BusinessNow: Live coverage of financial markets and companies, with analysis and opinion
Investors in Ansell, JB Hi-Fi and Domino’s are walking away following healthy gains, while the broader market slides.
- George Soros doubles down against the S&P500
- Is iron ore headed for $US40 a tonne?
- Miners rebound as ASX edges higher
- RBA sees scope for faster growth
- Luxury home price growth soars
- NAB’s dividend on the chopping block
- Westfield’s long NY wait is over
- BHP posts biggest ever annual loss
Welcome to the BusinessNow blog for Tuesday, August 16. What goes up must come down. Yesterday’s star performers — Ansell, JB Hi-Fi, NAB, Telstra and Domino’s Pizza — dropped gains today as investors look to take some profit, while BHP Billiton posted its biggest ever loss.
7.50pm:BHP’s hopes for a state of balance
The recent commodity price run-up makes BHP’s potential to double free cash flow something to get excited about,writes Barry Fitzgerald.
BHP Billiton boss Andrew Mackenzie has not exactly called the end of the four-year rout in commodities.
But he has done the next best thing by noting that at current prices, and by BHP continuing to work its socks off on productivity, BHP’s free cash flows could double from $US3.4 billion ($4.4bn) in the 2016 financial year to $US7bn in the year underway. Read more.
6.18pm:BHP is proving its mettle
BHP’s financial base ought to now become more stable and its numbers cleaner, making the benefits of Mackenzie’s strategy apparent, writes Stephen Bartholomeusz.
The surprise note within BHP Billiton’s otherwise as-expected $US6.2 billion loss for the year to June was the tinge of optimism the group has about its prospects this financial year, despite reporting its biggest-ever loss. Read more.
4.42pm:Stocks end in the red
The local sharemarket has faded into the close, as the big banks weighed on sentiment, Daniel Palmer writes.
At the end of the session, the benchmark S&P/ASX 200 index inched down 7.3 points, or 0.13 per cent, to 5,547.3, while the broader All Ordinaries index gave back 6.1 points, or 0.11 per cent, to 5,639.9. Read more.
4:19pm:BHP posts biggest ever annual loss
BHP Billiton has delivered the biggest loss in its history, posting a mammoth $US6.39 billion loss in FY16, mostly meeting expectations, versus a $US1.91bn profit in the year prior, writes Daniel Palmer.
The miner was hit by heavy writedowns at its US onshore gas business and Samarco iron ore operation in Brazil during the year.
BHP shareholders haven’t escaped the pain, with the miner delivering a final dividend of US14c a share, sharply below last year’s US62c and below the consensus of US18c.
BHP Billiton pushed 0.5 per cent higher today to close at $20.16. As we wait to see what investors make of today’s numbers the company’s shares are up 13.5 per cent year to date, and closed at $20.16 before the FY results.
Analysts continue to recommend the stock despite expecting a flat 12 months, with Bloomberg data showing seven ‘buy’ ratings, nine ‘hold’ rating and just two ‘sells’. The consensus 12-month price target of $20.15 is almost exactly in line with the current price.
4:10pm:Westfield’s long NY wait is finally over
After 15 years, Westfield Corporation is finally set for the grand opening of its first shopping centre in Manhattan.
Westfield chairman Frank Lowy is expected to be present for the opening of the $1.4bn World Trade Center mall on Tuesday (local time). It will be a key moment for the company, which lost an executive in the 2001 attacks, writes North American correspondent Elizabeth Redman.
The company took control of the site only shortly before the disaster, and has spent years building a shopping centre it expects to generate up to $1bn in sales once fully operational.
Read more
3:55pm:G8 Education shares are getting hammered
Shares in childcare operator G8 Education (GEM) have plunged as much as 29 per cent after the company revealed an unexpectedly weak profit, writes Michael Roddan.
But a ballooning pile of debt for the company may be a bigger issue than the sharp share price fall, with G8’s leverage increasing well above the group’s targeted ratio following a period of rapid expansion and a string of acquisitions.
Read more
3:40pm:Planned McAleese deal ‘unfair’
The proposed recapitalisation of embattled transport group McAleese is back on track as an independent expert declared the planned deal “reasonable”, though “not fair”, writes Daniel Palmer.
In a statement to the market today, McAleese (MCS) confirmed a shareholder vote on the deal with the SC Lowy consortium would proceed on September 19, three weeks later than initially planned.
Read more
3:28pm:Iron ore eyes a three-month high
China’s Dalian iron ore futures rose 3 per cent before lunch, suggesting the spot price could test the recent high of $US62.27 a tonne. A break there could take iron ore to a three-month high.
3:18pm:What to watch for in BHP’s results
BHP is due to report FY16 results after the close today, with analysts expecting an eye-watering$US5.9 billion loss and an underlying net profit after tax of $US803m.
Just as important will be the dividend, capex and any additional writedowns on assets.
The consensus estimate for the final dividend is 18c per share according to UBS, but the broker notes that the range of estimates is extraordinarily wide, at 4c to 62c.
UBS and Deutsche Bank have flagged the possibility of further writedowns of BHP’s US onshore petroleum business, and Deutsche says BHP’s Jansen Potash project and coal assets could also be written down.
FY17 capex will likely be cut from $5.7bn to as low as $5bn, according to Deutsche Bank, potentially helping offset the potential negative impact of additional writedowns.
BHP was last up 0.2 per cent at $20.20.
3:10pm:A good time for Peter Coates to pull up stumps at Santos
After eight years on the Santos board, Peter Coates is tipped to not stand for re-election as chairman at the company’s next AGM, opening the door for a change in the guard at the top.
Coates, to his credit, is one of the few company chairs to basically admit his board got it wrong, writes John Durie, confiding in the last annual report that he: “didn’t fully anticipate the timing and the depth of the down cycle for the oil price.”
Read more to find out why Durie thinks now is a good time for Coates to say farewell.
2:55pm:NAB’s dividend on the chopping block
National Australia Bank will likely be forced to cut its dividend as revenue pressure ramps up at the major banks, according to Morgans analyst Azib Khan, writes Daniel Palmer.
In a note to investors, Mr Khan trimmed his dividend forecast after reducing earnings per share estimates by 0.8 to 1.6 per cent due to margin pressures.
“As it is looking increasingly difficult for NAB to reduce its dividend payout ratio into its target range of 70-75 per cent over the ‘medium term’ by keeping dividends flat, we are now forecasting a cut to dividend per share in FY17,” he said.
Read more
2:35pm:Oswals settlement talks fail
Indian business couple Pankaj and Radhika Oswal’s $1.5bn-plus lawsuit against the ANZ is going ahead after the parties failed to reach a settlement at talks this morning, writes Ben Butler.
The couple claim the bank seized and sold their Burrup Fertiliser empire at an undervalue in 2010-11, while the bank accuses them of misappropriating $150m from Burrup and spending the money on luxury cars, property including the as-yet-unfinished “Taj on Swan” mansion in Perth and Mrs Oswal’s chain of vegetarian restaurants.
Read more
2:25pm:Leaders to laggards
Here’s a quick update on some of yesterday’s best performing stocks as at 2:20pm AEST, coming back down to earth today:
JB Hi-Fi -2.8% to $29.23
Ansell -2.9% to $22.53
Domino’s Pizza -4.3% to $73.70
Mantra -5% to $3.46
NAB -0.8% to $26.97
Telstra -1% to $5.44
2:10pm:Financials drag ASX into the red
Australia’s S&P/ASX 200 fell 0.2 per cent in the early afternoon to a new intraday low of 5530.1, after rising 0.2 per cent in morning trade.
Interesting to see the index bucking overnight gains in the S&P 500, which closed at a record high.
Weakness reflects modest falls in CBA, ANZ, NAB, Telstra, and Transurban.
BHP has held on to early gains and is currently up 0.3 per cent at $20.20 ahead of its FY16 results later today.
The broader index is currently down 0.1 per cent at 5533.3.
1:50pm:Is JB Hi-Fi a bargain at record highs? Depends who you ask.
JB Hi-Fi is either “played out”, or “well positioned for further gains”… depending on whether you ask analysts from Morgan Stanley or Macquarie. The experts are well and truly split on the soaring retailer.
At just before 1:30pm AEST today the stock was down a sharp 2.4 per cent, heading for its worst fall in six weeks as the ASX200 edged 0.1 per cent lower for the day.
The slide comes after JB Hi-Fi shot up almost 10 per cent to a record-high $30.36 yesterday – its best one-day gain in a year. But investors become understandably nervous when a stock roars to never-before-seen heights, with Morgan Stanley saying JB’s “thesis is played out” as it downgrades the stock to equalweight from overweight.
“In the last two months, JBH shares have rallied 31.9 per cent or 24.3 per cent relative to the ASX200,” Morgan Stanley’s Thomas Kierath said, going on to address the positivity surrounding JB Hi-Fi following the collapse of Dick Smith.
“We now think the risk-reward is balanced as near-term consensus earnings expectations increase. We expect JBH’s LFL sales growth - the primary driver of share price performance - to slow across FY17 as it begins to cycle the period from when it benefitted from Dick Smith’s weak performance.”
Meanwhile Macquarie, which cannot advise its valuation on JBH due to restrictions, points to its price-to-earnings ratio remaining relatively low.
“Despite the company’s rapid share price appreciation in recent months, JBH is sitting at a 3 per cent premium to market, which remains within its historical range on a relative PE basis but ahead of its long run average of a 5 per cent discount to market,” Macquarie’s Andrew McLennan said.
Other analysts are taking the conservative view, according to Bloomberg data, which show two ‘buy’ ratings, eight ‘holds’ and five ‘sells’. The consensus 12-month price target is $27.37.
So, to the question of whether JB Hi-Fi is a bargain at record highs? Macquarie, which says it can’t actually advise on the stock, says yes. The others, including Morgan Stanley, seem much less confident.
1:30pm:A-REITs bolster their foundations
This reporting season is providing an insight into one of the sectors that is, on paper, most vulnerable to financial market and system instability, writes Stephen Bartholomeusz.
Over the past week the heavyweights of the A-REIT sector have been reporting their results, and they have provided a pretty consistent picture. Taking advantage of the ultra-low rate environment, the A-REITs have lowered their borrowing costs and pushed out the maturities of their debt.
Read more to get Bartholomeusz’s full take on how the A-REITs are faring.
1.16pm:No mortal wound for Invocare
The funeral operator is suffering from lower death rates, but is working strategically to make up the difference, writes Tim Boreham.
In a damning indictment of hardy pensioners, CEO Martin Earp rues that an “especially mild autumn doesn’t help” and the old battlers may even survive the harsh winter in true Digger spirit. Read more.
12:55pm:Australian dollar dips after RBA minutes
The Australian dollar has dipped slightly after the Reserve Bank again failed to provide any indication of future interest rate moves.
At 12.10pm (AEST), the local unit was trading at US76.55c, down from US76.69c yesterday.
Read more
12:45pm:Buffett’s Berkshire sharply raises Apple bet
Warren Buffett’s Berkshire Hathaway Inc sharply increased its bet on Apple Inc during the second quarter, bringing its stake in the iPhone maker to roughly $US1.5 billion.
Though Mr Buffett’s record has been built on investments in insurers, financial companies and industrial businesses, including household names like Coca-Cola Co and American Express Co, Berkshire disclosed in May that it had made a $US1bn bet on Apple stock. Apple’s stock has since advanced more than 20 per cent in the past three months.
Berkshire added 5.42 million Apple shares to its position in the second quarter, bringing the firm’s total stake to 15.2 million shares, worth $US1.46bn at the end of the period.
Read more
12:20pm:Melbourne and Sydney’s luxury homes are still rocketing
Melbourne and Sydney’s luxury homes turned in the fifth and sixth fastest pace of price growth among major world cities during the year to June, writes property editor Turi Condon.
Melbourne’s top end house prices increased 11 per cent and Sydney prices rose 10.2 per cent for the 12 months, according to property group Knight Frank’s Prime Global Cities index.
As the chart below shows, by region Australia had the strongest price growth.
Which cities beat our top two? Click here for the full story.
12:13pm:Brokers see the beauty in BWX’s result
Beauty and skincare business BWX Ltd (BWX) gets ticks from Bell Potter and CLSA despite the market’s initial disappointment in its full-year result.
While normalised net profit after tax missed Bell Potter’s estimate, the difference relates to tax and interest expenses, with normalised EBITDA close to its estimate.
“The key is the strong EBITDA guidance in FY17 based on strong Sukin sales, which grew at 40 per cent in FY16 and no suggestion this is slowing,” Bell Potter’s John O’Shea says.
“The international Sukin sales in FY17 represent a wildcard and could drive the 30 per cent EBITDA guidance number a lot higher.”
CLSA’s Shaun Weick says it was overall a reasonable result, despite revenue being 6 per cent below consensus, and EPS missing by 2 per cent.
“Gross margin expansion was the feature of the result, with margins coming in 15 per cent ahead of consensus, driven by scale benefits, shifting product mix and more selective, higher margin third party manufacturing,” he says.
“The outlook for FY17 is marginally below consensus expectations with EBITDA growth of 30 per cent, implying FY17 EBITDA of $26.2m — 3 per cent below consensus.”
He’s looking for further clarity regarding the offshore strategy in China in particular, given the regulatory risk. BWX shares are down 9.9 per cent at $5.05.
12:05pm:Oswal trial adjourned amid talks
A billion-dollar-plus lawsuit between Indian business couple Pankaj and Radhika Oswal and the ANZ has been adjourned this morning amid talks between the parties, writes Ben Butler.
Radhika Oswal was due to give evidence this morning in the Victorian Supreme Court, which is hearing a case in which the couple claim their Burrup Fertiliser empire was sold at an undervalue by the ANZ and receivers PPB after being seized from them in a dispute over the hundreds of millions of dollars they owed the bank.
Read more
11:50am:How to get business borrowing again
The tale of Australian business is currently split in two, writes Robert Gottliebsen.
Today, as BHP announces big writedowns, its basic business outlook is being boosted by the totally new cost structure that the board and management has introduced. And, as it happens, prices of its two main products, oil and iron ore are on the rise. So BHP is fine.
But the small contractors who built the current round of mine infrastructure have been sent to the wall. Western Australia is in recession and countless families have lost their homes.
Read more
11:35am:RBA sees scope for faster growth
The Reserve Bank of Australia cut interest rates at the start of August due to subdued inflation readings and a sense the economy had scope to grow at a faster speed.
“While prospects for growth were positive, there was room for stronger growth, which could be assisted by lower interest rates,” the Reserve Bank of Australia said in minutes of its August 2 policy meeting.
Globally, the RBA is closely monitoring China’s slowdown, saying momentum continues to be lost in the world’s second largest economy, “which was having noticeable effects on other economies with large trade exposures to China.”
Read more
11:20am:Too much topping on Domino’s Pizza
Domino’s Pizza shares are down sharply following a 29 per cent jump in full-year profit and an aggressive store rollout plan.
But that’ll happen after an 800 per cent rise in five years — investors become skittish.
At just after 11am AEST Domino’s shares were down 4.75 per cent to $73.28 as investors eyeball a hefty trading multiple following a strong few years.
CLSA analysts say today’s result is “probably just enough” to justify the share price, with the store rollout plan the “cherry on top”, but investors are taking profit anyway.
Prior to today’s open Domino’s had gained around 35 per cent in the year to date, almost 90 per cent in the last 12 months and around 465 per cent in the last three years.
Analysts remain relatively bullish on the market darling, with Bloomberg data showing four ‘buy’ ratings, six ‘holds’ and only one ‘sell’.
11:15am:Challenger tops the leaderboard
Challenger tops the leaderboard today after reporting a strong result for its Life business, with cash operating earnings up 9 per cent to $592 million — near the top end of guidance $585m-$595m — total net annuity sales up 11.1 per cent, against market expectations of 8-10 per cent, and a stable margin of 4.5 per cent.
An increasing proportion of lifetime annuity sales has lifted new business tenor to 7.2 years from 6.4 years pcp, boding well for the margin, according to CLSA.
The broker says group NPAT of $362m was a slight 1 per cent miss against consensus due to a lower result in funds management business, which contributes 20 per cent to group earnings.
It notes that annuity sales from the Colonial platform doubled in the first year of being on the platform. Five new annuity partnerships will be launched in 1H17, including Clearview Wealth platform and Suncorp-branded annuities.
The strategic partnership with Link Group announced earlier has started well and is expected to ramp up to scale in the coming halves. The outlook for FY17 normalised cash operating earnings in the range of $620-640m is up 6.4 per cent on FY16 reported COE. CGH shares were last up 4.8 per cent at $9.66.
11:10am:NBN Co beats revenue target
NBN Co has more than doubled its full-year revenue as the company rolls out the National Broadband Network, easily exceeding its full-year target of $300 million.
Revenue jumped from $164m to $421m in the 12 months to June 30 as more end users signed up to the network, writes Supratim Adhikari.
The latest results highlight a continued acceleration of the network rollout, with the number of premises able to order an NBN service more than doubling from 1.2 million to 2.9 million in the year.
Read more
11:00am:G8 Education hammered by earnings miss, weaker margins
G8 Education shares dived 29 per cent to a three-year low of $2.62 after missing earnings estimates by about 19 per cent in the first half.
1H16 net income of $32.04 million compared with Bloomberg’s consensus estimate of $39.55m, while revenue of $357.95m also missed the market estimate of $373.5m.
It’s also worth noting that margins were hit by higher wages, legal costs and investment in staff training. The second-quarter centre EBIT margin slipped to 22.11 per cent vs 23.11 per cent year-on-year.
GEM slumped 19 per cent to $2.98 in early trade.
10:55am:Yesterday’s leaders are today’s laggards
Ansell, JB Hi-Fi and Domino’s Pizza investors are cashing in their chips and rushing for the exit today.
Ansell shares saw a personal-best 17.7 per cent jump yesterday as the company’s disappointing earnings update still beat expectations. But it’s gone limp in early trade, with the stock down 4 per cent to $22.23, as investors see a red flag in the form of a broker downgrade form Macquarie.
Meanwhile JB Hi-Fi has dropped 2.3 per cent to $29.44 following an impressive 9.9 per cent surge yesterday — its best rise in a year.
Strong earnings figures and same store sales growth show the retailer is loving life since competitor Dick Smith went down in flames late last year, but investors are clearly opting to take profit today.
10:45am:Miners rebound as ASX edges higher
The Australian sharemarket has advanced in early deals, boosted by a sharp lift in crude prices.
At the 10.15am (AEST) official market open, the benchmark S&P/ASX 200 index added 7.3 points, or 0.13 per cent, to 5,547.3, while the broader All Ordinaries index rose 6.1 points, or 0.11 per cent, to 5,639.9, writes Daniel Palmer.
The big miners rebounded from a dire start to the week as BHP climbed 0.74 per cent to $20.31 ahead of its full-year results release this afternoon, iron ore miner Fortescue rallied 1.9 per cent to $4.525 and Rio Tinto lifted 0.73 per cent to $48.39.
Earnings season again fell flat, with few big names reporting.
It left the spotlight to fall on one of the best performers on the local bourse over the past couple of years in Domino’s Pizza, which dipped 2.9 per cent despite outperforming guidance with a record profit.
In finance, the big four banks were all in the black, headed by a 0.9 per cent improvement in Westpac shares.
ANZ edged up 0.4 per cent after announcing a $1 billion hybrid raising.
Among blue chips, Telstra edged down 0.18 per cent at $5.48, while Qantas lost 0.9 per cent to $3.31.
10:30am:Asciano profit tumbles
The profit of ports and rails operator Asciano, which was taken over in July this year, fell 24 per cent in its last year of operation as an independent company, writes Michael Roddan.
Net profit for the year through June came in at $272 million, a 24 per cent slide on last year as export weakness hit revenue.
10:10am:CLSA’s verdict on Domino’s result
Domino’s (DMP) results are “probably enough” to underpin the share price, according to CLSA, with underlying net profit of $92 million beating consensus by 3 per cent and 1 per cent at the EPS level.
Its Australia and NZ operations didn’t surprise, with ANZ in line, Europe slightly ahead and Japan slightly behind CLSA forecasts at the EBITDA level.
Guidance for FY17 NPAT growth in the region of 30 per cent compares to CLSA’s 23 per cent growth forecast, while consensus forecast implies 33 per cent growth, the broker says.
“Importantly long term (FY25) guidance for ANZ stores has been increased by 300 stores to 1200 stores,” CLSA analyst Richard Barwick says.
“Overall probably just enough in result and FY17 guidance to satisfy the market with the upgrade to ANZ store numbers the cherry on top.”
DMP shares were down 5 per cent at $73.15 in early trading.
10:05am:Is iron ore headed for $US40 a tonne?
Iron ore miners could be in for a rocky second half if Morgan Stanley’s iron ore forecasts are right.
The US investment bank is sticking to its call for spot iron ore to average $US40 a tonne in the second half of the year versus the $US60 it’s at now. In the fourth quarter, it expects iron ore to average $US35 a tonne, a new low for the spot pricing era.
“China’s steel-intensive infra-programs have needed a higher-than-expected steel output rate from its industry, underpinning ore demand, creating upside risk to 2016 ore price expectations,” Morgan Stanley equity strategist Joel Crane says.
Beyond the seasonal pullback, Crane expects iron ore prices to be capped by ongoing supply growth.
Just look at the supply coming on line in the coming year:
Rio Tinto’s new Silvergrass development will add 10Mtpa, backing Morgan Stanley’s forecast of 340Mtpa over several years, while BHP Billiton has guided to 270Mtpa for FY17. Elsewhere, Vale’s S11D project development is on schedule, with 26Mtpa expected to be added in 2017. Roy Hill is set to reach 40-50Mtpa by year-end and Fortescue expects 165-170Mt for FY17, 25-30Mt above Morgan Stanley’s forecast.
9:52am:Analysts soften on Ansell after its hard and fast rise
Ansell roared almost 18 per cent yesterday — its best day ever on the ASX — after the hefty fall in full-year profit it reported still came in above expectations.
But that share price surge has the rubber glove and condom maker looking overcooked, according to Macquarie analysts, who have cut their rating on the stock to neutral from outperform.
“A solid result from Ansell, comfortably beating the market’s low expectations off the back of strong performances in sexual wellness, single use and improving momentum in the industrial division,” Macquarie said.
“However, with the stock rallying around 18 per cent post result and significant uncertainty remaining around its FY17 operating environment, we believe much of the upside is now captured in the price.”
The analysts’ cautious is shared by other market watchers, with Bloomberg data showing just two ‘buy’ or ‘outperform’ ratings remain on the stock. Eight ‘neutral’ recommendations are currently seen and three brokers rate the stock ‘sell’.
Long-suffering investors could see today as their chance to get out of the stock, with yesterday’s burst putting it 8.1 per cent ahead for the year to date.
Ansell last traded up 17.7 per cent at $23.16 per share — its best one-day performance on record.
9:47am:Look out for Oppo smartphones in your local Woolies
Chinese phone maker Oppo has snared a deal with supermarket giant Woolworths that will see its new $350 iPhone knock-off with high-end Android features sell with your groceries.
The Oppo F1s is no slouch features-wise, writes technology reporter Chris Griffith, making it a serious threat to its competitors.
Looks-wise, you would swear the F1s is an iPhone 6s...
9:40am:Fisher & Paykel takes ResMed to court
ResMed won’t be breathing easy on this news: Fisher & Paykel Healthcare has taken the medical device company to court in the US, claiming infringement of its patents and seeking damages from its rival.
Some of ResMed’s products — including some continuous positive airway pressure devices and accessories used to treat patients with sleep apnea, and some masks — infringe on its patents, Fisher & Paykel Healthcare (FPH) said in a statement to the ASX.
Read more
9:30am:Is a relief rally on the way for resources?
Aussie stocks look set to edge higher this morning, with mining giants expected to rebound from yesterday’s rough session that saw more than $2.5 billion wiped off BHP Billiton.
The SPI200 is pointing to a 0.2 per cent rise but fair value suggests a 0.3 per cent lift could be more likely, according to Bloomberg.
The price of iron ore edged lower overnight but is clinging on to the $US60 a tonne mark, while BHP Billiton is looking to regain 0.8 per cent, according to its ADRs. Gold miners will be hoping for some relief, with Newcrest dropping 4 per cent yesterday amid a wide resources sell-off.
9:15am:Domino’s grabs a bigger slice of the pie
Domino’s is launching a fresh assault on its competitors, with plans to open as many as 200 new stores over the next year after cooking up a record high profit in FY16, writes Michael Roddan.
Aside from store expansion, the pizza maker is also relying on technology to give it an edge over its rivals.
Read more
9:10am:ANZ announces $1bn hybrid
ANZ has moved to shore up its capital by announcing a $1bn tier-1 capital security.
The notes will constitute additional Tier 1 Capital for regulatory capital requirements.
9:05am:QBE hunts for risk
The nation’s biggest insurer, QBE, has been forced to invest in riskier assets as ultra-low interest rates hamper earnings from its multibillion-dollar investment portfolio, writes Ben Butler.
For the first time, QBE’s Bermuda-based reinsurer Equator Re has ploughed money into hedge funds while also upping its junk bond holdings.
Read more
8:57am:A solid showing from Domino’s
Domino’s Pizza results are solid and guidance is very impressive in many respects.
Underlying net profit after tax of $92 million was just a touch above Bloomberg’s consensus estimate of $91.1m, with revenue up 32 per cent to $930.2m.
It sees FY17 NPAT growth in the region of 30 per cent on the back of FY17 same store sales guidance of 10-12 per cent for Australia and New Zealand, 5-7 per cent for Europe and 0-2 per cent for Japan. FY16 same store sales growth was 10.9 per cent.
Domino’s plans to open 175-195 stores in FY17 and expects a 20 per cent EBITDA margin within two years. It delivered a final dividend of 38.8 cents per share.
8.37am:Broker rating changes
Ansell cut to Neutral vs Outperform — Macquarie
GPT Group cut to Underperfom vs Neutral — Macquarie
JB Hi-Fi cut to Hold vs Buy — Deutsche Bank
JB Hi-Fi cut to Underperform vs Outperform — Credit Suisse
JB Hi-Fi cut to Equalweight vs Overweight — Morgan Stanley
Aurizon cut to Equalweight vs Overweight — Morgan Stanley
NAB cut to Hold vs Add — Morgans
G8 Education raised to Buy vs Hold — Wilsons
Aurizon raised to Neutral vs Sell — Citi
GPT Group cut to Sell vs Neutral — Citi
8.20am: Miners win breathing space on debt
Global miners have pushed hard to ditch their debts: They have sold pits, laid off workers and pruned expenses from every part of their businesses. This year, an extra tailwind from improving commodity prices is helping miners repay borrowings quicker than expected.
The signs of improvement in miners’ balance sheets haven’t come a moment too soon for investors who have seen dividends cut in recent times as companies have prioritised reducing their debt loads.
Read more
7.35am: Soros doubles down against S&P 500
Billionaire investor George Soros, who rose to fame and fortune by betting against the sterling in 1992, has shown his latest hand: nearly doubling down on his bearish bet against the market.
The 86-year-old’s fund disclosed in a regulatory filing it had increased its bet against the S&P 500, the main index used to measure big-stock performance in the US.
It currently holds “put” options on roughly 4 million shares in an exchange-traded fund that tracks the index nearly doubling the “puts” it had on 2.1 million shares back in March.
The fund isn’t so keen on gold either...
Read more
7.00am: Australian stocks set to open higher
The Australian market looks set to open higher after all three major US stocks indexes ended at highest highs, extending their record-setting climb of the past few weeks.
At 6.45am (AEST), the share price index was up seven points at 5,502.
Locally, in economic news on Tuesday, the Reserve Bank releases the minutes of its August board meeting, Minutes of Reserve Bank of Australia monthly board meeting, the Australian Bureau of Statistics’ new motor vehicles sales figures for July is due out, as is the ANZ-Roy Morgan weekly consumer confidence survey.
In Australia, the market yesterday closed slightly higher thanks to a rally among the big four banks.
The benchmark S & P/ASX200 index was up 9.1 points, or 0.16 per cent, at 5,540. The broader All Ordinaries index was up 7.5 points, or 0.13 per cent, at 5,633.8.
6.50am: Dollar edges higher
The Australian dollar has edged slightly higher against its US counterpart as the greenback weakened on fading expectations of a Federal Reserve rate rise this year.
At 6.35am (AEST), the local unit was trading at US76.72 US cents, up from 76.69 cents yesterday.
The US dollar index, which tracks the greenback against six major world rivals, fell 0.1 per cent to 95.624.
“As it stands now, market participants see a less than 50-50 chance of rates rising by December. The dollar will continue to struggle until that chance rises meaningfully,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
6.30am:Iron ore dips to $US60
The iron ore price has edged down slightly but remains at surprisingly strong levels ahead of BHP Billiton’s full-year results, which are expected to show the company’s worst ever loss.
Iron ore inched down 0.3 per cent to $US60 a tonne in the most recent session, according to The Steel Index, from $US60.20 the previous day.
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Trump’s trade war tariff thaw
In a thawing of relations, the US will delay raising tariffs on Chinese goods after “substantial progress” in trade talks.
China puts heat on coal miners
Shares in pure-play coal miners pared early sharp losses as fears of China port ban eased throughout the session.