under where it should be to hit the lower end of FY18 production coming in at 58,994oz for 1H, (guidance 120Koz-130Koz). 2Q gold production also fell from 1Q, down 9% to 28121oz.
- Woodside (WPL) -0.87% Delivered production of 22.1 MMboe and sales revenue of $1.082bn. The start-up of LNG production from Wheatstone Train 2 was the highlight of the period, which also saw another strong quarter of performance at Pluto. For the proposed Scarborough development, Woodside has accelerated targets ready for start up to 2023 for the upstream component and 2024 for the downstream to maximise the market opportunity.
- Santos (STO) +1.68% First half sales revenue up 16% to US$1.7bn due to stronger commodity prices and higher oil sales. Santos had cash and cash equivalents of US$1.5bn and total debt of US$3.9bn, resulting in net debt of US$2.4bn. Net debt includes US$145m oil hedging mark-to-market liability. Santos’ new dividend policy will see the company look to pay ordinary dividends that are sustainable through the oil price cycle and will target a range of 10% to 30% payout of free cash flow per annum. Given the cyclical nature of the industry, the Board will also consider additional returns to shareholders above the ordinary dividend when business conditions permit.
- Evolution Mining (EVN) –4.44% June quarter production report. Gold production for the quarter rose to 202,254oz and FY production of 801Koz was towards the top of FY18 guidance of between 750Koz-805Koz. FY18 all in sustaining costs (AISC) came in at a record low of 797 A$/oz beating FY18 guidance of 846 A$/oz. For the quarter net debt was reduced by 62% to 71.8m and operating mine cash flow hit a record of $221.9m. The company also issued FY19 guidance for gold of between 720,000-770,000oz with AISC between A$850-A$900/oz.
- Aurizon (AZJ) -1.83% The ACCC has taken AZJ and Pacific National to court alleging the two companies came to an understanding that AZJ would exit the intermodal market, significantly lessening competition in the market. Aurizon has said it is disappointed with the decision and will strongly refute the allegations in court.
- Hub24 (HUB) +12.98% The June quarter saw net inflows of $739m resulting in FY net inflows hitting a record $2.4bn, up 24.1% year on year. Funds under administration are up 51.2% in the year to $8.3bn. The stock is up 5.6% this morning.
- Afterpay Touch (APT) +23.90% 4Q business update. Underlying sale proceeds through Afterpay rose 289% YoY to $2.18bn, while the fourth quarter saw underlying sales jump 39% QoQ to $736m or +171% YoY. APT reported approximately 16,500 retailers and 2.2m customers currently live & transacted on the platform since inception.
BEST AND WORST
- June unemployment steady at 5.4% in line with forecasts. Full time employment +41,200. Part Time up 9,700.
- Over the past year, trend employment increased by 318,000 persons or 2.6%, which was above the average year-on-year growth over the past 20 years (2.0%).
Seasonally Adjusted Estimates (Monthly Change)
- Employment increased 12,000 to 12,518,300. Full-time employment decreased 20,600 to 8,521,400 and part-time employment increased 32,600 to 3,996,900.
- Unemployment decreased 26,800 to 714,600. The number of unemployed persons looking for full-time work decreased 11,200 to 494,300 and the number of unemployed persons only looking for part-time work decreased 15,600 to 220,300.
- Unemployment rate decreased by 0.2 pts to 5.4%.
- Participation rate decreased by 0.2 pts to 65.5%.
- Monthly hours worked in all jobs decreased 24.2 million hours (1.4%) to 1,738.8 million hours.
ASIAN MARKET NEWS
- Yuan for the money. Yuan for the show. Authorities may have let the yuan go. A 0.4% move in the offshore rate. Heading to 6.8 USD and possibly up to 7. Chinese deleveraging taking its toll. Wintime Energy (now Losetime) has run up US$10.8bn in corporate debt and now has defaulted. Luckily the state banks have thrown it a lifeline.
- The average total debt-to-common equity ratio at listed companies in China climbed to 99.5% at the end of 2017, the highest in more than a decade, according to Bloomberg-compiled data. The shadow-banking sector contracted by 691.7 billion yuan in June, the biggest net monthly drop on record, according to Bloomberg calculations.
EUROPEAN AND US HEADLINES
- FTSE expected to open up, DAX up and CAC up.
- Trump’s chief economic adviser signals trade talks with China have stalled.
- The Czech PM has warned that the EU migration plan is unworkable.
- Uber has hired its first chief privacy officer. IPO next year?
- Boris, having resigned from government, is now back as a Fleet Street hack with the Telegraph. Let’s May fight another day.
Henry Jennings has been involved in financial markets for over 35 years as both a trader and a broker in London and Sydney.
Starting his career in London trading derivatives and moving to Australia in 1989, Henry eventually settled at Macquarie Group, rising to become a Divisional Director responsible for Equity Trading in Australia. For the last decade, Henry has been involved in private client broking and now writes exclusively for the renowned financial newsletter Marcus Today. Henry regularly appears on ABC TV and Sky Business as a market analyst, commentator and strategist and has presented at various conferences most recently for the AIA on the Gold Coast.
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