The big end of the Australian sharemarket is likely to outstrip the performance of small and medium-sized cap companies over the next 12 months in a market currently priced for very low interest rates, says the managing director of Australia's biggest listed investment company.
Ross Barker, who oversees a portfolio worth $6.5 billion for the Australian Foundation Investment Company said that even though there are still some "headwinds" for many of the top 50 stocks on the ASX, he predicts they will generally perform better than small and mid-cap stocks.
But it is likely that overall, the ASX200 will spin its wheels and still be sitting at between 5400 to 5500 points by this time in 2017. Better performing big cap stocks would offset an unwinding of some of the excessive price-earnings multiples among the mid-cap and small cap sector.
Barker said the big miners such as BHP Billiton and Rio Tinto which have slashed dividends [1]and capital investment are likely to be the prime candidates for lifting dividends higher in the next couple of years, although not to the same extent as during the mining boom. Improving commodity prices are also a plus, although AFIC is still annoyed at how much capital had been wasted during the golden years.
AFIC owns $313 million of BHP shares and the miner is its third-largest overall holding.
Barker said that while it will be difficult for three of the big four banks, Commonwealth Bank, NAB and Westpac, to maintain dividends following ANZ's decision to substantially reduce its payout to shareholders, all four are likely to be much more aggressive on costs.
This would help to offset subdued growth in lending as real estate prices peak.
"They've still got the lever they can use of cost-cutting," he said.
Shares have taken a lurch lower and the ASX 200 is now approaching 5400 points, down 25 points or 0.5 per cent to 5409, as miners sell off, the big banks struggle to hold on to gains, and casino operators led by Crown are whacked.
Around the region, Chinese mainland stocks have opened a touch higher, but Japan's Nikkei has taken a nosedive after a strong start and is now in the red. Wall St futures are lower. The Aussie dollar is off 0.4 of a penny to 75.83 US cents.
Aussie bonds continue to sell off, with the 10-year government yield climbing to 2.313 (remembering yields move in the opposite direction to prices) and back to its early June levels.
The story of the day, Crown, is still off more than 10 per cent following Chinese government raids on its overseas offices, but losses in fellow casino operators Star and SkyCity have moderated a touch, to 5.2 per cent and 3.9 per cent.
BHP is now off 0.8 per cent and Rio 1 per cent, while Fortescue's gains have been trimmed to 0.8 per cent. South32 just can't lose, though, and is up another 1 per cent as analysts this morning floated the idea of big shareholder cash splashes.
Whitehaven Coal hit a three-and-a-half year high and pushed to $3 per share following the release of its quarterly earnings and upbeat coal price forecasts, but has since pulled back a little to be up 1.4 per cent for the session thus far.
Energy is getting hit as the oil price slips further and amid heightened concerns over the sector among analysts. Woodside is off 1.7 per cent, and Santos 3 per cent.
Banks are now mixed, with CBA marginally lower, NAB 0.6 per cent down, while ANZ is up 0.3 per cent and Westpac 0.4 per cent.
Australia is forecast to enjoy at least another two years of solid economic growth, extending a quarter of a century without recession and dodging the deflation that dogs so many of its rich world peers.
The latest Reuters poll found analysts expect the $1.6 trillion economy to expand by 2.9 per cent this year, unchanged from the July poll.
Growth was seen at 2.8 per cent next year and 2.9 per cent in 2018, a result that would see Australia capture the Netherlands' crown for the longest run without a recession.
Surging export volumes, record low interest rates and an historic boom in home building have already underpinned growth of 3.3 per cent in the year to June.
A recent revival in the value of commodity exports also promises to boost company profits, national income and tax receipts in coming months. Surging prices for coal alone could eradicate the country's trade deficit and add 2 percentage points to nominal GDP.
The worst also seems to be over for a long slump in mining investment, which subtracted a huge 1.6 percentage points from GDP growth in the year to June.
"The Australian economy's output performance, in aggregate, has been resilient in what remains a challenging environment," said Westpac senior economist Andrew Hanlan. He is tipping economic growth of 3 per cent for both 2016 and 2017.
"That said, downside risks persist. World growth is sluggish, and global financial sector vulnerabilities remain."
At home, jobs growth has turned sluggish and heavily weighted to part time work, restraining wage growth and adding to downward pressure on inflation.
Indeed, underlying inflation slowed to a record low of 1.5 per cent in the year to June and looks likely to have remained very subdued in the third quarter
Accelerating global growth means we are nearing the end of the Australian "profits recession", write Credit Suisse strategists.
Aggregate earnings per share for the ASX 200 has dropped 13 per cent since the third quarter of 2014, but an expected pick-up in global economic growth in 2017 should help inspire single-digit EPS expansion in the year ahead. This backdrop of climbing earnings should help the benchmark top 200 index grind higher to 6000 by December 2017, the broker reckons.
"The coming end of the profits recession suggests a new phase of the market cycle," they write. "The premium associated with growth stocks should diminish as profits growth becomes less scarce."
Lowly valued companies are set to benefit, the strategists write, including the likes of Bluescope Steel, Caltex, Computershare, Macquarie Group and Myer. They add department store owner to their model portfolio.
The analysts also bring a global perspective to the ASX sectors, and they note:
- Australian heath care and infrastructure stocks trade at a biggest premium to their global peers.
- Aussie gold stocks are closing the valuation discount to their peers.
- Banks' price-to-book premium is justified by the superior return on equity.
- Meanwhile, the Australian fund managers are some of the most expensive in the world. But they are also some of the most profitable.
The broker notes that the commodities "mini-cycle" continues, with more spending by China and an increase in infrastructure projects there should boost steel demand and support iron ore prices. Credit Suisse's forecasts are:
- Iron ore could trend lower in the next calendar year to $US45/t because of a developing oversupply.
- The coal price rally is likely to peak out in 4Q16 then drift lower in 2017.
- Despite the recent plunge in the gold price, investment demand could be supported by the uncertainty of the US presidential election and earlier (and harder) than-expected Brexit timeline. We forecast $US1325/ounce by Dec 2016 and $US1450 by end 2017.
- Oil had a flat Q3 but started the fourth quarter with a price rally. Lower inventories in the US and flat production had set the stage for a rally before the OPEC output freeze agreement. The OPEC agreement would pose as a significant upside risk for prices, but currently it lacks crucial details and our analysts maintain crude forecast at $US44 a barrel in December 2016 and $US55 a barrel at the end of 2017.
Shares in Thai gold mine owner Kingsgate Consolidated collapsed this morning when trading resumed after a five-month suspension following a government decision to force it to close its mine by the end of the year.
Shares in the miner plunged as much as 68 per cent and are currently down 43 per cent at 23.5c, shredding the worth of the chairman, Ross Smythe-Kirk, a well-known former Sydney fund manager who has more than 5 million shares in the company.
Kingsgate operates Thailand's only gold mine, the Chatree mine which is located some 280 kilometres north of Bangkok, employing 1000 locals.
Local villagers have long complained of elevated levels of arsenic and manganese in the local environment blaming the miner, with Kingsgate arguing the two elements are occur naturally and not a consequence of its mining.
At the same time, a Thai investor, Northern Gulf Petroleum International has launched a partial takeover bid, offering just 4.2c a share seeking a controlling 50.1 per cent stake in Kingsgate which the miner has rejected.
For the December quarter, Kingsgate has forecast revenue to rise to $87 million from $61 million in the September quarter, which will result in it having net cash of $18 million by the time the Thai mine is closed.
Kingsgate is seeking to resurrect its fortunes via a new project in Chile.
Meanwhile, over in China, the Hong Kong and Shenzhen stock exchanges will today start a three-week systems test to prepare for the launch of the new cross-border share trading link between the cities, which could go live as early as November 21.
The test, running from October 17 to November 9, marks a significant step in the new Stock Connect scheme which will allow international investors to trade 880 Shenzhen listed stocks while mainland investors will be allowed to trade 417 Hong Kong stocks.
"All stockbrokers in Hong Kong and Shenzhen preparing to trade using the Stock Connect scheme will need to join the three-week testing," Benny Mau, chairman of Hong Kong Securities Association, told South China Morning Post.[4]
The testing would be run within normal trading hours, but will be conducted via a separate system.
Mau said similar testing was held prior to the launch of the existing Shanghai-Hong Kong Stock Connect launched in 2014, to give brokers a clear idea of how it works.
If problems do crop up, then another week could be added to the test period, he added..
"However, I believe the new stock link should still be launched on November 21, if all goes smoothly."
Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia last Thursday said the connect scheme will be introduced on a Monday after mid November, indicating November 21 as the possible date.
Turning away from the Crown saga for a bit, the warnings about overvalued house prices are increasing.
Property looks set to become the "worst investment" over coming decades because of a looming bust in apartment prices and the reality that official interest rates won't stay low forever, says a leading economist.
Describing the nation's economy as trapped in a "Faustian bargain" with low borrowing costs and resurgent commodity prices, Deloitte Access Economics economist Chris Richardson warns that future risks of a shakeout are mounting.
Richardson said buyers had for decades been repeatedly betting "double or nothing" on property, which until now has been a successful strategy. However, it has entrenched an unwavering belief in investing in housing over shares or other assets.
"There comes a point where past performance starts to become a guarantee of an unwinding of future performance," Richardson told The Australian Financial Review[5].
"There's an increasing risk that it becomes the worst investment in the next few decades. That might happen fast or slow. But every policy maker should pray that it happens slow."
The comments follow the Reserve Bank's decision to issue a storm warning[6] on Friday to inner-city apartment owners and their lenders over a looming oversupply of units that many analysts believe will lead to falling prices.
Banks in coming weeks are likely to reveal revenues are growing at a slower pace than many investors are expecting, Citi analysts say, who say they expect NAB and Westpac to cut their dividends at their results on October 27 and November 7, respectively.
The Citi note was dated Friday, the same day Morgan Stanley analysts echoed similar concerns, saying that expect NAB to cut its dividend this financial year.
"Recent results indicate revenue growth expectations may be too high," the Citi team write. "The key risk for this reporting season is a continued failure to meet consensus revenue estimates."
They point out that CBA was expected to lift revenue by around 6 per cent over the second half of fiscal 2016, but only managed 4 per cent. Same story for Bank of Queensland, where the market was expecting 3 per cent growth but got 0.5 per cent.
Top-line pressure will leave a need for the banks to articulate "where improved performance will emerge".
"The weak environment is likely to drive more proactive plans to improve performance. We are expecting Westpac to be the most active in this regard with better cost disclosure and more proactive targets expected."
All of this translates to mounting pressure on boards to reconsider their shareholder payouts, the analysts say.
"We expect NAB and Westpac to cut dividends at these results. With payout ratios already at around 80 per cent, the weaker than expect revenue growth is set to see a change of tack."
Their preferred big bank is ANZ (buy), with the other three rated "neutral".
Macquarie releases results on October 28, and ANZ November 3.
This morning's share price slump for Crown has wiped a cool $500 million from the value of major shareholder James Packer's stake in the casino operator, as analysts warned Crown could face a profit hit of up to 5 per cent if there is a wider crackdown on China's VIP gaming markets.
Theo Maas, partner at Crown shareholder Arnhem Investment Management said "back of the envelope calculations could mean 4-5 per cent of profits are exposed to the situation" but added "the situation is very uncertain at the moment."
Crown said in a statement to the ASX that it believes the executive vice-president of its VIP international business, Jason O'Connor, has been detained by Chinese authorities in a crackdown[8] that has seen 18 Crown staff detained.
"To date, Crown has not been able to speak with its employees and is working closely with the Department of Foreign Affairs and Trade to urgently make contact with and ascertain the welfare of its employees. Crown is endeavouring to provide support to the families of its employees in China and Australia," the company said.
Selling has intensified in the casino operators as investors react to the weekend's raids by Chinese officials on Crown offices[9].
Crown is now off 12.3 per cent to $11.36, SkyCity Entertainment Group is down 7.1 per cent to $4.04, and Star Entertainment Group is off 5.4 per cent to $5.42.
Here are analysts at CLSA's thoughts on what the developments mean for Crown and Australia's other casinos with VIP business from China:
1. They may need to shut down their direct VIP marketing operations
Given the scale of the arrests, it begs the question of whether the Chinese government has redefined what foreign casinos are able to promote in China and they are making an example of Crown. It would be suprising if Crown was doing anything different to other casinos with marketing staff in China.
Crown and also Star and SkyCity are going to have to reconsider whether they employ any direct marketing staff into China.
It's unclear whether the crackdown will eventually spread to junket operators bringing players to Australia as opposed to casino staff but it has to be a possibility.
It may be that the Chinese government wants to funnel all VIP play through junkets where they potentially have more control.
2. What's the Korean example tell us?
The stock prices are yet to recover. Paradise is down 50 per cent since the arrests and Grand Korea Leisure is down 40 per cent.
VIP revenues in Korea are down 20 per cent but it's more like 40 per cent for those two casinos.
However Korean VIP is only direct business, they don't use junkets. So if there is no impact on junket business, then the impact will be materially less. However other VIPs might be reluctant to go to Australia given what appears to be a focus on Australia.
3. Crown is most exposed to a decline in VIP
We estimate 30-40% of Crown's VIP is direct compared to Star at less at 20%, with the rest junket.
SkyCity has the highest proportion of direct VIP business at 60%.
However we estimate VIP is also a higher proportion of earnings for Crown at ~20% of EBITDA vs. ~12% for Star and 10% for SkyCity.
Additionally a greater proportion of Crown's project pipeline is focused on Chinese VIPs, specifically the Crown Sydney casino.
Stock prices are likely to be weaker even if there is no VIP impact – this incident highlights the potential fragility of VIP play and its exposure to Chinese regulation and enforcement.
Another issue is debt collection … it could impact the ability of Australia casinos to collect outstanding debts.
Banks are being forced to cut the interest rate premium they are charging new property investors, as lenders compete more fiercely in the investor mortgage market once again.
The mortgage market was split in two last year, after banks resumed charging property investors interest rates that were about 0.25 percentage points higher than owner-occupiers, something that had not occurred since the 1990s.
Now, however, the interest rate gap is narrowing, with several banks recently lowering what they are charging new landlord borrowers.
The change, which will only affect new customers, and not those with existing loans, comes after recent figures have also pointed to new lending rising for property investment – a market where the banking regulator has capped annual loan growth at 10 per cent in response to fears of a housing bubble forming.
Even so, financial regulators say they are more comfortable with lending standards in the housing market, including to investors. That is because banks have cut back on interest-only lending and are assessing borrowers' living costs more realistically, key regulators said last week.
Dutch lender ING Direct on Friday was the latest to announce a cut-price mortgage deal for investors, offering new investors with a deposit of more than 20 per cent an interest rate of 3.99 per cent.
AMP, which was forced to briefly stop writing new loans last year after growing too quickly, [11]is also charging property investors 3.99 per cent if they borrow more than $750,000. That is about 0.1 percentage points higher than its owner-occupier rate promoted to mortgage brokers.
Macquarie Group cut its fixed rates for investors earlier this month, with a three-year rate of 4.09 per cent.
Mortgage brokers say the trend is gathering pace, and the Reserve Bank observed the bout of competition in its Financial Stability Review on Friday. It played down the risks from banks targeting property investor lending, which it has previously seen as a "speculative" influence[12] on the housing market.
Read more.
A 10 per cent plunge in Crown and sharp falls in fellow casino operators has cruelled what would have otherwise been a mildly upbeat start to the week.
The ASX 200 is off a handful of points, despite modest gains in the big banks in the order of 0.2 per cent. Miners are modestly higher as a group thanks to a 0.1 per cent gain in BHP and a 3.1 per cent jump in Whitehaven Coal following its quarterly production update. Fortescue is up 0.6 per cent and South32 is marginally up.
The two biggest weights on the sharemarket are Crown, which is off 10 per cent, and Star Entertainment, which is off 5.6 per cent in early trade. SkyCity Entertainment is down 5.8 per cent.
Also dragging are slips in CSL, Telstra and Sydney Airport, while Woolies and Wesfarmers are also down.
On the winner's board is OFX Group, formerly known as OzForex, which has added 3.6 per cent.
South32 is on track to return $500 million to shareholders at the end of the financial year.
That's the call from Credit Suisse analysts this morning, who said the miner's cash build was "eye watering" and could be even stronger should commodity prices hold through the 2017 financial year.
"Balance sheet was net cash of $311m at end FY16 and we now forecast net cash of $1.1bn at end FY17 and $1.6bn at FY18," the analysts said.
"We think S32 can return around $500m to shareholders (or near US$0.10/shr) post FY17 year end.
"If spot commodity prices hold through FY17, net cash will be $1.6bn rather than $1.1bn."
The comments come as fund managers and analysts consider whether South 32's share price has peaked[13], given its strong run this year - the stock has charged 130 per cent higher in 2016 and last traded at $2.48.
The analysts increased their target price on South32 to $2.50 a share, up from $2.10.
"We've been caught out by the surprising strength of the recovery in both metallurgical and thermal coal prices," Credit Suisse told clients.
"While coal prices won't stay at this level, the starting point for S32 is an under-geared balance sheet and every quarter that prices remain at elevated levels increases the potential scale of a capital return at year end.
"We don't want to be underweight the shares at this juncture."
In local corporate news this morning, Whitehaven Coal said it expects the coal price to remain strong through the December quarter following recent settlements in Asian markets, which is helping it to cut borrowings.
The market price for so-called 'semi-soft' coking coal, has risen a strong 86 per cent to $US130 a tonne, it said in its latest quarterly report. The rise follows the surge in the price being paid for premium coking coal of $US200 a tonne following recent contract settlements.
In the September quarter, Whitehaven received $US70 a tonne for sales of semi-soft coking coal and $US67 a tonne for sales of steaming coal. Coking coal is primarily used when making steel, with steaming coal mostly used in electricity generation.
In the past week alone, Whitehaven's share price has risen by 4.9 per cent, continuing its steady climb thanks to renewed optimism over the outlook for coal prices, even though some analysts were warning late last week the rally in some miners was becoming overheated.
The AFR has done an interesting interview with VGI Partners founder Rob Luciano, perhaps better known in investment circles for its short positions in Slater & Gordon (and reports of a similar position in Estia).
Here are the highlights:
- Luciano looks to invest in "quality companies". That has led them to take multi-year positions in companies like Chicago Mercantile Exchange and the maker of a product that can be found in almost every Australian house – WD-40.
- One of VGI's most inspired stock picks was an an early investor in Amazon.
The fund bought the stock at an average price of around $US300, and is now at $US820 a share. But Luciano says he's frustrated he didn't buy more when the thesis turned out to be right, and sees Amazon "which has a longer investment horizon than most sovereign nations" has further to go.
"They have more businesses that could come out of it but at the moment the platform is global, has huge scale and the addressable market continues to grow. In our view it could be the sustainable first trillion dollar market cap – and that implies a share price over $2000." - While most investments are offshore, one of the fund's largest positions at present is in Medibank Private.
- Luciano says Australia's economy is not competitive – unit labour costs are too high – and the only way for it to be restored is for a substantial fall in the Australian dollar.
- On the recent underperformance of hedge funds globally: "They have made money from a reduction in bond yields, an expansion in multiples and an injection of more debt – this is the perfect combination of owning poor businesses and still making money."
Most noteworthy from Friday after the close of the local market was a speech by Janet Yellen, in which she suggested the Federal Reserve may need to run a "high-pressure economy" to reverse damage from the 2008-09 crisis.
Though not addressing interest rates or immediate policy concerns directly, Yellen laid out the deepening concern at the Fed that US economic potential is slipping and aggressive steps may be needed to rebuild it.
Yellen, in a lunch address to a conference of policymakers and top academics in Boston, said the question was whether that damage can be undone "by temporarily running a 'high-pressure economy,' with robust aggregate demand and a tight labor market."
"One can certainly identify plausible ways in which this might occur," she said.
Looking for policies that would lower unemployment further and boost consumption, even at the risk of higher inflation, could convince businesses to invest, improve confidence, and bring even more workers into the economy.
Yellen's comments, while posed as questions that need more research, still add an important voice to an intensifying debate within the Fed over whether economic growth is close enough to normal to need steady interest rate increases, or whether it remains subpar and scarred, a theory pressed by Harvard economist and former US Treasury Secretary, Lawrence Summers, among others.
Her remarks jarred the US bond market on Friday afternoon, where they were interpreted as perhaps a willingness to allow inflation to run beyond the Fed's 2.0 per cent target. Prices on longer dated US Treasuries, which are most sensitive to inflation expectations, fell sharply and their yields shot higher.
The yields on both 30-year bonds and 10-year notes ended the day at their highest levels since early June, and their spread over shorter-dated 2-year note yields widened by the most in seven months.
Jeffrey Gundlach, chief executive of DoubleLine Capital, said he read Yellen as saying, "'You don't have to tighten policy just because inflation goes to over 2 per cent.'
"Inflation can go to 3 per cent, if the Fed thinks this is temporary," said Gundlach, who agreed Yellen was striking a chord similar to Summer's "secular stagnation" thesis. "Yellen is thinking independently and willing to act on what she thinks."
Gundlach said Yellen's remarks "are in the same range" of European Central Bank President Mario Draghi's 'Do whatever it takes' speech in 2012.
He also said the speech suggested the Fed will keep interest rates ultra-low for longer than currently anticipated.
"I didn't hear, 'We are going to tighten in December,'" Gundlach said. "I think she is concerned about the trend of economic growth. GDP is not doing what they want."
While investors by and large think the Fed is likely to raise interest rates in December this year, in a nod to the country's 5.0 per cent unemployment rate and expectations that inflation will rise, they do not see the Fed moving aggressively thereafter.
"This is a clear rebuttal of the hawkish arguments," to raise rates soon, a line of argument pitched by some of the Fed's regional bank presidents, said Christopher Low, chief economist at FTN Financial.
The Chinese government appears to be looking for a showdown with Australian billionaire James Packer, writes BusinessDay columnist Elizabeth Knight.
Packer's gaming empire, Crown Resorts, is reeling in response to the massive raids on its Chinese operations and the detention of 18 staff[16].
The longer term business and public relations ramifications are still unclear as is any effect the raids may have on the economics of Packer's Sydney Barangaroo casino project which aims squarely at capturing the Chinese VIP gaming market.
It appears to be no accident that Chinese authorities undertook the highly orchestrated precision raids on all Crown International's Chinese offices when the Australian executive that ran Crown International VIP gaming, Jason O'Connor, was in town.
Sources said that O'Connor rarely travelled to China and picking the timing of his visit looks like an attempt to maximise the impact of the raids which were simultaneously undertaken across Crown's offices in all Chinese locations.
It was a cannon shot across the bow of Australian casino operators, which have been luring high-roller Chinese gamers to the growing market in the face of a crackdown by the Chinese government on casino-related corruption, particularly in Macau. Similar raids were made on the Chinese offices of South Korean gaming companies last year.
The pre-emptive strike by the Chinese government will send chills down the spines of investors in Crown and its Australian rival, The Star Entertainment Group.
But the targeting of Crown is probably no accident. Star has no offices in China and its sales staff are in other international locations.
Industry estimates suggest international VIP profit makes up between one quarter and one-third of Crown's earnings proportionately more than that of The Star.
But the more immediate concern is the future of the 18 Crown employees, three of which are Australian, that are now said to be undergoing questioning from Chinese authorities.
They could face up to 10 years' jail.
Australian Crown staff detained in China
Three Australians, including one senior executive, are among 18 employees to be detained. (Video courtesy ABC News 24)
SPONSORED POST
And here are the eight things catching IG strategist Chris Weston's eye this morning:
- For the traders out there it's a huge week, with 24 per cent of the S&P's market cap due to report quarterly earnings, the US dollar pushing through 98 and the highest levels since early March.
- At the same time, we have seen further selling of US treasuries, notably on Friday with the 10-year treasury closing at the highest level since June 3, spurred on by a strong sell-off in UK gilts.
- Oil has fallen a touch on Friday, largely as a result of the stronger US dollar, while the Aussie dollar looks like a pillar of strength relatively speaking, helped by solid buying in iron ore futures (+2.5 per cent on Friday).
- The leads for today's Asian session are fairly sanguine and our call is for a flat open in Australia, Japan and Hong Kong. China should find modest support, although all eyes fall on Wednesday's data dump.
- It's interesting to see that despite the yuan weakness there has been absolutely no effect on the Aussie dollar, in fact the Aussie (along with the Canadian dollar) was the best performer relative to the US dollar last week. This week, Aussie dollar traders will be focused on Thursday's employment data (consensus expects 15,000 net jobs to be created), but it's worth pointing out that the market is currently pricing in a 14 per cent chance of a cut from the RBA at the November meeting.
- Focusing on the weekly chart of the ASX 200, we can see the index still climbing in a bullish channel, but a weekly close below 5315 changes that picture.
- One suspects it will be the S&P 500 that plays a greater role in semantics this week, so watch how price reacts into 2116. A close through here would almost certainly set off a fresh wave of selling in global equities and we got confirmation of the support into 2116 level on Thursday. On Wall Street on Friday, the Dow was +0.2%, S&P 500 flat, Nasdaq flat.
- The US dollar index should drive as well, notably if the price can break above the March highs of 98.68.
A busy week of local and international data notably from the US and China will provide plenty of fodder for investors to weigh in markets this week.
Futures pricing has the market opening slightly lower on Monday morning, down 0.2 per cent or 9 points despite positive sessions in Europe and the US on Friday. The S&P/ASX 200 index finished Friday flat and down 0.6 per cent for the week.
On Tuesday the RBA releases the minutes from its October policy meeting and on the same day new governor Philip Lowe delivers a speech at a Citi investment conference in Sydney.
The big ticket local economic data comes on Thursday with labour force data from the Australian Bureau of Statistics. Economists forecast 15,000 jobs were added in September, a positive turnaround from the previous month's 3900 fall, but the unemployment rate is expected to tick up from a three year low of 5.6 per cent to 5.7 per cent.
"There is also the impact of employment associated with the Census to be considered, with delays in filling out the Census likely to have prolonged Census-related employment into September, another positive risk factor," NAB senior economist David de Garis said.
The US presidential election and Federal Reserve meeting remain the headline events heading into year's end and data this week including inflation and initial jobless claims will be closely watched. Retail sales data in September, released on Friday, showed at 0.6 per cent rise for the month, further strengthening the case for a rate hike, however a speech by Fed chair Janet Yellen on the same day gave few clues to the board's thinking.
The third and final presidential debate between Hillary Clinton and Donald Trump in Las Vegas will be held Thursday morning Australian time, as a poll at the weekend gave Clinton a 95 per cent chance at winning the election next month[19].
Good morning and welcome to the Markets Live blog for Monday.
Your editors today are Jens Meyer and Patrick Commins.
This blog is not intended as investment advice.
BusinessDay with wires.
Back to top[21]References
- ^ BHP Billiton and Rio Tinto which have slashed dividends (www.afr.com)
- ^ Here's more on the AFR ($) (www.afr.com)
- ^ Back to top (www.smh.com.au)
- ^ Benny Mau, chairman of Hong Kong Securities Assoc iation, told South China Morning Post. (www.scmp.com)
- ^ told The Australian Financial Review (www.afr.com)
- ^ comments follow the Reserve Bank's decision to issue a storm warning (www.afr.com)
- ^ Here's more ($) (www.afr.com)
- ^ detained by Chinese authorities in a crackdown (www.smh.com.au)
- ^ weekend's raids by Chinese officials on Crown offices (www.smh.com.au)
- ^
Tidak ada komentar:
Posting Komentar