ASX to open flat, Wall St mixed

Earnings season: AFR profit season calendar and results: On today’s schedule: Challenger (CGF), Coronado Global Resources (CRN), James Hardie Industries (JHX), SCA Property Group (SCP).

Today’s agenda

Local: NAB business survey July, Weekly payrolls

Overseas data: Japan current account June; Euro zone ZEW expectations August; UK ILO unemployment rate June US PPI final July, NFIB small business optimism July

Market highlights

ASX futures were down 3 points to 6067 at 7am AEST

  • AUD -0.1% to 71.50 US cents
  • On Wall St: Dow +1.3% S&P 500 +0.3% Nasdaq -0.4%
  • In New York: BHP +2.3% Rio +1.1% Atlassian -2.9%
  • In Europe: Stoxx 50 +0.2% FTSE +0.3% CAC +0.4% DAX +0.1%
  • Spot gold -0.5% to $US2026.15 an ounce at 2.27pm New York time
  • Brent crude +1.5% to $US45.05 a barrel
  • US oil +2.2% to $US42.12 a barrel
  • Iron ore n/a
  • 2-year yield: US 0.13% Australia 0.25%
  • 5-year yield: US 0.24% Australia 0.37%
  • 10-year yield: US 0.58% Australia 0.86% Germany -0.53%
  • US prices near 5pm New York

From today’s Financial Review


JobKeeper becomes DividendKeeper: Retailers getting millions of dollars in JobKeeper program wage subsidies are posting higher profits and paying bigger dividends to their shareholders.

Huawei data centre built to spy on PNG: Major cyber security flaws were found in the Beijing-funded data centre in Port Moresby, where government files could be easily stolen without detection.

Chanticleer: ASIC finally lets Brenner separate personal and business: Having protested her innocence against personal misconduct suggestions, the former AMP chairman’s name has been cleared after two years living under a cloud.

Super funds forecast to tip $100b into private equity: They will increase their allocation to the asset class from 4.6 per cent to 7.5 per cent over the next five years, says Boston Consulting Group.

Chanticleer: Future Fund’s $30b crisis response: The Future Fund has increased its cash holdings by about $10 billion since March, and new CEO Raphael Arndt says the fund is positioned to take advantage.

United States

Yardeni on how to value US equities: “While the current P/E undoubtedly will revert to the mean eventually, that might not be a very useful insight if the mean has moved higher when adjusted for record-low bond yields. In other words, it could just as easily revert to a higher P/E as to a lower one, which would still be above the historical average.

“In a world of zero interest rates, maybe the new normal mean P/E is 30, twice what it was during the old normal. We don’t have a model that says that 30 is the new normal. All we are saying is that the new normal mean P/E might be higher than the current reading of 22.1 rather than lower and closer to the old normal’s 15.0 average.”


LPL Financial on the disconnect between the S&P 500 and the US economy: “The next leg of the economic recovery may be tougher. Although we expect a COVID-19 vaccine, if not multiple vaccines, to clear human trials by year-end, it may take additional time to find a vaccine that’s safe and effective.

“With the S&P 500 already having eclipsed the high end of our year-end fair-value target of 3300, and given a number of risks in addition to COVID-19, such as the upcoming US presidential election and escalating US-China tensions, the upside for stocks over the rest of the year may be limited. But we would say the same thing about bonds, which leads us to maintain our tactical overweight equities allocation.”


European shares closed slightly higher on Monday as growth-sensitive cyclical stocks got a boost from improving economic data out of China.

With trading volumes dwindling as traders leave for summer holidays, the broader European STOXX 600 index held to tight ranges, ending the session 0.3% higher. The benchmark saw trading volume down to nearly 75% of its 30-day moving average.

Energy majors BP, Royal Dutch Shell and Total rose between 1.3% and 3% as crude oil prices rose.


Banking sector stocks rose 2.0%, leading sectoral gains, while the travel & leisure index, which has dealt a heavy blow in the wake of the health crisis, rose 0.9%.

Carnival Plc jumped 9.3% as it planned to resume AIDA Cruises sailing operations from German ports at the start of September.

However, equity analysts at JPMorgan Cazenove argued they do not a see a case for a sustained rally in the cyclical stocks.

“For Cyclicals and Value to work from here, one needs to see a continued acceleration in the PMIs. We think this is unlikely,” JPMorgan’s Mislav Matejka wrote to clients.

Technology stocks, which have outperformed this year in Europe, slid 1.5% on worries over the heightening US-China rift ahead of scheduled talks on August 15 to review the trade agreement signed in January.


Hong Kong shares ended lower on Monday, weighed down by rising tensions between Beijing and Washington.

At the close of trade, the Hang Seng index was down 154.19 points or 0.63% at 24,377.43. The Hang Seng China Enterprises index fell 0.72% to 9990.67.


At the close, the Shanghai Composite index was up 0.75% at 3,379.25, after earlier falling as much as 0.57%.

The blue-chip CSI300 index was up 0.36%, clawing back from a 1.31% fall. The CSI financial sector sub-index ended 1.34% higher, the consumer staples sector added 0.11%, the real estate index jumped 3.08% and the healthcare sub-index closed 0.62% lower.

The broader market gains came after data showed that China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of economic recovery


OANDA’s Edward Moya on bitcoin: “After a wild start to the trading week, bitcoin and the other top cryptocurrencies are rising higher after Russia decided to avoid banning cryptocurrencies and as Facebook remains committed to creating a payments platform to run through all their projects.

“Bitcoin’s latest rally was predominantly following the unprecedented stimulus trade that triggered the dollar’s demise, but now the next move higher seems to be taking form on improving fundamentals for the crypto space. Bitcoin should continue to attract further institutional interest as big Tech breaks becomes a bigger part of daily transactional payments. Bitcoin seems poised to make a quick run towards the $US12,000 level and eventually the $US13,200 region.”


China, the world’s biggest consumer of aluminium and zinc, launched options contracts for both on the Shanghai Futures Exchange on Monday, drawing lukewarm interest on the first day of trade.


The roll out follows the launch of copper options almost two years ago and comes after a recent rally in the base complex driven by a strong recovery in Chinese demand and concerns of supply disruption overseas.

Shanghai base metals fell across the board on Monday, however.

Malaysia’s palm oil inventories fell to three-year lows in July as production declined due to labour shortages and heavy rains while exports rose amid easing coronavirus-related curbs, official data showed on Monday.

End-July stockpiles in the world’s second-largest palm producer declined 10.55% from a month earlier to 1.7 million tonnes, while output fell 4.14% to 1.81 million tonnes, the Malaysian Palm Oil Board (MPOB) said

Australian sharemarket

The Australian sharemarket shot to a three-week high on Monday, driven by a stronger-than-expected US July labour force report and an extension of key economic support measures by President Donald Trump.

The S&P/ASX 200 Index advanced 105.4 points, or 1.8 per cent, to 6110.2, its highest level since July 21.


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