Market Wrap – 27th June 2018

Market Summary

The Australian market followed through on weaker performance globally the previous night, closing lower amid increased trade concerns (particularly with the United States and China). Interestingly, the 2018-embattled banking sector continued its resurgence, with the ‘big-four’ all closing in the positive on Tuesday.  Gains to the US market were led by the energy sector following a rise in oil prices (above US$70). This rise in oil prices can be primarily attributed to the push from the United States for its allies to refrain from the importing of Iranian crude (after Iran identified its intention to boost production). Trade concerns continue to linger however, with US President Donald Trump emphasising that motorcycle-manufacturer Harley-Davidson would ‘be taxed like never before’, should it shift its production sites to Europe (as means for avoiding the brunt of protectionist policy).

US markets were up – Our market is expected to open lower 

 

  • AUSTRALIA:
    ASX200  was down 12.8 points or -0.21% to 6,198
    ALL ORDINARIES down 16.6 points or -0.26% to 6,292
    SPI futures contract is down 16 points to 6,136

 

  • U.S.A:
    DOW  +0.12% to 24,283
    S&P500 +0.22% to 2,723
    NASDAQ +0.39% to 7,562

 

  • ASIA: 
    HANG SENG  -0.28%
    NIKKEI +0.02%
    SHANGHAI -0.52%
    CSI 300 -0.83%

 

  • EUROPE: 
    CAC  -0.05%
    DAX -0.29%
    EURO STOXX 50 -0.01%
    FTSE 100 +0.37%

 

  • COMMODITIES: 
    WTI Crude Oil  +3.46%
    Brent Crude +2.07%
    Gold -0.61%
    Aluminium +0.14%
    Iron Ore +1.70%
    Copper +0.28%

 

  • BONDS: 
    US 10-year yield  moved to 2.880% from 2.880%
    AUS 10-year yield moved to 2.648% from 2.636%

 

  • CURRENCIES: 
    AUD  -0.30% to US 0.7391
    US Dollar Index +0.43% to 94.36

 

Top Performers on ASX200:                                                                                             

  • Australian Pharmaceutical Industries Limited (API): +8.28%
  • Speedcast International Limited (SDA): +3.58%
  • Mayne Pharma Limited (MYX): +3.57%

Bottom Performers on ASX200:

  • Wisetech Global Limited (WTC): -78%
  • Beach Energy Limited (BPT): -09%
  • Domino Pizza Enterprise (DMP): -3.78%

 

Stock News                                                                                                                      

  • Flight Centre Travel (FLT): +2.68% – the travel agency rose on Tuesday after financial institution UBS maintained its ‘buy’ rating on the company, raising its target price to $69 (from $60.70). The broker recognises the importance for Flight Centre Travel to experience a potential upgrade to their earnings guidance (or perhaps exceed such), in order to foster growth to enable for market outperformance. The primary drivers for the company’s continued growth moving forward are favourable travel market condition, enabling for medium-term targets to be achieved. More specifically, UBS views current 2018 financial year profit (pre-tax) guidance of $360-385 million (and hence implied growth of 5-6%) to be conservative, and hence forecasted underlying growth to be 2% higher than such.
  • APN Outdoor Group (APO): +0.31% – the outdoor advertiser rose after announcing that its Board had unanimously recommended shareholders vote in favour of JCDecaux SA’s $6.70 per share offer (all-cash). Note that this represents an 18% premium on APN Outdoor Group’s closing share price as of 19th Though subject to change, current expectations have the deal’s completion by the fourth quarter of 2018. Note that the smooth transition of this deal follows APN Outdoor Group losing out on the acquisition of AdShel (a subsidiary of HT&E Limited), to Ooh Media (ASX: OML). As reiterated last week (see ‘Market Wrap – 22nd June), a condition for the takeover of APN Outdoor Group, was that its bid of Adshel did not proceed to a completed acquisition.
  • Trade Me Group (TME): -3.23% – the auction-based company fell on Tuesday after its CEO Jon Macdonald announced his intention to step down from his role in approximately six months. Macdonald has held the CEO role for more than a decade (and been a part of the company since 2003), cites such as being an appropriate time to ‘take a rest and then do something new’. The company is yet to recognise any suitable replacements internally in the organisation but notes a ‘global recruitment process’ has commenced.

 

This week we are awaiting the following economic news

  • Today US Durable Goods Orders for May
  • Thursday Euro Area Business Confidence Data for June
  • Thursday US Final GDP Group Rate Data for the First Quarter
  • Friday UK Consumer Confidence for June
  • Friday Australian HIA New Home Sales for May
  • Friday Japan Unemployment Rate for May
  • Friday UK Final GDP Growth Rate Data for the First Quarter
  • Friday US Personal Income and Spending for May
  • Friday Baker Hughes Oil Rig Count
  • Friday China NBS Manufacturing PMI for June

 

By Christopher Youssed and Roger Haidar