Yo-yo markets continue on US China trade war: Aus shares 0.1% lower at noon

Market Reports

by Jessica Amir

Aussie share market fell as expected today, despite better than expected US leads.  The S&P/ASX 200 index is 0.1 per cent lower or 7 down at 6,402 noon. On the futures market the SPI is 25 points lower or 0.4 per cent lower.

But let's pause on what's going on around the world. Yesterday the local market had the biggest drop of 2019 taking the market back to June levels. It was the fifth biggest fall in the market in nine years.

On Wednesday in the US, The Dow saw its biggest drop of the year falling 3 per cent after we saw “the 2-10 inversion”. Which means the benchmark 10-year treasury yield fell below the 2-year rate.

Yesterday in the US (Thursday) the 30-year treasury bond also fell to a historical low, and the 10-year treasury yield hit its lowest level in 3 years.

But US equities mostly rebounded, rising on stronger than expected US retail sales, better-than expected Wallmart results, which sent Wallmart’s shares 6.1 per cent higher, plus China Minister of Foreign Affairs came out and said it “hopes the U.S. will meet China halfway”

No local economic news today. Yesterday we learnt the headline unemployment rate held steady at 5.2 per cent - still below the RBA target of 4.5 per cent. And we also saw that the number of employed people rose more than expected in July (up 41,000 instead of 14,000).

Company news

Abacus Property Group (ASX:ABP) reported its attributable net profit after income fell 17 per cent in the year ended 30 June 2018, falling to $202.7 million with total revenues falling 15 per cent to $388.2 million. The business is in the midst of transitioning towards an annuity style investment house, focusing on office and self-storage. Over the year its property rental income rose 8.4 per cent. The June 2019 half year distribution was 9.25 cents, the same amount of distribution that was paid same time last year. ABP confirmed distribution guidance of 2-3 per growth for FY20. Shares in Abacus Property Group (ASX:ABP) are trading 1.5 per cent lower at $4.01 at noon. YTD its trading 23 per cent higher.

Newcrest Mining (ASX:NCM) announced its gold production and revenue rose 6 per cent and copper revenue jumped 24 per cent, revenue ticked up 5 per cent, while costs at some mines hit record lows (Cadia achieved record annual gold and copper production and record low AISC per oz). All these factors helped its statutory profit for the 12 months to 30 June 2019 to surge 178 per cent, to $561 million. Final dividend was US14.5 cents per share (fully franked), taking full year dividend to US22 cents per share. Free cash flow rose 34 per cent to $804 million and importantly there was zero fatalities and life altering injuries in the year. It also completed the purchase of 70 per cent of Tier 1 orebody in Canada, the Red Chris copper-gold mine in Canada, for $804 million, subject to debt and capital adjustments. As for next FY, (FY20) guidance for gold and copper are expected to be less than 2019 FY, amid lower grade ore and maintenance in the September 2019 quarter. Newcrest Mining (ASX:NCM) shares are trading 1.4 per cent lower at $36.26 at noon. YTD its trading 69 per cent higher.

Best and worst performers

The best-performing sector is S&P/ASX Health Care, adding 0.5 per cent, while the worst performing sector is S&P/ASX Communication Services, shedding 2.5 per cent.

The best performing stock in the S&P/ASX 200 is Super Retail Group Limited (ASX:SUL), rising 8.6 per cent to $8.82, followed by shares in The Star Entertainment Group Limited (ASX:SGR) and Healius Limited (ASX:HLS).

The worst performing stock in the S&P/ASX 200 is Ooh!Media Limited (ASX:OML),dropping 24.3 per cent to $3.06, followed by shares in Breville Group Limited (ASX:BRG) and Whitehaven Coal Limited (ASX:WHC).

On the topic of oOh! Media (ASX:OML), it flagged its earnings are expected to drop, giving guidance of underlying EBITDA for the year ended 2019 to be in the range of $125 million and $135 million. Down from its prior $152 million and $162 million indication, on a sharp decline in bookings for the third quarter of 2019.

Asian markets

Japan’s Nikkei has lost 0.2 per cent, Hong Kong’s Hang Seng has shed 0.5 per cent and the Shanghai Composite has lost 0.1 per cent.

Commodities and the dollar

Gold is trading at US$1,522 an ounce.
Iron ore price (NYMEX) fell 2.5 per cent to US$88.44 [continuing its fall from its July 2019 five year highs ( of $117.76)]
Iron ore futures are pointing to a rise of 0.8 per cent.
One Australian dollar is buying 67.78 US cents.