Daily FNArena News - Australia

Increased volatility in markets and downgraded economic growth expectations are a positive backdrop for defensive names among A-REITs. Brokers embark on a round of stock picking.

A host of items are expected to negatively affect BHP Group’s first half profit, although most brokers acknowledge there is still enough momentum to meet full year guidance.

Record gold production was a highlight for Saracen Mineral Holdings in the December quarter, although several brokers consider the stock overpriced.

Market volatility and increased competitor activity have once again driven Sims Metal to downgrade expectations. Most brokers, while disappointed, still favour the longer-term outlook.

Broker views centre on how Rio Tinto will carve up the cash pie stemming from asset divestments, as revenue continues to benefit from strong commodity prices.

Gold has found a solid footing, as several features in the global environment combine, and this underpins a strong revenue outlook for gold stocks.

Negative markets and outflows caused Perpetual to report a decline in funds under management in the December quarter and brokers expect the share price will remain under pressure in the near term.

Wealth manager Magellan Financial’s fund flows stood out in the December quarter and a better outlook has prompted several brokers to review their ratings.

A sharp drop off in demand for some of its produce over December and into January caused Costa Group to flag a flat net profit outcome for 2018. Brokers believe the market reaction was overdone.

Discretionary retailing encountered difficult Christmas trading in 2018 and brokers suspect a depressed consumer environment bodes poorly for the upcoming reporting season.