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Market Opener – 21 Mar 2019
Local Markets Commentary
The Australian market commences today’strade ahead of two keydomestic reports, with mixed overnight key commodities priceleads, and a lower US Federal Reserve GDP forecast combinedwith indications of no new US rate rises this year.In overnight commodities trade, oil rallied.US gold futures (April) turned to close lower, but climbed~US14/oz post-settlement.Iron ore (China port, 62% Fe) dropped.LME copper and nickel each picked up the pace of Tuesday’sgains.The $A was propelled to ~US71.20c after trading at~US70.90cearly yesterday evening.Locally today, the Australian Bureau of Statistics (ABS) publishesFebruary employment statistics, 11.30am AEDT.Figures for NSW will draw more attention than usual on accountof the State election Saturday.Also at 11.30am, the Reserve Bank of Australia (RBA) publishesits quarterly bulletin.Monthly forex transactions and reserve assets are also expectedfrom the RBA today.Stocks trading ex-dividend today include AIA, FBU and FLT. Pleasesee pp3-4 for a comprehensive list.Regionally this morning, New Zealand has announced Decemberquarter GDP had grown 0.6% for the three months and 2.3% yearon-year, following 0.3% September quarter growth.Japan’s markets are closed today, due to a public holiday.
Overseas Markets Commentary
Major European and US equities markets headed lower on openovernight, key US indices jumping two hours before close, on aAustralia – February employment and Reserve Bank of Australiaquarterly bulletin - 11.30am AEDTASX opening times delayed today due to futures contractsexpiring:Group 1 (A-B) - 10:00:00 ± 15 secsGroup 2 (C-F) - 10:04:00 ± 15 secsGroup 3 (G-M) - 10:08:00 ± 15 secsGroup 4 (N-R) - 10:12:00 ± 15 secsGroup 5 (S-Z) - 10:16:00 ± 15 secsToday’s Stock WatchQANTM Intellectual Property (QIP) / Xenith IP Group(XIP)The Australian Competition & Consumer Commission (ACCC)will not oppose the proposed QIP-XIP merger.Sigma Healthcare (SIG)33.7% lower, $36.52M full year NPAT.2.9% lower, $3.98B revenue.20% lower, 2c fully franked final dividend. 36.7c NTA.Washington H Soul Pattinson & Co (SOL)22.6% higher, $179.19M interim NPAT.31.6% higher, $723.29M revenue.24c fully franked interim dividend, up 1c. $13.76 NTA.Brickworks Ltd (BKW)18.1% higher, $114.57M interim NPAT.17.3% higher, $442.47M revenue.19c interim dividend, up 1c. Please also see p2 (ASX: FBR).WorleyParsons Ltd (WOR)WOR has secured the United Arab Emirates (UAE) Ruwaispetrochemicals complex fourth phase project managementcontract with the Borouge Abu Dhabi National Oil CompanyBorealis JV.ResourcesAeris Resources (AIS)In response to a media article, AIS confirms the company isoffering Glencore ~$US525M cash plus ~$US50M worth of AISshares, plus a royalty, for the CSA mine.AIS needs to raise finance however, including via a likely$US185M - $US240M equity capital raising and $US250M -$US300M worth of debt.The company will also need shareholder approval and as suchwarns that no formal agreements in relation to a potentialtransaction have been reached.AIS called a trading halt pre-trade yesterday after trading at 17c– 18c Monday – Tuesday.State One Stockbroking Limited – Market Opener Thursday, 21 March 2019S t a t e O n e S t o c k b r o k i n g L t d A F S L 2 4 7 1 0 0 2 | P a g eFederal Reserve post-policy meeting statement, before retreatingsome before close.The US president had offered overnight that he would need to beconvinced of demonstrated compliance with any trade dealbefore lifting any new import tariffs imposed over the past yearon goods from China. This, with reports out of China over the pastweek, suggested ongoing argy-bargy.An overnight media article in the meantime cited administrationofficials in claiming the US chief trade representative and treasurysecretary would return to Beijing next week for further face-toface trade talks with China’s VP Liu He.Two hours prior to the close of US trade, the US Federal Reservereleased its post-policy meeting statement, indicating no furtherrate rises were likely this year, and perhaps one only during 2020.In addition, the Fed lowered its forecast for 2019 GDP growth by0.2% to 2.1%.The central bank also confirmed plans to stop reducing its balancesheet on a monthly basis from October, and to slow the monthlybalance sheet rundown from May.The $US fell, in particular against the yen and euro, after gainingin early trade.Meanwhile in the UK, the PM had announced she had written tothe European Council president, requesting the UK’s plannedwithdrawal from the European Union (EU) be delayed until 30June.Indications out of the European Commission prior to thishowever, suggested permission would only likely be granted untilthe 23 May European Parliament elections.The British pound was pushed sharply lower on news of therequest, ahead of a scheduled European Council two-day summitfrom later today (AEDT).Among data releases UK February CPI growth came in at 0.5% forthe month, following 0.8% January deflation. On an annual basis,CPI growth slipped 0.1% to 1.9%.A CBI industrial trends orders index tumbled to one, from six inFebruary.Germany’s February producer prices fell 0.1% during the month,following a 0.4% January rise. Year-on-year they were 2.6%higher.In the US, weekly mortgage applications rose 1.6% after climbing2.3% the previous week.Tonight in the US, weekly new jobless claims are due.In the euro zone, the European Council (comprising EU leaders)considers whether to push back the initially legislated 29 Marchdate for the UK’s planned withdrawal from the European Union(EU).Meanwhile in the UK, the Bank of England holds a policy meetingand announces outcomes. Subsequent media-conferencecomments are anticipated directly relating to UK-EU separationscenarios.The European Central Bank publishes an economic bulletin whichwill be keenly parsed for any changes to forecasts.Carnival, CITIC Securities, ConAgra Brands, Next, Nike andPetroChina are scheduled to report earnings and/or provideupdates.
The Australian market commences today’strade ahead of two keydomestic reports, with mixed overnight key commodities priceleads, and a lower US Federal Reserve GDP forecast combinedwith indications of no new US rate rises this year.In overnight commodities trade, oil rallied.US gold futures (April) turned to close lower, but climbed~US14/oz post-settlement.Iron ore (China port, 62% Fe) dropped.LME copper and nickel each picked up the pace of Tuesday’sgains.The $A was propelled to ~US71.20c after trading at~US70.90cearly yesterday evening.Locally today, the Australian Bureau of Statistics (ABS) publishesFebruary employment statistics, 11.30am AEDT.Figures for NSW will draw more attention than usual on accountof the State election Saturday.Also at 11.30am, the Reserve Bank of Australia (RBA) publishesits quarterly bulletin.Monthly forex transactions and reserve assets are also expectedfrom the RBA today.Stocks trading ex-dividend today include AIA, FBU and FLT. Pleasesee pp3-4 for a comprehensive list.Regionally this morning, New Zealand has announced Decemberquarter GDP had grown 0.6% for the three months and 2.3% yearon-year, following 0.3% September quarter growth.Japan’s markets are closed today, due to a public holiday.
Overseas Markets Commentary
Major European and US equities markets headed lower on openovernight, key US indices jumping two hours before close, on aAustralia – February employment and Reserve Bank of Australiaquarterly bulletin - 11.30am AEDTASX opening times delayed today due to futures contractsexpiring:Group 1 (A-B) - 10:00:00 ± 15 secsGroup 2 (C-F) - 10:04:00 ± 15 secsGroup 3 (G-M) - 10:08:00 ± 15 secsGroup 4 (N-R) - 10:12:00 ± 15 secsGroup 5 (S-Z) - 10:16:00 ± 15 secsToday’s Stock WatchQANTM Intellectual Property (QIP) / Xenith IP Group(XIP)The Australian Competition & Consumer Commission (ACCC)will not oppose the proposed QIP-XIP merger.Sigma Healthcare (SIG)33.7% lower, $36.52M full year NPAT.2.9% lower, $3.98B revenue.20% lower, 2c fully franked final dividend. 36.7c NTA.Washington H Soul Pattinson & Co (SOL)22.6% higher, $179.19M interim NPAT.31.6% higher, $723.29M revenue.24c fully franked interim dividend, up 1c. $13.76 NTA.Brickworks Ltd (BKW)18.1% higher, $114.57M interim NPAT.17.3% higher, $442.47M revenue.19c interim dividend, up 1c. Please also see p2 (ASX: FBR).WorleyParsons Ltd (WOR)WOR has secured the United Arab Emirates (UAE) Ruwaispetrochemicals complex fourth phase project managementcontract with the Borouge Abu Dhabi National Oil CompanyBorealis JV.ResourcesAeris Resources (AIS)In response to a media article, AIS confirms the company isoffering Glencore ~$US525M cash plus ~$US50M worth of AISshares, plus a royalty, for the CSA mine.AIS needs to raise finance however, including via a likely$US185M - $US240M equity capital raising and $US250M -$US300M worth of debt.The company will also need shareholder approval and as suchwarns that no formal agreements in relation to a potentialtransaction have been reached.AIS called a trading halt pre-trade yesterday after trading at 17c– 18c Monday – Tuesday.State One Stockbroking Limited – Market Opener Thursday, 21 March 2019S t a t e O n e S t o c k b r o k i n g L t d A F S L 2 4 7 1 0 0 2 | P a g eFederal Reserve post-policy meeting statement, before retreatingsome before close.The US president had offered overnight that he would need to beconvinced of demonstrated compliance with any trade dealbefore lifting any new import tariffs imposed over the past yearon goods from China. This, with reports out of China over the pastweek, suggested ongoing argy-bargy.An overnight media article in the meantime cited administrationofficials in claiming the US chief trade representative and treasurysecretary would return to Beijing next week for further face-toface trade talks with China’s VP Liu He.Two hours prior to the close of US trade, the US Federal Reservereleased its post-policy meeting statement, indicating no furtherrate rises were likely this year, and perhaps one only during 2020.In addition, the Fed lowered its forecast for 2019 GDP growth by0.2% to 2.1%.The central bank also confirmed plans to stop reducing its balancesheet on a monthly basis from October, and to slow the monthlybalance sheet rundown from May.The $US fell, in particular against the yen and euro, after gainingin early trade.Meanwhile in the UK, the PM had announced she had written tothe European Council president, requesting the UK’s plannedwithdrawal from the European Union (EU) be delayed until 30June.Indications out of the European Commission prior to thishowever, suggested permission would only likely be granted untilthe 23 May European Parliament elections.The British pound was pushed sharply lower on news of therequest, ahead of a scheduled European Council two-day summitfrom later today (AEDT).Among data releases UK February CPI growth came in at 0.5% forthe month, following 0.8% January deflation. On an annual basis,CPI growth slipped 0.1% to 1.9%.A CBI industrial trends orders index tumbled to one, from six inFebruary.Germany’s February producer prices fell 0.1% during the month,following a 0.4% January rise. Year-on-year they were 2.6%higher.In the US, weekly mortgage applications rose 1.6% after climbing2.3% the previous week.Tonight in the US, weekly new jobless claims are due.In the euro zone, the European Council (comprising EU leaders)considers whether to push back the initially legislated 29 Marchdate for the UK’s planned withdrawal from the European Union(EU).Meanwhile in the UK, the Bank of England holds a policy meetingand announces outcomes. Subsequent media-conferencecomments are anticipated directly relating to UK-EU separationscenarios.The European Central Bank publishes an economic bulletin whichwill be keenly parsed for any changes to forecasts.Carnival, CITIC Securities, ConAgra Brands, Next, Nike andPetroChina are scheduled to report earnings and/or provideupdates.