Tag Archives: Base Metals and Minerals

article 3 months old

Material Matters: Oil & Gas, Silver, Zinc And Iron Ore

-AWE bid a positive for sector
-Bullish oil likely short term
-US gas prices lower for longer
-Speculative push on silver
-Zinc entry point ahead?
-Pull forward in iron ore demand seen
 

By Eva Brocklehurst

Oil & Gas

The read on the unsolicited proposal for AWE ((AWE)) from Lone Star Japan, - which was rejected - is positive for Australia's small cap E&P sector, Credit Suisse asserts. The broker considered the bid reasonable although the board maintained it was opportunistic.

Still, the bid may bring attention to the value opportunities in a sector which has suffered from weak commodity prices. The broker finds value in the sector and has Outperform ratings on Beach Energy ((BPT)), Senex Energy ((SXY)) and FAR ((FAR)).

Morgan Stanley questions why the oil price is not higher, given the muted price action over the past 1-2 months suggests that an inventory buffer may be preventing a full recovery and/or the market is rightly nervous about the sustainability of outages and possible producer responses.

Bullish oil trends are expected to continue through May but the broker suspects the risks may skew to the negative in the second half. A number of worrying data points have emerged in recent weeks, which makes the broker suspect Chinese demand is slowing already.

Any renewed concerns in emerging markets could be particularly problematic for oil. The broker also notes India, Argentina and China have, or are planning, new regulations on oil trade which may have significant impacts on imports, production and investment.

Goldman Sachs observes the oil market has gone from enduring storage saturation to being in deficit earlier than expected. Hence, the broker is pulling forward its price forecasts with second half West Texas Intermediate now forecast at US$50/bbl.

The reason the broker believes the market shifted to deficit in May is driven by evidence of strong demand and sharply declining production. Stronger vehicle sales, and a larger crop harvest lead Goldman Sachs to raise its demand forecasts emanating from India and Russia, while reducing US and EU forecasts.

The broker expects some outages will recur, as well as higher production from Iran and Iraq, and this should eventually more than offset the higher demand. As a result a more gradual decline in inventories is expected with a return to surplus in the first quarter of 2017. Goldman lowers 2017 forecasts, with prices expected to only reach US$60/bbl by the fourth quarter of 2017.

Morgan Stanley also suspects cheaper Canadian gas may flood the US market in the northern summer. AECO prices traded to 5-week lows last week and the broker notes average discounts to Henry Hub prices are in excess of US$1/mmbtu for both May and April.

AECO sourced gas is currently the lowest cost option for many regions of the US. If this continues the added supply may keep prices lower for longer. Morgan Stanley observes record high inventories have occurred in Canada, given a very mild winter on top of supply growth.

Silver

A sharp rise in the price of silver over the last six weeks has made it a top performer in the year to date, Morgan Stanley observes a corresponding lift in the metal's non-commercial CFTC long positions and Comex futures, suggesting speculators are behind the move up in price.

The broker answers the question of why silver has not tracked gold this time: speculators prefer silver over gold, largely because it is cheaper and the latest speculative push has been driven by a credit surge in China and perceptions of emerging risk around China's expanding debt.

Silver's production rates are higher, delivered predominantly as a by-product of zinc-lead operations. Favourable market conditions exist as well, as mine supply fell 6.4% in 2015 and is forecast to shrink further. Morgan Stanley forecasts silver this year at around US$14.55/oz, capped by persistent low inflation.

Zinc

Macquarie suggests that zinc stocks are more than ample to cover any spot requirements, despite a definite improvement in European demand sentiment. The situation is similar in North America. Premiums have been flat in both regions and some analysts are expecting a downward move in prices.

The tightness in concentrates is yet to feed down the chain, the broker observes, and a short-term move down may occur. Macquarie agrees this could provide an entry point as into the second half its view on prices is strongly positive.

September and December quarter prices are expected to range between US$1,900/t and US$2,200/t as metal production slips on an emerging feed deficit. The broker believes mine reductions are obvious enough to envisage production falling around 8.0% this year, forcing metal output to fall and tightening up markets.

Iron Ore

Macquarie has upgraded its outlook for iron ore over the near term. This comes on the back of stronger Chinese steel demand and supply disappointments. The broker upgrades forecasts for 2016 iron ore prices by 1.0% and 2017 by 11%. Chinese steel demand growth is forecast to rise slightly in 2016 after the broker previously expected it to fall.

Pulling forward near-term demand expectations and the delays to supply has meant the broker's outlook for 2018 and 2019 is more precarious. Macquarie now estimates 50mt of high-cost seaborne supply needs to be removed in these years.

The new outlook has driven upgrades to miner earnings estimates for the next 18 months but then downgrades for the following 18 months. The broker's preferences are unchanged but sustained strength in iron ore prices over the next 18 months could mean Fortescue Metals ((FMG)) de-gears at a much faster rate than current estimates imply.
 

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article 3 months old

The Overnight Report: Over-Inflated

By Greg Peel

The Dow closed down 180 points or 1.0% while the S&P fell 0.9% to 2047 and the Nasdaq lost 1.3%.

Up to the Minute

“Members discussed the merits of adjusting policy at this meeting or awaiting further information before acting. On balance, members were persuaded that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.”

This conclusion contained in the minutes of the RBA’s May meeting, released yesterday, caused the Aussie to shoot up from under 73 to around 73.6 in a blink. While economists have been climbing over themselves since the release of the May monthly statement and quarterly SOMP to forecast more and more rate cuts, this paragraph from the minutes suggests May’s cut was not actually a lay-down misere.

Members were persuaded.

They had to be persuaded because “developments over recent months had not led to a material change in the outlook for economic activity or the unemployment rate”. It was just an issue of low inflation. There may have been some lingering concern over further fuelling the housing bubble with a rate cut, but thanks to new restrictions, “potential risks of lowering interest rates therefore were less than they had been a year earlier”.

To sum up, the RBA cut in May because it could, not because it should. It was not an absolute call based on domestic drivers. It was a relative call based on global drivers. Low inflation is being imported. Whether or not we do get another cut in August, and continue down to 1.00% as some economists are now forecasting, will depend, I suggest, entirely on the Fed.

For if the Fed raises in June, or at least some time this year, the ECB, the BoJ, and other central banks around the globe including the RBA, will be handed a rate cut by default. A rate cut that does not require increased debt or a further foray into the parallel universe of negative rates.

The local stock market stumbled slightly late morning yesterday when the RBA minutes first hit the wires, but only briefly, before the index closed on its highs. But there was a very, very scary development in the afternoon. An RBA board member fronted the press and spoke.

Please, please Australia, do not let us go down the much derided Fedspeak path! That way be dragons.

The Aussie has since come back to US$0.7326, up 0.5% over 24 hours. The board member hinted there was room for another cut.

Between the minutes and the RBA-head, we’ve really learned nothing more than we knew from the May statement and SOMP. Thus the ASX200 was able to achieve what it started out to achieve yesterday, posting a rally entirely driven by the oil price. The energy sector closed up 3%.

We then drop down to materials with a 1.9% rally, given BHP crosses sectors, before otherwise noting counter-rallies in the defensives of consumer staples and telcos, each up 1.1%. No other sector much moved, although we should note the banks were strong by default given two major ex-divs.

The ASX200 didn’t quite make it to 5400, and if the SPI Overnight’s 27 point drop is anything to go by, won’t make it there today.

Speaking of Fed rate hikes…

Today we go down

The WTI price kicked on another 1.5% last night, but energy was the only sector on Wall Street to finish in the green.

The US April CPI numbers showed a 0.4% rise at the headline, up from 0.1% in March and representing the biggest jump since January 2013. On that note, the Dow fell 200 points.

June is back on the table.

The potential for a June rate hike was enhanced by, you guessed it, Fedspeak. The Atlanta and San Francisco Fed presidents last night both said the decision hinges on the data. Lockhart of Atlanta went one step further and suggested June “certainly could be a meeting at which action could be taken”.

Let’s look at some realities: (1) The core CPI rose only 0.2%, having risen 0.1% in March; the headline jump was all about the oil price rebound; (2) the Fed prefers the PCE measure of inflation to the CPI; (3) the Fed has been banging the “data dependent” drum for months and months; and (4) Fedheads have to suggest a meeting is “live”, otherwise what’s the point of holding one?

On that last point, we note the Bank of England is seriously considering cutting its meetings back to every two months, rather than every month.

We might also note that despite the supposed enhanced risk of a June rate hike, the US ten-year yield hasn’t moved, nor has the US dollar index, and gold is actually stronger.

The minutes of the Fed’s April meeting are out tonight, so look forward to some further volatility. The last three Wall Street sessions have seen the Dow down 200 (or thereabouts), up 200 and down 200 again.

Commodities

West Texas crude is up US70c at US$48.59/bbl. Brent is up US34c at US$49.48/bbl.

It was a mixed and relatively inconsequential session on the LME, with aluminium down 0.5% and lead down 1.5%, while nickel and tin rose 0.5%.

The US dollar index is flat at 94.55 despite the CPI scare, which would have helped keep a lid on things.

Iron ore jumped US$1.90 to US$55.70/t.

Gold is up US$4.80 at US$1278.80/oz.

Today

The SPI Overnight closed down 29 points or 0.5%.

The local market is not following Wall Street at present. Oil is up again and iron ore is up 3.5%. If we are down 29 points today, it would more likely be as a result of technical consolidation near this 5400 level. Unless Fed rate hike fear sends yield stocks down the gurgler.

As noted, the Fed minutes are out tonight.

Before that, the local March quarter wage price index releases kicks off the countdown to Australia’s GDP result.

A few AGMs will be held today, including those of Coca-Cola Amatil ((CCL)) and Iluka Resources ((ILU)). ResMed ((RMD)) goes ex.

Rudi will be hosting Your Money, Your Call Equities on Sky Business tonight, 8-9.30pm.
 

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(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Overnight Report: All The Way With Woz

By Greg Peel

The Dow closed up 17 points or 1.0% while the S&P gained 1.0% to 2066 and the Nasdaq rose 1.2%.

Healthy

The futures had suggested down 15 points yesterday morning but it didn’t take the ASX200 long to ignore this call and head higher. Much was made of disappointing Chinese data before trading commenced but on a disappointment scale, they weren’t really up there.

The local market is becoming increasingly inured to big moves on Wall Street, particularly since ups and downs of 200 Dow points have become de rigeur. Unless the moves relate specifically to something that impacts on the Australian market, such as oil prices, or it’s all part of general global macro fear/exhilaration, there’s not enough correlation between Bridge Street and Wall Street on any given day to suggest one must always be determined by the other.

The big story on the local market yesterday was the government’s agreement to do something about above-market rents being paid by pathology collection centres, as a trade-off against last year’s cuts to bulk billing incentive payments. Health Cares Primary ((PRY)) and Sonic ((SHL)) both jumped 5% yesterday as a result, sending the healthcare sector up a market-leading 2.0%.

Next best was materials with a 0.8% gain, in the face of the Chinese data, and a 0.6% rise in the banks would have had the biggest index clout. Elsewhere, some renewed support for supermarkets and more buying in telcos offset a fall in energy.

The ASX200 is sitting right in the middle of that 5300-400 range and it has to be said, still gives the impression of wanting to go up. While we’ve had a couple of stumbles on the way, it’s been a while since we’ve had one of those big one percent plus wash-out sessions that were quite frequent earlier in the year.

Hope I’m not speaking too soon, albeit the futures closed up 47 points overnight so we may yet have another shot at 5400 today, assuming the profit-takers don’t get toey.

Tonight’s mass media headlines will suggest there was a rally in stocks “despite selling in the banks”. That’s because both NAB and Macquarie go ex today, so be warned.

Nine Reasons to buy Apple

Celebrated iThing maker Apple is one of those stocks that’s simply too big for its own good. I’m assuming after last night’s 3.7% share price gain Apple is back to being the biggest company in America by market cap, having briefly seceded to the artist formerly known as Google. When you’re that big your every little move shifts market cap weightings exponentially and forces index trackers to react, exacerbating ups and downs. The herd follows blindly.

Apple is a stock everyone though they must own, until it was declared ex-growth, and everyone bailed out again. Never mind the barrow-loads of cash the company continues to generate every day. In the recent sell-off, Apple’s PE ratio fell to a low of nine times. That makes the company look more like an iron miner than what has arguably become more of a consumer staple. This wasn’t lost on Warren Buffet, who last night revealed he’d bought over a billion dollars’ worth of Apple shares.

So there’s the bulk of your 175 point Dow rally overnight. Apple, of course, bears no relevance to the Australian market so we’d need something else to justify a 47 point jump in the SPI overnight.

Enter Goldman Sachs. The investment bank was obviously feeling the pain on its short oil position – Goldman has been bearish oil – so decided to square up and try the long side instead. Last night Goldman issued a note suggesting that on a balance of strong demand and sharp declines in production, the oil market had shifted from “nearing saturation to being in deficit much earlier than we expected”.

Goldman now expects WTI to average US$45 in the June quarter and US$50 in the second half of 2016, up from US$35 and US$45 respectively. WTI subsequently jumped 3.3% last night.

Meanwhile the Empire State activity index dropped to minus 9.0 from plus 9.6 last month, completely confounding forecasts of plus 5.8. While this might be good for those not wanting a Fed rate hike, I seem to recall April rebounding very sharply from a weak March. In other words, activity in the New York Fed region either surges one month and collapses the next in a cycle, or this series is increasingly misleading.

Commodities

West Texas crude is up US$1.51 or 3.3% at US$47.89/bbl. Brent is up US$1.34 or 2.8% at US$49.14/bbl.

LME traders had their first opportunity to respond to the “disappointing” Chinese data last night, and subsequently sold down base metals from the bell. But the selling didn’t last long, and helped by a benign greenback, which is flat over 24 hours, and the jump in oil prices, base metal prices recovered to post a positive session.

Copper and nickel rose 0.5%, aluminium and tin 1%, and lead 2%.

Iron ore rose US30c to US$53.80/t.

With the dollar index steady at 94.58, gold is steady at US$1274.00/oz.

With commodity prices stronger, the Aussie is up 0.3% at US$0.7290.

Today

The SPI Overnight closed up 47 points or 0.9%.

The US will see inflation, housing and industrial production data tonight.

Before that, the RBA will release the minutes of its May meeting and forex cowboys will have their fingers on the trigger in case there’s any hint of a back to back cut.

DuluxGroup ((DLX)) and Ozforex ((OFX)) will release interim earnings today and James Hardie ((JHX)) will release quarterly earnings either today or tomorrow, depending on which broker you believe.

As noted, National Bank ((NAB)) and Macquarie Group ((MQG)) will go ex-dividend today which will appear to take a sizeable chunk out of both the financial sector and the index on the session.

Rudi will Skype-link with Sky Business around 11.15am to discuss broker calls and later tonight he'll participate in a webinar organised by VFSGroup: https://vfsgroup.com.au/seminars/

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available in the FNArena Cockpit.  Click here. (Subscribers can access prices in the Cockpit.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Monday Report

By Greg Peel

Friday

I mentioned on Friday morning, with regard Thursday’s trade on the local market, that telcos had traded up 0.8% and utilities down 1.7%, with no real rhyme or reason. Well on Friday, telcos were down 1.2% and utilities up 1.0%, so go figure that one.

Beyond that, there was an air of “Friday” about Friday’s trade. We had the run-up into the technical target range of 5300-5400 and having done so, ran out of any reason to push higher. Materials fell 1.2% with a bit of help from weak metal prices but energy was down 0.5% despite a stronger oil price.

Consumer staples led the market down 1.5% as traders took profits after having successfully ridden the rally back in the supermarkets from oversold conditions, to the point further catalysts are not apparent. Discretionary (+0.8%) is getting more attention now thanks to the RBA’s urgent change in policy.

With Wall Street down on Friday night, the SPI down 15 points and the weekend’s Chinese data releases disappointing, it looks like we’ll be in for some further consolidation as the new week begins.

It’s Structural

All last week on Wall Street we saw large US chain stores lining up to report earnings misses and suffer share price drops as a result. On Friday it was JC Penney’s turn to join the queue, falling 3%. By Friday night an ETF made up of all these big brick & mortar retail names was down 15% for the week alone, prompting concerns for the US economy.

The consumer represents two thirds of US GDP. If Americans are not spending, then the US economy is in trouble. On Friday night the April retail sales numbers were released, which were hoped would throw some light on the issue.

Vale bricks & mortar. April sales rose 1.3%, exceeding forecasts of 1.0% and marking the biggest monthly gain in a year. While autos represent a chunky component, sales ex-auto were still up a solid 0.8%. Outside of autos, one of the best performing segments was “non-store sales”. In other words, online.

Good news – the US economy is not in trouble. Bad news – such a stellar result will not have been missed by the Fed. Could June once again be back in play?

On the sales result, the US dollar index rose another 0.5% to 94.38. The greenback continues to rebound from what were previously encouraging lows, thus weighing on shares of multinationals. The US two-year yield spiked up on a return of the June possibility, before settling back to be down one basis point. But the ten-year yield closed down 5 basis points to 1.71%.

This “flattening of the yield curve” suggests that while the Fed may hike again in the short term, in the longer term the bond market does not anticipate strong US growth. Flat yield curves do not offer banks much opportunity to profit, thus the financials were sold down on Wall Street on Friday night. Slow economic growth does not bode well for consumer staples, so Wal-Mart led the Dow down.

The Dow closed down 185 points or 1.1% while the S&P fell 0.9% to 2046 and the Nasdaq lost 0.4%. The S&P breached its 50-day moving average at 2054 and thereafter the selling accelerated. Typical “risk-off” ahead of a weekend was exacerbated by a monthly options expiry.

Commodities

The sell-off on Wall Street had nothing to do with oil prices, which for once were very flat on Friday night. West Texas was barely changed at US$46.38/bbl and Brent was down a tad at US$47.80/bbl.

Thursday night’s selling on the LME gave way to retrospection on the strong US sales result, but also squaring ahead of the weekend’s data out of China. Only a 1% rally in zinc is worth noting.

Iron ore fell US90c to US$53.50/t.

Despite the stronger greenback, gold managed to rally US$9.60 to US$1272.80/oz. Because of the stronger greenback, and a change in trend since the RBA rate cut, the Aussie fell 0.7% to US$0.7268.

The SPI Overnight closed down 15 points or 0.3% on Saturday morning.

China

On Saturday Beijing released monthly Chinese data for April.

Industrial production rose 6.0% year on year, down from 6.8% in March and missing forecasts of 6.5%. Retail sales rose 10.1%, down from 10.5% and missing 10.5% forecasts. Fixed asset investment rose 10.5% in the four months to April, down from 10.7% for the three months to March, and missing 10.9% forecasts.

So all were disappointing. But then, the March numbers had been stronger than expected so once again, we must factor in the Lunar New Year distortion. Beyond that, just how worried should the world be about an economy growing output at a 6% annual rate, retail sales at 10% and construction spending at 10%?

The Week Ahead

The minutes of the April Fed meeting will be released on Wednesday night. As usual, the market will be looking for any clues as to what the Fed might do next.

US data this week include housing sentiment and the Empire State index tonight, housing starts, industrial production and the CPI tomorrow, the Chicago national and Philly Fed indices on Thursday, and existing home sales on Friday. More grist for the Fed mill.

Japan will report March quarter GDP on Wednesday.

The minutes of the RBA’s May meeting are due tomorrow and these, too, will be closely scrutinised.

On Wednesday Australia’s March quarter wage price index result will be released – the first of the quarterly releases ahead of our own GDP result in a couple of weeks. The April jobs numbers will be released on Thursday to a country in election mode.

God help us.

On the local stock front, Elders ((ELD)) will report earnings today, while DuluxGroup ((DLX)), James Hardie ((JHX)) and Ozforex ((OFX)) will report tomorrow. There is another handful of AGMs to be held this week and Woodside Petroleum ((WPL)) will hold an investor day on Friday.

National Bank ((NAB)) goes ex tomorrow.

Rudi has a busy TV appearances schedule ahead of him this week. On Tuesday he'll Skype-link with Sky Business around 11.15am to discuss broker calls. Later that day, he'll host a webinar for clients of VFSGroup. On Wednesday he'll host Your Money, Your Call Equities (8-9.30pm). On Thursday, he'll appear twice; first as guest on Sky Business (12.30-2.30pm) then later as guest on Switzer TV, between 7-8pm. On Friday, he'll linkup again through Skype, probably around 11.05am, to discuss time broker calls one more.

For further global economic release dates and local company events please refer to the FNArena Calendar.

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article 3 months old

The Overnight Report: Retail Wreck

By Greg Peel

The Dow closed up 9 points while the S&P was flat at 2064 and the Nasdaq fell 0.5%.

By Greg Peel

Mixed Bag

I thought thirty points down in the SPI ahead of yesterday’s open on the local market looked a bit pessimistic but we got there early on, only to stumble back by the close. The 13 point drop in the index for the session represents no more than Westpac going ex.

That’s also why the financials sector was down 0.9% yesterday but elsewhere we closed with very mixed results, suggesting the market is trying to sort out its allocations as we flirt with the highest index levels of 2016 to date.

Myer ((MYR)) posted a less worse than expected result and shot up 7%, dragging consumer discretionary up 0.9%. Myer is nevertheless the second most shorted stock on the market – 14% according to ASIC’s most recent data – and thus short-covering was a primary driver.

Energy jumped 3% on the rise in oil, as this sector just refuses to settle down. A tick up in iron ore saw materials up 0.7%. Thereafter, funny things were going on in the defensives with telcos up 0.8% and utilities down 1.7%.

The ASX200 is sitting between 5300 and 5400, right in the middle of what has been a technical target range for the past couple of months. Following on from central bank domination in April the macro story has gone a bit quiet, leaving the current swathe of micro-story corporate earnings results, quarterly trading updates and AGMs to provide impetus in individual sectors, but not in clear index direction.

We have Chinese monthly data out over the weekend and the eurozone GDP result tonight, which may or may not spark some movement. We have Japan’s GDP next week. But it is likely we will need to wait to June for some more macro action, when the Fed meets and the Poms hold their referendum.

The King is Dead

Having not released any ground-breaking new iThings for a while, Apple has been on the slide. Last night manufacturers who make components for iThings reported weaker than usual demand in the second quarter, and Apple shares fell further. The result is that the most recent company to be included in the Dow, on the basis of it being the biggest company in America, is as of last night no longer the biggest company in America.

Long live the artist formerly known as Google. Alphabet is now the biggest company in America – a title that for so long belonged to Exxon but not, for obvious reasons, in recent times. Alphabet is not in the Dow.

Nor are any of America’s big department store and apparel chains in the Dow, which is probably just as well. Following on from Macy’s 14% plunge on Wednesday night, Kohls fell 9% last night on an earnings miss and after the bell, Nordstrom is down 17% for the same reason. JC Penney reports tonight.

While consumer discretionary alone is not enough to send Wall Street hurtling southward, ongoing concern over just why these chain store results are so bad is weighing on investor sentiment, and on hopes for the US economy. Is it structural? Because that’s okay. That’s just a changing of the guard. Is it because of a warm winter? Because that’s just seasonal. Or is it because the US consumer is simply not spending? Because that’s a worry.

It’s probably a conflagration of all three, but with the US savings rate running at 5%, the latter remains an issue in the June quarter. Americans are buying cars, and spending on home renovation, but they’re just not buying clothes and accessories – what women would call “staples” and men would call expensive and unjustifiable indulgences (as they queue up at Home Depot). Gucci belts, it would seem, have been tightened.

Also weighing on Wall Street last night was the weekly new jobless claims number. I usually don’t follow this weekly number too closely given its volatility but last night’s sudden jump to a 14-month high of 294,000 new claims, coming off the back of the weak April non-farm payrolls result, has Wall Street wondering whether the solid run for the US labour market these past few years has now reached a peak.

Of course the balance is yet another reason not to expect the Fed to raise in June. So having been up over 80 points early and down over 80 points mid-session, the Dow closed flat, as did the S&P. The Nasdaq’s drop was all about Apple.

Commodities

You can’t keep a good oil price down at the moment which is rather disconcerting. The higher it rises…

West Texas is up US40c at US$46.39/bbl and Brent is up US62c at US$47.92/bbl.

Base metal traders in London did not like the US jobless claims number at all, nor the fact that the US dollar index rose 0.4% to 94.15 when such a result would suggest the opposite. Aluminium fell 1%, copper and zinc fell 1.5%, nickel fell 2% and lead and tin fell 3%.

After a one-session bounce, iron ore is down US$1.00 at US$54.40/t.

Gold is down US$13.50 at US$1263.20/oz.

The Aussie is down 0.8% at US$0.7322.

Today

The SPI Overnight closed down 11 points or 0.2%.

The US retail sales result for April is out tonight, just to add further fuel to the consumer fire. The eurozone will release its March quarter GDP result tonight and tomorrow, Beijing will release April retail sales, industrial production and fixed asset investment numbers.

Before that, Oil Search ((OSH)) and Santos ((STO)) will both hold AGMs today.

Rudi will Skype-link with Sky Business at around 11.05am to discuss broker calls and then re-appear as guest on Your Money, Your Call Fixed Interest, 7-8pm.
 

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available in the FNArena Cockpit.  Click here. (Subscribers can access prices in the Cockpit.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

article 3 months old

Good As It Gets For CSR?

-Plasterboard competition heightened
-Power costs for Tomago likely to rise
-Scope for more capital returns
 

By Eva Brocklehurst

In delivering its FY16 results CSR ((CSR)) emphasised building work piling up for at least another 12-18 months, despite concerns of a peak in the housing market. On an underlying basis building product earnings were up 28% while Viridian glass more than doubled earnings, albeit off a low base. Aluminium earnings were flat.

The company also expects to achieve price increases in excess of cost inflation in FY17. Hence, Deutsche Bank, forecasts building product earnings margins to expand to 13% from 11.5% in FY16. The broker takes an optimistic view on FY17 profits on the back of this margin expansion and agrees the Australian housing market should remain robust.

Moreover, volume increases in aluminium at around 2.0% per annum combined with costs reductions should mean the company outperforms, despite weak aluminium prices. The broker expects aluminium prices to fall 4.0% in FY17 and rise 7.0% in FY18.

At the other end of the spectrum, Morgan Stanley believes the current situation is as good as it gets and downgrades to Underweight from Equal-weight. The current share price implies earnings from building products which are just too high, in the broker's opinion.

The main reasons for this view are that the market will looking through higher building product earnings in FY17 towards a weakening housing market, despite any measures from the Reserve Bank in terms of further cuts to the cash rate. Knauf Plasterboard is also envisaged raising the competitive threat level in 2017.

The broker also notes a high positive correlation to the Australian dollar limits support for the stock in a rate cutting environment. The broker expects similar risks in the wake of the FY16 results to what occurred after the first half result when the stock underperformed.

Macquarie also is concerned about the market outlook and continues to envisage limited valuation support for the stock, retaining an Underperform rating. The broker finds it difficult to envisage a win-win compromise on the step-up in electricity costs at Tomago aluminium smelter and, longer term, aluminium market fundamentals are weak and this will be felt in the price of the metal.

On the positive side, the company's brick joint venture has performed particularly well and Macquarie notes it is on track to realise $10m in synergies in FY17, at the top end of prior guidance.

Credit Suisse is also recommending caution when it comes to capitalising peak cycle earnings. While the momentum for building products should continue in FY17 the broker expects earnings to be weighed down by aluminium. In FY18 and beyond the pressure should be aggravated by the easing housing cycle.

At present the strong balance sheet and share price support from an on-market buy-back prevents the broker from taking a more negative stance and a Neutral rating is retained.

Brokers concede the company's commentary that the volume of dwellings approved but not yet started is large, with supply constraints appearing from a lack of labour in the building trade. This suggests activity will remain elevated for another 12 months before easing back.

Credit Suisse also acknowledges the aluminium price was better than expected in FY16 and strong volumes and cost cutting meant the company delivered a credible result. Yet, this is not expected to be easy to replicate going forward. Furthermore, there is the competitive threat in plasterboard, previously mentioned, as well as the step up in electricity costs at Tomago.

The balance sheet is in a cash position and the asbestos liability continues to fall, so Ord Minnett believes there is scope to increase capital management initiatives. On the broker's assumptions CSR has the ability to return a further $150m in cash following the current buy-back.

Citi also suspects capital returns and/or high-growth expansion or M&A could be on the slate, and believes the consensus outlook needs to be reviewed given the beat in the FY16 results. Buy-back support should leave the balance sheet under-geared by the end of FY17. The broker also highlights the quality in the dividend yield and retains a Buy rating.

There are three Buy ratings, two Hold and two Sell on FNArena's database. The consensus target is $3.58, suggesting 0.6% upside to the last share price. The dividend yield on FY17 and FY18 forecasts is 6.3% and 6.4% respectively.
 

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article 3 months old

The Overnight Report: Earnings Bite

By Greg Peel

The Dow closed down 217 points or 1.2% while the S&P fell 1.0% to 2064 and the Nasdaq lost 1.0%.

Technical Madness

It was another case of the computers going nuts from the opening bell on Bridge Street yesterday, this time to the upside, sending the ASX200 up 83 points in a blink. By midday the index was only up 27 points – basically where it ended the session – suggesting that’s about what where we should have been from the start.

Yes, it had been the biggest day on Wall Street in two months and oil prices were higher, likely triggering the algorithms as the rest of the market stood aside. It is becoming increasing dangerous to play the opening rotation – something ASIC should be having a chat to the ASX about. But Wall Street’s rally was largely technical, and itself computer-driven, and lo and behold the ASX200 breached a longstanding upside technical target of 5400 from the open before the buying simply disappeared.

Back on earth, we saw the rotation trade of Tuesday – selling resources and buying yield through the banks and telcos – partly reverse. Interestingly, it was materials that fully reversed, rising 2.7% despite another fall in the iron ore price, while energy managed only a 0.3% recovery despite a higher oil price. The banks only fell back 0.1% and the telcos actually rose again, up 0.5%.

Put it down to chatter from CEOs yesterday but clearly the “value” players have been out in force since the bottom of the market earlier this year, buying up beaten-down large caps because they lack the imagination to see that often the world actually changes. Thus stocks like BHP Billiton ((BHP)) and Woolworths ((WOW)) had another good run yesterday and have had very good runs all the way from the bottom. Money has certainly been made in the short term, but what of long term trajectories?

One problem is the “growth” stories of 2015 have to a large extent run too far away in 2016, leaving investors disinclined to play at stretched PEs. This has been reflected in the past couple of weeks in the number of ratings downgrades implemented by major broking houses for no other reason than over-valuation. Yet by the same token, short-side traders are also abandoning the market. The shorters have been increasingly burnt, it appears, and for the time being have crawled back into their holes.

The ASX200 has now hit 5400 which on a technical basis, should open up the door to 5700 and ultimately 6000 if the tea leaves are accurate. But what will get us there? Ongoing buying-back of overproducing miners and yesterday’s-model supermarkets? Pushing milk powder and Big Data names ever higher still? A Turnbull victory? Another RBA rate cut?

I’d suggest that if we’re going to see 6000 again we would have to see the economies of China and the US both pick up.

Australian consumers are brimming with confidence nevertheless. Westpac’s confidence index jumped 8.5% this month to its highest level in two years. Mind you, one might see it as “upside-down” confidence. The RBA cut its cash rate, which it wouldn’t do if the Australian economy was strong, and the federal budget produced no howlers, albeit pre-election budgets never do.

Speaking of the RBA, there would have been some head-scratching going on in Martin Place yesterday after March housing loan data showed a resurgence in loans to investors and a drop in loans to owner-occupiers. The central bank was able to cut the cash rate because the opposite has been true in prior months, supposedly taking some heat out of the housing bubble.

Structural or Cyclical?

Iconic US department store Macy’s posted its seventh quarter of declining sales growth last night and missed broker forecasts, sending Macy’s shares down 14% and dragging the whole US bricks & mortar consumer sector down with it, including America’s Bunnings (Home Depot) and America’s Woolies (Wal-Mart), both Dow names.

The question on everyone’s mind was: Does ongoing decline represent the slow death of bricks & mortar retail as online rises, or does it reflect a presently weak US consumer? Commentary tended to favour the latter, although the elephant in the room must be Amazon’s forecast-smashing result posted last month.

If it is the latter, then the US economy is not going to be picking up pace anytime soon.

Meanwhile Disney (Dow) posted a rare earnings miss with its result, and subsequently fell 4%. The combination of Disney and retail turned Tuesday night’s rally on Wall Street, which seemed no more than technical, into a full reversal, this time on reality, despite another strong jump in oil prices.

Commodities

Last night’s weekly US oil data showed a bigger than expected drop in inventories and another reduction in production. As a result, West Texas crude is up US$1.44 or 3.2% to US$45.99/bbl and Brent is up US$1.83 or 4% at US$47.30/bbl.

Just when it looked like oil might head south again, the opposite is true.

And iron ore has also bounced, up US$1.20 to US$55.40/t.

There has been a bit of assistance from the US dollar which, having risen back steadily for several session, last night fell 0.5% on its index to 93.81. This assisted all commodity prices. Base metals were mostly 0.5-1% stronger, although zinc jumped 3%.

Gold is up US$11.40 at US$1276.70/oz.

Despite the drop in the greenback, the Aussie is holding its ground at US$0.7377.

Today

The SPI Overnight closed down 33 points or 0.6%. Not sure what Macy’s and Disney has to do with Australian banks and resources.

The Bank of England will hold a policy meeting tonight but despite some surprisingly weak data of late, is not expected to budge ahead of the increasingly worrying Brexit vote.

Before that we will see AusNet Services ((AST)) post earnings today and Myer ((MYR)) provide a quarterly update. AMP ((AMP)) and Westfield Corp ((WFD)) will hold AGMs.

Westpac ((WBC)) will go ex today which will distort the financials sector performance.

Rudi will make his weekly guest appearance on Sky Business, 12.30-2.30pm.
 

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All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Overnight Report: Mystery Rally

By Greg Peel

The Dow closed up 222 points or 1.3% while the S&P gained 1.3% to 2084 and the Nasdaq rose 1.3%.

Rotation

For a long time analysts have been suggesting the strong rebounds in oil and iron ore prices these past couple of months would not last given the fundamentals remain unsupportive in the medium term. Yesterday’s action on the local market smacked of investors suddenly fearing they might be right.

The energy sector closed down 2.3% and materials 2.0%. Yet the index closed up 0.4%, so clearly there were offsetting trades. But they were hardly market-wide.

Every other sector closed the day little changed except two – the banks (+1.5%) and telcos (+0.9%). Here we see a very old-fashioned “rotation” trade among Australia’s mega-caps, out of resources and into the banks and Telstra.

With the bank reporting season now out of the way the market knows where the sector stands. Yields on offer are still hard to ignore and become even more attractive if the RBA cuts again. If the RBA is not already set to cut again, lower commodity prices provide further impetus. It must be noted that lower rates are a drag on bank earnings, but rate cuts provide the opportunity for the banks to reprice their mortgage rates, ie not pass on the full cut.

Telstra has its issues in adapting to a more competitive industry but still pays a hefty fixed-quantum dividend that analysts expect to rise further very soon.

Oil prices rebounded solidly overnight, so it will be interesting to see what the rotators plan to do today. Iron ore fell sharply again nevertheless.

Commodities

Last night the US Energy Information Administration issued a report which raised its 2017 average WTI price forecast by a whopping 25% to US$50.65/bbl. This seems to counter current fears that ongoing excessive OPEC production will only send prices lower again.

But in actual fact, the EIA also raised its 2017 US production forecast to 8.19m barrels per day from a prior 8.04m. The difference is in the rarely discussed demand side. The EIA believes growing demand out of China and India will usurp increased production to the extent prices will rise.

This was one reason to buy oil again last night, after having sold it the night before. Another reason was supply outages, specifically in Canada, where fires have shut down 1.6m barrels per day of production that will take a week to restart, and in Nigeria, where an escalation of hostilities have prompted Chevron and Shell to evacuate non-essential staff.

This was enough to send West Texas crude US$1.31 or 3% higher last night to US$44.55/bbl and Brent up US$1.84 or 4% to US$45.47/bbl.

No one paid much attention to Kuwait, which last night announced a targeted 50% increase in production over the next four years.

Base metals quietened down last night having tumbled on Monday night. Lead, nickel and zinc rebounded slightly while aluminium, copper and tin held their ground.

Iron ore fell US$1.40 or 2.5% to US$54.20/t.

The US dollar index ticked up another 0.1% to 94.24 and gold is relatively steady at US$1265.30/oz.

The Aussie has bounced back somewhat after its precipitous fall, up 0.8% at US$0.7372.

Technical

The rebound in the oil price was enough to provide a lift on Wall Street last night but now that the direct correlation has faded, commentators were left scratching their heads as to why the US indices had their best session in two months. If anything, recent talk has been of the rally running out of steam.

There may be some clue in the fact three Dow components hit new all-time highs last night – McDonalds, Johnson & Johnson and Home Depot. The three consumer stocks are all consistent yield payers (In Wall Street Land, 2% is considered “yield”), and their strength would suggest ongoing reverberations from last week’s soft US jobs number and subsequent assumptions the Fed will not move in June.

But perhaps the real clue lies in the fact all of the Dow, S&P and Nasdaq posted equivalent 1.3% gains. Such consistency is rare. Traders noted that resistance in the broad market S&P500 was breached at 2074 thanks to the energy sector, opening the door to the next resistance level of 2082. The S&P bumped up against that level for a while before finally settling at 2084.

When 2074 was breached, the computers kicked in. Computers tend not to be stock pickers but market-buyers. At 2082, the computers took profits, but by then momentum traders were in on the act and probably FOMO traders as well.

(Fear of missing out.)

But when all is said and done, in a world where economic data is soft and corporate earnings are weak, central bank stimulus rules.

Today

The SPI Overnight closed up 30 points or 0.6%, no doubt anticipating a rebound in the local energy sector today.

Local housing finance data are out today for March, while Westpac will release its monthly consumer confidence survey.

CSR ((CSR)) will post its earnings result today.

News overnight that the Thailand government has ordered the Chatree gold mine closed will no doubt impact on the share price of Kingsgate Consolidated ((KCN)) today.
 

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All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Overnight Report: No Correlation

By Greg Peel

The Dow closed down 34 points or 0.2% while the S&P rose 0.1% to 2058 and the Nasdaq gained 0.3%.

Eager

It was another up and down day on the local bourse yesterday, with up winning in the end. Wall Street had closed modestly positive on Friday night despite a weak jobs number, although that weakness likely keeps the Fed at bay in June.

The numbers to consider on the day were the Chinese trade data and the local ANZ job ads series.

Chinese exports fell 1.8% year on year in April having risen 11.5% in March. Imports fell 10.9% having fallen 7.5% in March.

The export number disappointed, as it appears to have killed off what looked like a Chinese economy finally in recovery following various stimulus measures. The import number is troubling as this reflects the new, domestic-focused economy Beijing is trying to engineer. But we go through this same charade every year – Chinese numbers are not seasonally adjusted, and thus often wildly distorted on the move into and out of the Lunar New Year holiday.

It appears that’s how the Australian market took the results yesterday. The materials sector was the only sector to finish in the red, but only by 0.6%. It’s not the stuff of panic. Energy, on the other hand, rose 1.2% to be one of the better performing sectors on the day.

Australia had the chance to respond to the Chinese numbers before the rest of the world. Overnight, the rest of the world has panicked. More on that in a moment.

Australian job ads fell 0.8% in April and remain broadly unchanged in number since October last year. “The number of job ads has been broadly flat now for six months,” ANZ noted. “This follows a period of substantial growth in employment, and some modest slowdown should probably not be surprising”.

So all up, no great surprise in either the local or Chinese numbers, it would seem. By the close on the ASX every sector bar materials had put on a relatively even performance to the upside, with consumer staples probably the only stand-out with a 1.7% gain. The banks were up 0.5% on Commonwealth Bank’s ((CBA)) not too bad result, while Orica’s ((ORI)) result was poorly received but again, probably not a major shock for a company selling explosives to miners.

Right now it looks like the market wants to be above 5300, and so doing push towards 5400 and beyond. The RBA has cut and will likely cut again, the Aussie has come off strongly as a result and also thanks to a stronger greenback, and in another couple of months we will have a new-look parliament, which throws up all sorts of possibilities. Majority in the Senate? Now that would be a breath of fresh air, whichever side of the aisle you sit. Australian governments of both stripe have been hamstrung for a decade.

Commodities

The Australian market may not have seen the Chinese trade numbers as particularly ominous but that’s not how commodity markets saw them last night.

West Texas crude is down US$1.32 or 3.0% to US$43.24/bbl and Brent is down US$1.70 or 3.8% to US$43.63/bbl. Oil markets were further affected by the announcement out of Saudi Arabia that the Crown Prince had moved aside the longstanding oil minister and appointed his own technocrat, only serving to fuel uncertainty.

Base metals markets have been hit in recent selling by the speculators and commodity funds who chased prices up in the February rebound, and last night, thanks to China, that trickle became a flood. Lead fell 1%, tin 1.5%, copper 2%, aluminium and zinc 2.5% and nickel 4.5%.

Iron ore fell US$2.10 or 3.6% to US$55.60/t.

Commodity prices were not helped by the US dollar, which rose another 0.3% on its index to 94.15 thanks to a lower yen, which responded to talk out of Tokyo that currency intervention has not been ruled out.

Gold is down US$24.30 at US$1263.40/oz.

Nor were commodity prices helped by an article appearing in the China People’s Daily – the Communist Party propaganda rag – suggesting the government was not prepared to use excessive investment or rapid credit expansion to counter subdued growth.

The Aussie is down another 0.7% at US$0.7314 thanks to the stronger greenback and weaker commodity prices.

Material Move

The US materials sector led down Wall Street last night, aided by energy. But the firm correlation with oil prices seen earlier in the year is now but a memory and other sectors managed to post sufficient gains to offset the resource sector drag, particularly healthcare. Volatile biotech had a good day, helping the Nasdaq up 0.3% when the Dow was down 0.2%.

There is much talk on Wall Street now that the market has run about as far as it can, and if nothing comes along to provide the next shot of upside adrenalin, surely it must go down. Many are worried that oil prices are set for a pullback. While the correlation has abated for now, there is little doubt it will be back in spades were oil prices to fall out of bed once more.

The S&P500 remains little changed for the year.

Today

The SPI Overnight closed down 16 points or 0.3%.

China will release inflation data today. Too strong and it will kill off hopes of further stimulus. Too weak and it will exacerbate slowdown fears.

Incitec Pivot ((IPL)) will release its earnings result today and QBE Insurance ((QBE)) will hold an investor day.

Rudi will Skype-link with Sky Business at around 11.15am to discuss broker calls.
 

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All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Monday Report

By Greg Peel

Derivative Dive

On Friday afternoon a very large trade was booked in May 5000 put options on the SPI futures contract. Clearly the deal had been agreed upon the night before, which is why the SPI Overnight closed down a surprising 47 points on Friday morning and the SPI continued to plunge when daylight trading commenced at 9.30am.

The put options were likely bought as a market hedge and were sold by local market makers, who themselves then had to “delta hedge” by selling futures contracts. Heavy selling in the SPI then dragged down the physical ASX200 from the opening bell, and within a blink the market was down 80 points for reasons that were not immediately apparent.

Then the futures selling stopped.

It took till lunchtime to be back to square, and eventually the ASX200 finished up 12 points for the day. Given a flat Wall Street on Thursday night, the only explanation for initial market weakness – until such time as the options deal was revealed – was weakness in iron ore and base metal prices but as it was, the materials sector closed up a percent on the day. Oil prices were slightly stronger overnight but energy closed down a percent.

The only other sector to finish in the red were financials, but only just, while otherwise we saw squaring up ahead of the weekend and the Friday night release of the US April jobs numbers.

The talking point of the day came from the release of the RBA’s quarterly Statement on Monetary Policy. The board has reduced its 2016 core inflation forecast range to 1-2% from a prior 1.5-2.5%, suggesting inflation will not reach the RBA’s target 2-3% range this year. Once again it is clear the weak March quarter CPI data came as quite a shock to the central bank. Not only can we see why we had a rate cut last week, the market is now baking in a second cut, if it were not already suspecting such.

By Saturday morning the Aussie was down a further 1.3% at US$0.7367, which was all to do with the RBA and very little to do with a slight tick up in the US dollar.

Goodbye June?

The US added 160,000 new jobs in April, well short of the 200,000 expected. Previous results for March and February were revised downward. The unemployment rate remains steady at 5.0% due to a tick down in participation. On the other hand, wages grew by a reasonable 0.3%, in line with expectation.

On the release of the report, a handful of major houses issued their own reports informing that prior expectations of a Fed rate hike in June had now been pulled back to September. There is one more jobs report to go before June and another Fed meeting in July but by September, June quarter GDP growth numbers will be known. (Note: the Fed meets six-weekly, not monthly).

Once again Wall Street was caught between the benefits of lower for longer rates and the unsettling reality of a slowing pace of US growth. The Dow fell and recovered and fell again, before finally recovering to finish the session up 79 points or 0.5%. The S&P rose 0.3% to 2057 and the Nasdaq added 0.4%.

While September is now the preference for some, more dovish commentators suggest that in a year which is yet to see the Brexit vote and the US election, December is the most likely option, if only to save face. The trend in US economic data would need to turn around significantly in that time to even justify December.

This is not the sought of news incoming RBA governor Philip Lowe really needs. While local inflation has forced a rapid reaction in RBA policy, the problem of the too-strong Aussie was meant to be alleviated this year by rising US rates.

Commodities

Australians can no doubt empathise with our Canadian friends who saw a 25,000 acre wildfire in Alberta grow to 250,000 acres in the space of 24 hours. While the fires have moved close to oil sands production, no infrastructure has as yet been damaged. Production has ceased nonetheless given the evacuation of local residents means there is no one there to run operations.

The fires have put a floor under oil prices for now, but has not sent them skyward, suggesting that once Canadian production is back to normal there might not be much holding oil prices up. West Texas was only slightly higher at US$$44.56/bbl on Saturday morning and ditto Brent at US$45.33/bbl.

Lower for longer rates in the US means a weaker for longer US dollar, hence base metals prices were mostly positive in London on Friday night. Nickel and zinc were the best performers with gains in excess of one percent but aluminium fell half a percent.

Iron ore fell another US$1.80 or 3% to US$57.70, to mark a fall for the week of US$7.50 or 11.5%.

While the reduced likelihood of June Fed rate hike did not impact on the US dollar index, which was up 0.1% at 93.89, gold rallied US$10.10 to US$1287.70/oz.

The SPI Overnight closed up 22 points or 0.4% on Saturday morning.

The Week Ahead

It’s a quiet week ahead for US data releases until we get to Friday, which features retail sales, business inventories and fortnightly consumer sentiment.

The eurozone will release a first estimate of March quarter GDP on Friday.

The Bank of England meets on Thursday night but nothing is expected, especially ahead of the Brexit vote.

Beijing will release Chinese inflation data for April tomorrow.

It’s now game-on in Australia, with a double dissolution election confirmed for July 2. We knew that anyway, but confirmation still removes uncertainty.

Local data releases this week include ANZ job ads today and Westpac consumer confidence tomorrow, along with housing finance numbers.

Commonwealth Bank ((CBA)) will wrap up bank reporting season today with a quarterly update, and we now shift into a new reporting mini-season. Orica ((ORI)) will report today, Incitec Pivot ((IPL)) tomorrow, CSR ((CSR)) on Wednesday and AusNet Services ((AST)) on Thursday.

Myer ((MYR)) will release quarterly sales numbers on Thursday and there’s a handful of AGMs to be held throughout the week.

ANZ Bank ((ANZ)) goes ex-dividend today and Westpac ((WBC)) on Thursday.

Rudi will appear on Sky Business on Tuesday, via Skype-link, to discuss broker calls. He'll be back on Thursday from 12.30-2.30pm and again via Skype-link on Friday morning, around 11.05am, to discuss broker calls. Later that day he'll re-appear as guest on Your Money, Your Call Fixed Interest, 7-8pm.
 

For further global economic release dates and local company events please refer to the FNArena Calendar.

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