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Buru takes full control in Canning Basin tenements

Luke Housego

Buru Energy will assume full control of three exploration tenements in the Canning Basin in Western Australia, with Roc Oil to relinquish its half interest from the end of December.

Buru will pay nominal consideration only under the deal and the oil and gas companies will maintain their joint interest in the Ungani oil field.

“Together with its existing 100 per cent and majority owned permits, Buru now controls a gross 22,000 square kilometres of highly prospective contiguous acreage in the Canning Basin,” executive chairman Eric Streitberg said. “The Canning Basin is one of the least explored onshore basins in Australia with already producing conventional oil resources and large scale wet gas resources.”

Metcash: net loss and 6 cent dividend

Robert Guy

Metcash has reported a first-half net loss of $151.6 million after a $237.4 million impairment following the loss of a supply contract to 7-Eleven.

The supermarket operator and food wholesaler’s group sales increased 0.5 per cent to $7.2 billion. This reflected growth in its food and liquor divisions, though this was partly offset by weakness in the hardware division.

 Craig Sillitoe

Group earnings before interest and tax declined $8.4 million to $149.7 million, with food EBIT falling $7.8 million to $85.2 million and liquor EBIT declining $0.5 million to $29.6 million. Hardware EBIT dropped $0.5 million to $37.3 million.

Underlying profit after tax fell to $95.7 million from $100.3 million at the same time last year, hurt by the loss of a supply contract for Drakes.

A fully franked interim dividend of 6¢ a share was declared. It will be paid on January 23.

Metcash said there was continued improvement in the sales trajectory of wholesale sales (excluding tobacco), which declined 0.3 per cent compared to a 1.9 per cent fall at the same time last year.

Excluding the impact of ceasing to supply Drakes, non-tobacco sales increased 0.3 per cent – the first half-year period increase in non-tobacco sales since the 2012 financial year.

October retail sales preview

Timothy Moore

October retail sales are on the radar today. Here’s what NAB is expecting:

“The NAB Cashless Retail Sales Index suggests a 0.4% rise in retail sales in October (market: 0.3%). While this would be the strongest outcome since February, barring the 0.4% gain in August that was boosted by tax refunds, it’s likely the improvement reflects stronger food prices.

“The NAB business survey shows faster retail price inflation in October and our tracking of supermarket prices shows a solid rise in fresh vegetable prices. These factors suggest real retail sales likely remain weak.”

Steven Dooley, currency strategist at Western Union Business Solutions, said the retail sales figures will be “more critical than ever” after this week’s poor GDP numbers showed further signs of consumer stress.

He’s expecting a modest 0.1% advance, and sees the risk to the downside for today’s numbers.

“A more cautious consumer might require further rate cuts next year – or even unconventional policy tool like quantitative easing,” Mr Dooley also said.

In addition, Mr Dooley said the retail numbers will also be important to see whether the Morrison government’s tax refund has any effect on retail spending. “So far, the impact of the up-to $1080 tax refund has been limited.”

Westpac is looking for what it calls a “sluggish” 0.3 per cent result, in line with consensus. There remains some hope that the tax offsets will belatedly come through.

Fonterra reports Q1 earnings lift, affirms guidance

Luke Housego

Fonterra Shareholders’ Fund reported an increase in first quarter earnings and reaffirmed full-year guidance despite noting pressure from higher milk prices.

Fonterra said normalised earnings before interest and tax for the three months ended October were $NZ171 million ($163 million).

The company maintains its normalised earnings guidance of NZ15-25¢ per share for the 2020 financial year.

Bellamy’s scheme meeting ahead

Vesna Poljak

Bellamy’s chairman John Ho will reiterate to the scheme meeting to be held in Melbourne today that Mengiu’s offer is attractive and within the valuation range deemed reasonable by the independent expert.

Mengiu has offered $13.25 a share for Bellamy’s stock by virtue of a 60¢ special dividend and the offer price of $12.65 cash a share. The stock is worth $12.25 to $13.93 a share according to Grant Samuel.

TWE names new US president

Vesna Poljak

Treasury Wine Estates appointed Ben Dollard as president of the Americas business starting January 13 and based in Oakland. He replaces Angus McPherson who won’t be moving to the US “due to unforeseen personal circumstances”.

Mr McPherson will return to work in February in a revised role based in Melbourne.

They both report to Tim Ford. Mr Dollard is ex-Constellation Brands where he is currently president for craft and specialty.

ASX to rise as trade angst eases

Timothy Moore

Australian shares are poised to snap their brutal start to December as Donald Trump’s latest trade comments helped revive optimism that progress is being made in talks between the US and China.

In brief remarks in London, President Donald Trump struck a more positive tone in comments about the trade talks.

“We’re talking to China,” Mr Trump told reporters. “Those discussions are going very well and we’ll see what happens.

Overnight market highlights

  • ASX futures up 58 points or 0.9% to 6669 near 7.15am AEDT
  • AUD +0.1% to 68.51 US cents
  • On Wall St near 3.15pm: Dow +0.7% S&P 500 +0.8% Nasdaq +0.6%
  • In New York: BHP +1.3% Rio +0.7% Atlassian +0.4%
  • In Europe: Stoxx 50 +1.4% FTSE +0.4% CAC +1.2% DAX +1.3%
  • Nikkei 225 futures +1%
  • Spot gold -0.3% to $US1473.81/oz at 2.02pm New York
  • Brent crude +3.8% to $US63.15 a barrel
  • US oil +4.2% to $US58.45 a barrel
  • Iron ore +0.8% to $US89.06 a tonne
  • Dalian iron ore +1.6% to 624 yuan
  • LME aluminium -0.5% to $US1758 a tonne
  • LME copper +1.2% to $US5886 a tonne
  • 2-year yield: US 1.58% Australia 0.70%
  • 5-year yield: US 1.61% Australia 0.71%
  • 10-year yield: US 1.78% Australia 1.06% Germany -0.32%
  • 10-year US/Australia yield gap near 6am AEDT: 72 basis points

Good morning

Good morning and welcome to Markets Live for Thursday.

This blog is not intended as investment advice.

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