AGM’s driving stocks in a quiet market
A volatile open for index options expiry today – the usual shenanigans early on before a low was put in place around 11am, a high just after 2pm and a slide into the close.
Employment data was out during early trade and was weak on a headline level – with an overall loss of 9.8k jobs v an expectation of +15.2k gain, however that was probably sugar coated by a decline in the actual unemployment rate to 5.6% v 5.7% expected. Lower than expected participation the cause which suggests weakness while the composition was also soft.
There was a 53,000 loss of full-time jobs offset by a 43,200 gain in part-time jobs - so some swings and roundabouts for the RBA to think about and we’ve had a very slight uptick in the expectation for a Melbourne Cup rate cut in Oz – with the market pricing a 19% chance. We doubt this print alone will have a big bearing on current RBA thinking but it does go in the basket of weakness. Q3 inflation the main game still and that is due out next Wednesday.
On the market today we had a range of +/- 24 points, a high of 5457, a low of 5433 and a close of 5442, up +6pts or +0.12%.
ASX 200 Intra-Day Chart
ASX 200 daily
AGM’s today dominated the news flow while those companies that gave poor updates yesterday continued to cop it on the chin today (the Reject Shop for example). Rio Tinto (RIO) gave Q3 production numbers as did Fortescue Metals (FMG) – RIO finished up and FMG down.
Lend Lease (LLC) AGM; nothing really knew from their AGM today and the stock remains on track, although sentiment is clearly against it with concerns around an impending oversupply of units in Oz while their exposure to Crown through Barangaroo also has them in the sites of sellers. Compounding the issue – and someone would be packing up their desk this afternoon for doing it – there was an additional attachment on the initial release that implied that the margins of their apartment were 6% - not the 15% that they had originally guided to. It’s not the case however it was just another reason to sell LLC today. Stock closed down -3.07% to $13.58. Seems to be headed back down to the bottom of the range in our view.
Rio Tinto (RIO) Q3 production; . Iron ore and copper were both sluggish but the company explained the issues reasonable well – iron ore on port and rail maintenance and copper on lower grade at Escondida – and we saw a similar trend in BHP earlier in the week, however it seems that RIO has had a well-timed run of met coal production (up 21% QoQ) – given the big run up in prices. Guidance was lowered a touch but the mkt was expecting that. We’ve traded RIO on the upside recently through an option position and will continue to look for opportunities on the long side.
Fortescue Metals (FMG) Sep QTR production; Another very good result from FMG with the coy delivering strength both operationally and financially. Below is a good chart thanks to Shaw and Partners showing key components of today’s announcement. Beware though, these numbers are good however the stock has run hard leading into them. We expect FMG to cool off here and bide time…
Source; Shaw and Partners
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