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- The ASX 200 fell 0.67% yesterday amid mixed earnings results and weak offshore performance
- Swaps indicate a 55% chance of an RBA rate cut in Dec following the minutes release yesterday
- BHP Billiton (BHP.ASX) fell 1.7% in London reporting FY profit missed estimates, falling 30%
- S&P 500 rose 0.4%, ending a four-day slump, as Best Buy Co. surged 13% after posting earnings
- Stoxx Europe 600 retreated 0.8%, with financials leading losses amid financial stability concerns
- Gold rose for the fourth time in five sessions, adding 0.5% to US$1,373/oz on the weaker USD
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| ASX Market Wrap |
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| • | The ASX 200 fell 0.67% to close at 5,078.20, with 8 of 10 subgroups declining, led by consumer staples. The ASX outperformed most regional indices, however, as the earnings season gathered pace. Volume was 1.2% below 30-day average. |
| • | National Australia Bank (NAB.ASX), the best performer out of the big four banks this year, edged 0.67% higher to $31.57 after saying Q3 cash earnings rose 7% from a year earlier to $1.5 billion on mortgage growth, improved margins and lower bad debt charges. |
| • | Asian markets slumped across the board yesterday, with the benchmark MSCI Asia Pacific Index falling 1.6% to a six-week low of 131.51, as investors sold riskier assets ahead of the Fed minutes and Jackson Hole central bank meeting this week. |
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| • | Economics: Australia Westpac Leading Index for June, 10:30 a.m. Sydney; Australian skilled vacancies for July, 11 a.m. Sydney |
| • | Earnings results today: AAX, ABC, AIA, AIO, AAX, APA, BHP, BLD, BRG, CLO, FBU, FKP, GWA, IIN, ILU, IOF, PPX, RIC, SEK, SUN, SUL, SYD, SMX, TRS, TME, WEB, WPL |
| • | BHP Billiton (BHP.ASX) fell 1.7% to 1,923.5 pence in London after it said full-year profit slumped 30%, missing forecasts. Net income dropped to $10.9 billion in the year to June 30 from $15.4 billion a year earlier. |
| • | Aristocrat Leisure (ALL.ASX) raised to Neutral at Bank of America Merrill Lynch |
| • | Crowe Horwath Australasia (CRH.ASX) cut to Sell at UBS |
| • | Imdex (IMD.ASX) raised to Hold from Sell at Canaccord |
| • | Sonic Healthcare (SHL.ASX): Cut to hold vs buy at Wilson HTM; PT $15.43 |
| • | Ex-dividend: SUL, SGN, DMP |
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| ASX Winners |
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| • | Arrium (ARI.ASX): 16.75%, +$0.165, $1.15; FY underlying net income $168m beats adjusted estimate of $146.5m; including impairments and restructuring charges net loss of $695m is less than analysts’ forecast. |
| • | Breville Group (BRG.ASX): 10.93%, +$0.81, $8.22; FY 2013 net income rises 8.2% from a year earlier to $49.7m, in-line with adjusted estimate of $49.6m; FY 2013 revenue rises 13.7% to $486.5m. |
| • | Fleetwood Corp (FWD.ASX): 8.24%, +$0.28, $3.68; pares Monday’s 18% slump on the back of weak earnings results; stock raised to neutral at JPMorgan and UBS. |
| • | Challenger (CGF.ASX): 5.77%, +$0.27, $4.95; added to Monday’s 7.3% rally after the stock was raised to buy at Citigroup; on Monday reported FY 2013 normalized net income $308.5m, beating estimates. |
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| ASX Losers |
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| • | MacMahon Holdings (MAH.ASX): -20%, -$0.035, $0.14; FY 13 net loss ($29.5m) more than guidance ($10m-$20m) and median analysts’ estimate ($18.4m); sees FY 14 revenue $0.9Bn-$1.2Bn vs. May forecast ~$1.4Bn. |
| • | QBE Insurance (QBE.ASX): -5.46%, -$0.93, $16.1; 1H net income of $477m missed median analysts’ estimate of $555m; cash profit of $590m down from $844m PCP as insurance margin falls from 13% PCP to 10.8%. |
| • | Invocare (IVC.ASX): -5.42%, -$0.63, $11; says 1H underlying operating earnings after tax fell 9.1%; total revenue from a year earlier up 5% YoY to $187.1m; interim dividend $0.15 below forecast $0.155 (Bloomberg). |
| • | Coca-Cola Amatil (CCL.ASX): -5.49%, -$0.7, $12.04; 1H net income $215.9m (excl. items $225.1m) broadly in-line with adjusted estimate of $220m; forecasts FY EBIT growth of flat to 4% decline YoY before significant items vs. May forecast of no growth. |
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| • | S&P 500 rose 0.4% to 1,652.35, snapped a four-day slump and a rout in European and Asian markets, as Best Buy Co. surged 13% to US$34.80, the highest level in six months, after it posting its biggest quarterly profit since 2011. |
| • | Best Buy Co., Urban Outfitters Inc. and TJX Cos. led gains in the S&P 500 after all three retailers posted earnings that beat analysts’ estimates, highlighting the U.S. consumer is continuing to spend, despite rising interest rates. |
| • | The Stoxx Europe 600 retreated 0.8% to 302.25, its lowest level since 31 July, with financials leading losses amid concerns that rising rates, due to a withdrawal of Fed stimulus, could undermine financial stability (Spain’s non-performing loans hit 11.6% in June). |
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| • | The Reserve Bank of Australia (RBA) signalled it remains open to further cuts of the cash rate and that the AUD’s direction “would be important” in setting monetary policy, according to the minutes of the 6 August meeting. |
| • | Swaps data now shows traders are pricing in a 55% chance of a rate cut by the RBA in December, up from 47% before the minutes were released, while pricing in a lower chance of a cut in September (Bloomberg data). |
| • | The Reserve Bank of New Zealand (RBNZ) will impose restrictions on low-deposit home lending from October, saying that loans for more than 80% of a property’s value must account for no more than 10% of a bank’s new lending, from about 30% now. |
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| • | WTI crude lost 2% to settle at US$104.96/bbl, its biggest slide since 20 June, as traders repositioned as the September contract expired, amid speculation the Fed will provide more guidance on tapering. Brent crude rose 0.2% to US$110.15/bbl. |
| • | Gold advanced for the fourth time in five sessions, gaining 0.5% to US$1,372.60/oz as a weaker dollar boosted demand for the precious metal. Silver futures fell 0.4% to US$23.118/oz after reaching a three-month high of US$23.64/oz. |
| • | Glencore Xstrata Plc’s 1H adjusted net income slid 39% to $2.04 billion from $3.36 billion a year earlier, more than the average analyst estimate of $1.87 billion, as the commodity trader-miner wrote down its assets by $7.7 billion. |
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| • | A global rout in emerging market stocks boosted the demand for safe haven assets, with Treasuries rising for the first time in four days, sending the 10-year yield down 6bps to 2.83%. |
| • | In Europe, Germany’s 10-year yield fell from its highest levels in almost 17 months, while the UK’s 10-year yield fell 8bps to 2.67% as the nation sold £1.75 billion (~US$2.74 billion) of inflation-linked gilts. |
| • | Spain’s 10-year bonds dropped for a second day as the nation sold €4.15 billion of notes, while Greece’s bonds slumped ahead of the ECB’s Joerg Asmussen visiting Athens tomorrow. |
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| • | The Aussie dollar retreated 0.76% to US$0.9040 after the RBA minutes signalled the central bank is open to further rate cuts; neither closing off the “possibility” nor signalling an “imminent intention” to cut rates. |
| • | The New Zealand dollar slid 1.2% to US$0.7969, its biggest decline since 5 July, after RBNZ Governor Graeme Wheeler said the currency is “over-valued relative to what would be sustainable long-term.” |
| • | The euro strengthened as slides in Asian stocks and currencies hinted investor repatriation of assets from emerging markets. The euro gained 0.6% to US$1.3417 after earlier touching $1.3452, the highest level since 14 Feb. |
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