Good morning traders, welcome to another week at the coalface. Unless you have a public holiday are taking a well deserved day off, in which case what are you reading this for?
Thanks @ttward, @Ravgnome & the aftermarket loungers, was a little bit quieter over the weekend but still interesting conversations to be had as always.
ASX Market Report
Declines across the US and Europe will provide a negative lead in for the Australian share market on Monday. Australian markets are also expected to be affected by Monday's public holiday in Victoria, South Australia, Tasmania and the ACT.
CommSec chief economist Craig James says its no surprise that after the losses in the US, there would be similar declines in our own market on Monday. "US investors are trying to mull up the state of the economy - job figures were much weaker than expected but the question is whether this is just a one off type development. And housing stats were much firmer than expected," he told AAP. "So that data was more mixed than anything."
Despite the US dollar weakening against all other currencies, the Australian dollar was firmer. Rather than being about 70 cents, the Australian dollar was at 70.5 cents.
He said mining stocks were all down, including the oil price (down 59 cents), nickel (down 1.2 %) and iron ore ($2.20 lower). "The only saving grace is the gold price, up over $13 an ounce," he said. "Gold stocks may do okay on Monday but some of the other mining and energy stocks may face headwinds - the higher Australian dollar doesn't help."
He said investors could expect Monday to be a little softer in terms of volume, and potentially, growth because of the public holiday. He said because of that, no major economic data had been released. But what everyone is waiting for is a development in the US-China trade dispute. "Without new information, we are effectively in a holding pattern."
Australian shares hit the skids over concerns about a global growth slowdown, with nearly every sector on the local bourse in the red.
The benchmark S&P/ASX200 index was down 60.1 points, or 0.96 per cent, to 6,203.8 points at 1615 AEDT on Friday, while the broader All Ordinaries was down 57.1 points, or 0.9 per cent, at 6,287.1.
It follows losses on the US and major European markets overnight after the European Central Bank slashed its 2019 growth and inflation forecasts. Every sector was lower aside from property trusts, which was up marginally.
"It's a bit of an unwind today, a bit of risk-off," said Chris Weston, head of research with Pepperstone in Melbourne. "The concern we've had is about global growth. What the ECB did has reverberated across the globe ... sent global shockwaves through the market." Mr Weston said Pepperstone's clients were concerned about whether "today is the start of a more of a trend, the start of a deeper pullback. It feels like it's got more legs there." It was worst day for the ASX200 since January 2, but overall the market still closed up 0.18 per cent for the week.
The financial sector was the worst hit, down 1.58 per cent. ANZ was down 2.27 per cent, CBA down 2.01 per cent, Westpac down 1.32 per cent and NAB down 1.13 per cent.
Santos, Woodside Petroleum, Oil Search, Origin Energy and Beach Energy were down between 1.14 per cent and 2.38 per cent despite oil prices moving higher overnight.
Telco Telstra was down 0.31 per cent, while pharma giant CSL was down 0.06 per cent.
ON THE ASX:
* The benchmark S&P/ASX200 index was down 60.1 points, or 0.96 per cent, at 6,203.8 points at 1630 AEDT on Friday.
* The All Ordinaries was down 57.1 points, or 0.9 per cent, at 6,287.1.
* At 1630 AEDT, the SPI200 futures index down four points at 6150.
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 70.01 US cents, from 70.46 US on Thursday
* 77.81 Japanese yen, from 78.72
* 62.56 euro cents, from 62.34
* 53.55 British pence, from 53.46
* 103.64 NZ cents, from 103.85
GOLD:
The spot price of gold in Sydney at 1630 AEDT was $US1292.87 per fine ounce, from $US1285.38 on Thursday.
5 Things to Watch
1/ TIME FOR SOME VOODOO?
So after three years of pumping 2.6 trillion euros worth of stimulus and cutting interest rates to minus 0.4 percent, the ECB has admitted its growth/inflation targets remain elusive and those emergency-era monetary settings will have to persist for a lot longer. The ECB is not alone. Doubts abound around the world about whether developed economies have enjoyed lasting benefit or been fully repaired by trillions of dollars of bond buying “quantitative easing” from central banks over the past decade. Japan has been in this funk for decades. The Federal Reserve is finding “normalization” of its policy settings difficult. Of late, slowing economic momentum has seen Australia, Canada and Sweden turning tail on policy tightening plans.
All this speaks loud and clear to the current economic policy zeitgeist – a raging debate around MMT, or Modern Monetary Theory, effectively a reworking of monetary theory by the left of the U.S. Democratic Party ahead of next year’s elections. MMT advocates posit that policymakers in countries fortunate enough to manage the world’s main reserve currencies should, as long as inflation remains as subdued as it is right now, just keep interest rates at zero and print money to invest in environment and infrastructure projects.
With interest rates near zero and inflation structurally depressed, they argue that government deficits and debt levels far higher than the sometimes arbitrary limits set by current orthodox policy can be both sustainable and productive in seeding higher and better-quality economic growth in the longer term.
2/BREAKING POINT
Three votes in three days! The Brexit saga returns with a vengeance on March 12 when Prime Minister Theresa May risks another crushing defeat of the deal she’s negotiated with the EU. Another defeat for May — who as of Friday had no new concessions from Brussels to present to parliament — could just reignite fears about an eventual no-deal Brexit outcome. It will also deal a blow to the pound that’s rallied in recent weeks as this risk was priced out.
If May loses the vote, lawmakers will get to vote on March 13 and 14 to rule out a no-deal Brexit and on delaying Britain’s departure. Depending on whom you ask, agreement to delay will either settle nerves or prolong the unknown.
A Reuters poll of economists predicted Brexit to be delayed by a few months, with a free-trade deal eventually agreed But uncertainty is showing up in currency derivatives markets, with one-month implied volatility — capturing the March 29 Brexit date — at its highest since mid-January. The pound too has come off recent highs.
3/ A BUYERS’ STRIKE?
Was December’s dismal retail sales report in the United States a one-off pause in consumer spending caused by the stock market meltdown? Or was it the start of a trend? That question could be answered on Monday when January data is released — roughly three weeks later than normal after the partial government shutdown in December and January disrupted the data release schedule.
The figures will be a key signal about how well the U.S. consumer and economy are standing up to a worldwide slowdown. Overall sales are seen edging up 0.1 percent in January after dropping 1.2 percent in December, the biggest fall since 2009. Several subsets of the series saw an even more-alarming decline — for instance the so-called ‘core’ measure of retail sales slid 1.7 percent for its largest decline since 2001.
Even against that bleak backdrop, the December falloff in online sales was especially weak. In the hitherto booming sector, the 3.9 percent decline was the largest since the financial crisis and marked the worst December ever for the ‘nonstore’ category that stands as a proxy for online sales. Another month of weakness will confirm the storm clouds are gathering and the stimulus impact is well and truly over.
4/ SLOW AND SLOWER
The message that rang loud and clear from China’s annual parliament meeting was: stability is paramount. Which is why the authorities kept growth targets within a broad 6.0-6.5 percent range, cut taxes but kept fiscal easing well short of 2015 levels. And they emphasized yuan stability as a priority. Yet, reading between the lines, one might conclude that to keep growth above 6 percent, China needs to be flexible about credit growth and deficit targets.
But after February’s 20 percent-plus exports contraction and the sharp imports slowdown, it seems a matter of when, not if, benchmark interest rates will be cut. Upcoming data on industrial output, retail sales, housing and credit will also come against the backdrop of speculation about what deal U.S. President Donald Trump and his Chinese counterpart Xi Jinping will eventually reach on those all-important trade tariffs.
5/RE-RUN IN EM
The Argentine peso in recent days has led emerging currencies in a race to the bottom, plumbing record lows. Others such as the Turkish lira and South African rand have followed closely.
One culprit is the strong dollar which has surged to its highest level since June 2017. But domestic factors are also to blame. Aside from problematic politics and high inflation, Turkey, Argentina and South Africa rely heavily on external financing. Slowing world growth will weigh on such markets’ prospects. Turkey and Argentina were also clobbered with economic forecast downgrades by the OECD, while South Africa’s economy too has slowed.
There are signs investment into emerging equities and bonds is starting to slow. It all stirs memories from 2018 when a buoyant first quarter dissolved into selling, with Turkey and Argentina getting walloped by currency crises. Both countries have since taken steps to recover. Investors will be wondering whether those are sufficient to stop history repeating.
Economic Data for Mar 11-17
Also something neat from the RBA, some aussie economic stats.
Key Economic Indicators:
Composition of the Australian Economy:
In Asia
Deepening fears for the health of the global economy pushed world stocks to three week lows on Friday after China exports contracted by a fifth, sending shares in some of the country’s key indexes more than 4 percent lower.
The February data out of Beijing came in well below expectations of a 4.8 percent drop and worsened the already brittle mood on world markets, after European Central Bank slashed growth forecasts and unveiled a new round of policy stimulus on Thursday.
While the timing of the Lunar New Year made it difficult to draw a true signal from the China data noise, the scale of the drop was alarming, especially when coupled with sombre new data from Germany and Norway.
The data knocked Chinese stocks off the 20-month highs hit earlier in the week, with mainland equity indexes plunging more than 4 percent in their worst day in five months. Japan’s Nikkei. closed 2 percent lower.
In Europe
European stocks notched up their biggest weekly fall since December on Friday, extending losses as weak China and German data and poor U.S. jobs numbers tightened bears’ grip on the market, underscoring worries about a global economic slowdown.
The STOXX 600 fell 0.8 percent on the day for its biggest weekly fall since Dec. 21, when a sharp sell-off was sweeping global markets. Germany’s DAX was down 0.5 percent.
“The weakness in soft data since September is starting to impact hard data, so central banks are reacting,” said Sophie Huynh, multi-asset strategist at Societe Generale. But she added “we should not over-interpret the China trade data because we have to take into account Chinese New Year and potential front-loading.”
Mounting evidence of a global economic slowdown kept downward pressure on world earnings expectations. Analysts now see 2019 earnings growth at just 4.4 percent, less than half the growth they expected back in October.
In the United States
Wall Street’s main indexes fell for a fifth straight session on Friday and posted their biggest weekly declines since the market tumbled at the end of 2018, as a weak U.S. jobs report ignited more concerns about the global economy.
But Friday’s declines were only slight. Stocks significantly pared losses late in the day as investors reassessed the employment report and considered whether the market’s recent slump was ending.
The eventful session came as some Wall Street watchers prepared to celebrate the 10-year anniversary of the start of the S&P 500’s bull market run that took root during the financial crisis.
U.S. employment growth almost stalled in February, with the economy creating only 20,000 jobs, adding to signs of a sharp slowdown in economic activity in the first quarter. The payroll gains reported by the Labor Department were the weakest since September 2017.
The weak U.S. report added to economic fears also fanned by a sharp fall in China’s exports and after the European Central Bank slashed growth forecasts for the region on Thursday.
“People are worried about the jobs report and global growth in general and that is pushing markets lower,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company in Milwaukee.
But stocks finished well above their lows for the session, as investors noted the jobs report was affected by seasonal effects and the federal government shutdown.
“As people take a step away from the headline number, they say, ‘Hey, this is just one report. The economy is likely not as weak as this one report would suggest’,” said Keith Lerner, Chief Market Strategist, SunTrust Advisory Services in Atlanta.
The Dow Jones Industrial Average fell 22.99 points, or 0.09 percent, to 25,450.24, the S&P 500 lost 5.86 points, or 0.21 percent, to 2,743.07 and the Nasdaq Composite dropped 13.32 points, or 0.18 percent, to 7,408.14.
The Nasdaq snapped a 10-week streak of weekly gains.
The recent pullback has paused a rally to start 2019 that has been fueled by optimism over a U.S.-China trade deal and by beliefs the Federal Reserve will be less aggressive in raising interest rates. The S&P 500 is up 9.4 percent this year.
“In the first part of the year, what we have largely done is clawed back what we lost in the fourth quarter that was based upon geopolitical and Federal Reserve fears that are now ebbing,” Schutte said.
Australian News
China heads for a trade recession as exports crash 20pc, and that's bad news for Australia. China's export effort appears to have finally cracked under sustained pressure from US tariffs and a slowdown in global trade
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An independent economic think tank is urging the Morrison Government to do the politically unthinkable ahead of an expected May election and back Labor's plans to end unsustainable tax breaks. The Committee for Economic Development of Australia (CEDA) says tough decisions need to be made about controversial tax credits on dividends and capital gains tax to ensure the anticipated return to a budget surplus is long-term instead of a one-off.
Read more
Declining household consumption and rising unemployment are among the downside headwinds that could force the Reserve Bank (RBA) to change course and lower its economic growth forecasts, a leading analyst said on Thursday. Westpac chief economist Bill Evans believes growing pressure on the economy could force the RBA to intervene on two occasions this year, with a possible interest rate cut in August followed by another in November, which would reduce the official cash rate to an unprecedented low.
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Superannuation funds are poised to own more than half of the Australian sharemarket by 2030, raising concerns they could soon wield too much influence. The total value of Australian shares owned by Australian superannuation funds rose from $279 billion in 2008 to $650 billion at the end of 2018, according to a Rainmaker analysis for The Sydney Morning Herald and The Age.
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Happy is not a word either the head of the Commonwealth Bank or Westpac would use to describe their reaction to the final report of the financial services royal commission. That's despite claims by some commentators that commissioner Kenneth Hayne's 76 recommendations were actually a win for the banks, letting them off lightly for the widespread misconduct he exposed.
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More of your personal credit history is now being watched by banks and other lenders.National Australia Bank has started sharing people’s mortgage payment information with credit agencies, and the other three major banks will join it within six months.
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Commonwealth Bank boss Matt Comyn has confirmed shareholders will bear the bulk of the $1.4 billion bill for customer remediation that the bank has racked up over the past five years.
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China's cloud has silver lining for Australia's big miners. The chief executive of one of Australia’s biggest mining exporters to China sees an upside for Australia in the sober report on China’s slowing economy delivered this week by Chinese Premier Li Keqiang.
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Newly appointed ABC chairman Ita Buttrose has argued women will need to push for the top jobs in media if the industry is to achieve proper gender balance at the highest levels. Ms Buttrose, 77, was chosen as chairman of the public broadcaster in late-February by Prime Minister Scott Morrison and is the second woman in the history of the taxpayer-funded organisation to take on the role.
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One token woman ain't diversity: Shareholders to punish one-woman boards by voting against main men
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Opinion - Matthew Lynn: Sharemarket still living in the shadow of 2008-09's almighty crash. There won't be any candles, balloons or cards. Indeed, it is unlikely anyone will be celebrating at all. But today, March 9, marks the 10th anniversary of the last great bear market.
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Global News
Wall Street weekahead: Housing shares dependent on economy easing but not falling
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President Donald Trump on Monday will ask the U.S. Congress for an additional $8.6 billion (6.61 billion pounds) to help pay for the wall he promised to build on the southern border with Mexico to combat illegal immigration and drug trafficking, officials familiar with his 2020 budget request told Reuters.
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'Brexit in peril' as PM May faces heavy defeat. Brexit could be reversed if lawmakers reject the government’s exit deal, Foreign Secretary Jeremy Hunt said on Sunday after two major eurosceptic factions in parliament warned that Prime Minister Theresa May was facing a heavy defeat.
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Move over, Saudi Arabia. America is about to steal the kingdom's energy exporting crown. The United States will surpass Saudi Arabia later this year in exports of oil, natural gas liquids and petroleum products, like gasoline, according to energy research firm Rystad Energy.
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The US economy added only 20,000 jobs in February, a surprisingly low number that bucked the trend of huge jobs gains in recent months. That was the fewest jobs gained in a month since September 2017.
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The company that makes the popular flavored sparkling water LaCroix reported a drop in sales and profit in its latest quarter. And the CEO is quite angry about it, saying that "much of this was the result of injustice!" National Beverage chairman and CEO Nick Caporella, who typically writes the company's earnings releases as an off-the-cuff letter to shareholders, made the comment in the company's report after the closing bell Thursday.
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Coffee futures may jump over 20% by year-end with global surplus expected to turn into a deficit
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An heiress to the Disney fortune has taken a swipe at the world’s CEOs, claiming they are earning far too much. Abigail Disney, whose grandfather Roy O. Disney co-founded The Walt Disney Company with her great uncle Walt Disney, spoke out about the “unacceptable” wealth inequality in the US today during an appearance on CNBC’s Squawk Box program recently.
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EU Makes New Offer Well Short of May's Demands: Brexit Update
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Europe will fight Mark Zuckerberg's plan for Facebook. Mark Zuckerberg has put Facebook on a collision course with European regulators. The CEO wrote Wednesday in a lengthy blog post that he plans to integrate WhatsApp, Instagram and Messenger, making it easier for users to communicate across the Facebook-owned platforms.
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News Corp CEO Robert Thomson predicts digital ‘reckoning’. News Corp’s global CEO Robert Thomson has slammed the “smugness” of tech giants Google and Facebook during a wide-ranging speech in London.
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Germany does not want to ban Huawei from 5G networks - minister. Economy Minister says Berlin will tighten security criteria for all vendors instead.
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China's 21% plunge in exports shows weakening global economy
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Long before Trump's trade war with China, Huawei’s activities were secretly tracked. The surprise arrest of Huawei's chief financial officer in December quickly turned the executive, Meng Wanzhou, into a central figure in a trade war between two economic superpowers.
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Stock News
Fremont Petroleum shares surge on strong oil and gas flows at J.W. Powell Well. Crude oil now flowing to tanks with flow increasing strongly and a 15-foot gas flare recorded with strong flow continuously building.
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Red Sky Energy applies for ministerial consent to acquire Innamincka Dome project. The company, which is focused on hydrocarbons, is initiating a capital raising under its existing ASX placement capacity.
Read more
Rio Tinto is in talks to move into the next phase of an agreement with Apple, chief executive Jean-Sebastien Jacques says, as the miner looks to transition its aluminium business to tap a low-carbon economy.
Read more
Atrum Coal Ltd (ASX:ATU) has raised around $20 million new equity funds through the issue of 114.3 million ordinary shares in a two-tranche placement at the issue price of 17.5 cents per share. The placement was well supported with strong demand from institutional and sophisticated investors based in Australia and internationally, which has allowed the introduction of several new institutional investors on to the Atrum share register.
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InvoCare Limited (ASX:IVC) entered a trading halt pre-market this morning outlining its intention to raise up to $85 million in new funding. The timing was a little unlucky, with Channel 9's A Current Affair featuring inappropriate behaviours in the funeral industry last night.
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Embattled wealth manager IOOF Holdings has slipped out of the benchmark S&P/ASX100after the Australian share market indices' quarterly rebalancing.
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Paradigm Biopharmaceuticals Ltd (ASX
AR) director Christopher Fullerton has purchased 100,000 shares on-market for a total consideration of $118,116. The transaction brings Fullerton’s total holding (direct and indirect) to 836,000 shares.
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De Grey Mining Ltd (ASX
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Animoca Brands Corporation Ltd (ASX:AB1) has progressed its partnership with iClick Interactive Asia (NASDAQ:ICLK), signing a deal with Vigame Network worth about $12.6 million to resell the advertising inventory of iClick. iClick is a China-based online marketing platform with gross billings of over US$400 million per annum. It is the largest Chinese independent online marketing platform in terms of gross billing.
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Argosy Minerals outlines rights issue to raise up to $6.2 million for Rincon Lithium Project
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Altech Chemicals Ltd (ASX:ATC) (FRA:A3Y) has officially mandated Macquarie Bank as the preferred mezzanine lenderfor its proposed Malaysian high purity alumina (HPA) plant. During May 2018 Altech received an indicative and non-binding mezzanine debt term sheet for a facility amount of up to US$90 million.
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Please include the Stock Code in your post out of respect for your fellow traders, or use the OT tag for non-stock related content.
If for some unholy reason you still want more reading at this time of the morning, I did some Lithium sector charts over on the STT over the weekend, if that is your kind of thing. Yes, this is a shameless plug.
Here' breakfast to get your week off and kicking. Play hard, but play fair, and hit that ball straight and true (did I mention I like sports metaphors).
Day Trading Pre-market Open - 11 Mar 2019
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