Good morning traders. Thanks to @ttward, @Ravgnome and the Aftermarket loungers. Loving ttward's Bar/Lounge tour, bringing about a bit of wanderlust on my part.
The headline news from yesterday was the IMF saying what many of us are seeing in the data that has been coming out, which is growth is slowing. We can debate how much of an effect the trade war is having on it, but overall the outlook is still one of weakening growth going through 2019.
Oh, and Brexit, Brexit, BREXIT (make it stop please, this just gets more painful to watch by the day)
The Australian stock market has closed lower for the first time in six days dragged heavily by financials, but remains on a six-year high comparatively for January.
The benchmark S&P/ASX200 index was down 31.6 points, or 0.54 per cent, to 5858.8 at 1630 AEDT on Tuesday, while the broader All Ordinaries was down 29.2 points, or 0.49 per cent, lower at 5924.3.
"Even though the market is down January remains on a two-month high and is the best start to a new year since 2013," CommSec chief market analyst Steven Daghlian told AAP.
"This is partly due to the fact that there are some helpful signs from China and the US where they are trying to get along and resolve trade disputes."
It comes as the International Monetary Fund revised its global economic growth forecasts for the next two years, warning of continuing trade tensions between the two nations on global growth, and the possibility of a "no-deal" Brexit between the UK and the European Union.
The financial sector was the heaviest weight on the ASX market led by Westpac Banking down by 1.72 per cent to $25.75.
ANZ also fell by 1.45 per cent to $25.81 as did Commonwealth Bank down 1.19 per cent to $72.18 and NAB falling 1.28 per cent to $24.59.
Mining stocks were doing little to ease the pressure with giant BHP dropping by 1.3 per cent to $32.77 after releasing their quarterly update detailing their output had fallen by nine per cent due to production disruptions.
The world's biggest miner said on Tuesday that unplanned production outages at Olympic Dam, Spence and Western Australia are likely to negatively affect productivity and flagged that it would revise guidance at its results on February 19.
Rio Tinto retreated 0.62 per cent to $80.01, Newcrest Mining also fell 0.69 per cent to $23.05 and South32 dropped 0.88 per cent to $3.36.
Energy companies were also under pressure at Tuesday's close led by Oilsearch who also released their quarterly output which fell shorter than what analysts were hoping for.
Oilsearch dropped 2.82 per cent to $7.58 followed by Santos who were down 0.82 per cent to $6.05 and Woodside Petroleum which dropped 0.82 per cent down to $33.66.
Consumer discretionaries were bolstered by Super Retail Group stocks up 2.75 per cent to $7.09 after the promotion of former Boating, Camping and Fishing, Rays, and Macpac manager Anthony Heraghty to chief executive.
Aristocrat Leisure were up by 1.36 per cent to $24.64, while Breville also finished higher at 2.33 per cent to $10.99.
European stock markets were down on the back of the US markets closing for Martin Luther King Jr Day and China reported their slowest economic growth in more than two decades.
The Aussie dollar fell, buying 71.36 US cents from 71.69 US cents on Monday.
ON THE ASX:
* The benchmark S&P/ASX200 index was down 31.6 points, or 0.54 per cent, to 5858.8 at 1630 AEDT on Tuesday
* The All Ordinaries was down 29.2 points, or 0.49 per cent, lower at 5924.3
* At 1630 AEDT, the SPI200 futures index was down 24 points, or 0.41 per cent, at 5803.0
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 71.36 US cents, from 71.69 on Monday
* 78.08 Japanese yen, from 78.56
* 62.84 euro cents, from 63.02
* 55.44 British pence, from 55.70
* 106.12 NZ cents, from 106.64
GOLD:
The spot price of gold in Sydney at 1630 AEDT was $US1277.8 per fine ounce, from $US1281.31 on Monday.
The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy.
In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China’s economy and a possible “No Deal” Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets.
The IMF predicted the global economy to grow at 3.5 percent in 2019 and 3.6 percent in 2020, down 0.2 and 0.1 percentage point respectively from last October’s forecasts.
“Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth.”
The downgrades reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under market pressure due to Rome’s recent budget standoff with the European Union.
Growth in the euro zone is set to moderate from 1.8 percent in 2018 to 1.6 percent in 2019, 0.3 percentage point lower than projected three months ago, the IMF said.
The IMF also cut its 2019 growth forecast for developing countries to 4.5 percent, down 0.2 percentage point from the previous projection and a slowdown from 4.7 percent in 2018.
“Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising U.S. interest rates, dollar appreciation, capital outflows, and volatile oil prices,” the IMF said.
The IMF maintained its U.S. growth projections of 2.5 percent this year and 1.8 percent in 2020, pointing to continued strength in domestic demand.
It also kept its China growth forecast at 6.2 percent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending.
In Asia,
Losses were led by Chinese shares, with the blue-chip indexoff 1.2 percent. Hong Kong's Hang Seng index was down more than 1 percent and Australia's main share index faltered 0.5 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.9 percent on Tuesday, drifting away from a recent seven-week top.
Japan's Nikkei which had opened firmer, skidded 0.7 percent.
“Concerns over slowing global growth are starting to filter through to financial markets,” said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
Those worries sent prices for copper, used in electrical wires and vehicles, drifting lower.
In another sign of risk aversion, the Australian dollar, often used as a liquid proxy for China investments, eased 0.3 percent to $0.7134, putting it on track for a third straight session of losses.
In Europe,
European shares extended their slide on Tuesday as growth worries weighed on global markets while results from Switzerland’s UBS dragged on the banking sector.
The pan-European STOXX 600 fell 0.4 percent, with Germany's DAX .GDAXI also retreating 0.4 percent and Italy's FTSE MIB .FTMIB down 1 percent as a new batch of corporate updates cemented the risk-averse mood.
Europe’s banking index .SX7P fell 1 percent, with HSBC (HSBA.L), BNP Paribas (BNPP.PA) and Santander (SAN.MC) down between 1.2 percent and 2.7 percent.
In the United States,
Wall Street ended its four-day rally on Tuesday as a gloomy global economic growth outlook and disappointing company forecasts dampened investor spirits at the height of fourth-quarter reporting season.
All three major U.S. stock indexes extended their losses after the Financial Times reported the Trump administration rejected an offer from China for preparatory talks ahead of next week’s high-level trade negotiations.
Each of the FAANG momentum stocks, a group which includes Facebook Inc (FB.O), Apple Inc (AAPL.O), Amazon.com (AMZN.O), Netflix Inc (NFLX.O) and Google parent Alphabet Inc (GOOGL.O), were down between 1.7 and 4.6 percent.
Fears of a slowdown in corporate profits were exacerbated as companies posting fourth-quarter results provided disappointing forward-looking projections.
The Dow Jones Industrial Average .DJI fell 398.96 points, or 1.61 percent, to 24,307.39, the S&P 500 .SPX lost 45.21 points, or 1.69 percent, to 2,625.5 and the Nasdaq Composite .IXIC dropped 148.39 points, or 2.07 percent, to 7,008.84.
All 11 major sectors of the S&P 500 were in the red, with the largest percentage losses coming from industrials, communications services and tech.
With just over 12 percent of S&P 500 companies having reported thus far, 78.7 percent of have beat Street expectations. Analysts expect S&P 500 fourth quarter earnings growth of 14.1 percent, down from 20.1 percent on Oct. 1, according to Refinitiv data.
Australian News
The Australian dollar is subdued as concerns about the outlook for Chinese, and global, growth cast a shadow over commodity-sensitive currencies. The Aussie dollar was pinned at 71.54 US cents, having steadied above a 71.40 US cents low hit overnight.
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Finance, construction, real estate and retail jobs most likely to be hit in 2019 as house prices fall
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While many of us were relaxing over summer, financial markets had a change of heart that could ultimately affect anyone with a mortgage or savings account.
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Federal Treasurer Josh Frydenberg has painted a pessimistic outlook for the Australian economy as the Coalition ramps up its bid for re-election.
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Afterpay executives say they were “absolutely distressed” by a retailer’s advertising campaign that encouraged “broke” consumers to use their service. The ASX-listed buy-now, pay-later provider said it threatened to withdraw service from the retailer when it became aware of the advert last year, and would have severed ties had there been any repeat.
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Agriculture Minister David Littleproud has launched a blistering attack on a group of animal activists, demanding immediate removal of an online database of farmers. Aussie Farms sparked outrage after publishing a map detailing the location of farms and abattoirs in an effort to expose animal cruelty.
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World News
The United States on Tuesday enters the second month of a partial government shutdown over a lack of congressional funding, with no quick end in sight to the historic crisis weighing on the nation's economy and morale. Since December 22, a quarter of the government has been paralyzed because of an impasse between opposition Democrats in Congress and the White House over funding for a wall to block illegal immigration at the border with Mexico.
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Trump plans to reopen govt, build border wall undercut by Supreme Court
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'What scares me the most': Business leaders in Davos are worried about central banks. "What scares me the most longer term is that we have limitations to monetary policy, which is our most valuable tool," Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, said Tuesday at the World Economic Forum.
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The United States will proceed with the formal extradition from Canada of Huawei executive Meng Wanzhou, Canada's ambassador to the United States says. David MacNaughton, in an interview with a Canadian newspaper, said the United States has told Canada it will request Meng's extradition, but he did not say when the request will be made.
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Canada should ban China's Huawei Technologies Co Ltd from supplying equipment to Canadian 5G networks because the security risk is too great,a former spy chief said in an article published on Monday. China last week threatened repercussions if Ottawa blocked Huawei, a warning the Canadian government dismissed.
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Analysts expect the European Central Bank to acknowledge growing risks to the eurozone economy Thursday while sticking to its patient course, kicking off a year that could see the Frankfurt institution mostly marking time. The central bank is caught at an intermediate stage of withdrawing crisis-era stimulus, having wound up net purchases of government and corporate bonds -- so-called "quantitative easing" (QE) -- but seeing the economy still too fragile to lift interest rates from their historic lows.
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British workers’ pay grew at the fastest pace in over 10 years and employment jumped much more than expected in the three months to the end of November, contrasting with other signs of an economic slowdown ahead of Brexit.
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British Prime Minister Theresa May has sought to break the parliamentary deadlock over Brexit by proposing to seek further concessions from the European Union on a plan to prevent customs checks on the Irish border.
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Stock News
Kogi Iron Ltd (ASX:KFE) has received final documentation from the Federal Republic of Nigeria, Ministry of Mines and Steel Development, granting Exploration Licence EL 28784, which replaces EL 16998. EL 16998 was first approved in September 2015 and has been replaced by EL 28784 in the normal course of business.
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Peel Mining shares rise following further high-grade zinc-lead-silver hits at Wagga Tank
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Oil Search chief executive Peter Botten has hailed a fourth-quarter surge in production as a sign of better times after the company faced the most challenging year in its history. Oil Search’s major Papua New Guinea LNG project was rocked by a devastating 7.5 magnitude earthquake in early 2018 that halted operations but it was able to restart production within months.
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Volt Resources secures 6-month loan facility as it progresses Tanzanian note issue. The company aims to raise US$40 million to help fund the stage I development of its graphite project.
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BHP Group's second-quarter iron ore production has fallen nine per cent and the mining giant has flagged a $US600 million hit due to production disruptions at its copper and iron ore operations.
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Premier Mark McGowan has personally urged BHP boss Mike Henry to cut a deal over a royalties rip-off that has short-changed WA by up to $300 million and went undetected for more than a decade. The world’s biggest mining company appeared to be digging in yesterday, but The West Australian understands BHP is keen to avoid a public relations battering and is working to resolve the iron ore royalties dispute.
Silver City Minerals gains new substantial holder with more than 5% interest
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Alliance Mineral Assets Ltd (ASX:A40) (SGX:40F) has revealed that Regal Fund Management has become a new substantial shareholder in the company after acquiring about 67 million ordinary shares with a voting power of 5.14%. The specialist alternative investment manager is one of Australia’s leading investment managers servicing a wide range of institutional investors and high net worth individuals.
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The world can barely get enough of Australian wine with 94 million cases of Aussie wine sold around the world last year. That is an increase of 5 per cent in volume, but consumers are paying more for it with the value of exports up 10 per cent to $2.8 billion.
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Shares in Supercheap Auto and Rebel owner Super Retail Group are higher after the company shored up a leadership gap with the promotion of its outdoor retail manager to chief executive.
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The owner of Rebel Sport and Supercheap Auto is the latest retailer to report a weak start to the crucial December sales period, saying its customers took advantage of events like Black Friday to do their Christmas shopping earlier. Super Retail Group, which on Tuesday announced an internal candidate would become its next chief executive, said events like the American imported Black Friday, and online sales events Click Frenzy and Cyber Monday, were having a noticeable impact on its business.
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G Medical Innovations Holdings Ltd on track for revenue growth in 2019. The mobile and e-health company is set for first production from its facility in Guangzhou, China.
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TPG-Vodafone decision pushed back to April. A regulatory decision on whether or not to allow TPG and Vodafone’s proposed merger to proceed is now not expected until mid-April due to a delay in receiving information from the two telcos.
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Qantas chief executive Alan Joyce will meet with Perth Airport chairman Nev Power to discuss the airport fee dispute that has been raging publicly since December. Mr Joyce is in Perth this week to discuss the furore around aeronautical fees, which resulted in the airport taking the airline to the WA Supreme Court to recoup more than $11 million in unpaid fees in the six months to December 2018.
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A group of businesses in Victoria's Latrobe Valley say they are collectively owed hundreds of thousands of dollars by a manufacturing company that was supported by the Victorian Government to create jobs after the closure of a coal-fired power station.
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Out of respect for your fellow traders, please inc Stock Codes in your posts (so we know what the heck you are talking about)
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Trying a new system, hopefully the post formatting comes out ok.
Here is breakfast, happy trading. Sorry it's a little later than normal, technical issues (browser died), but food should still be warm.
