Level 14 Suite 606, Level 6
172 St George’s Terrace 83 York St
PERTH WA 6000 SYDNEY NSW 2000
PO Box 7625 PO Box R1931
CLOISTERS SQUARE WA 6850 ROYAL EXCHANGE NSW 1225
P: +61 8 9288 3388 P: +61 2 9024 9100
Global Wrap – 23 September 2018
STATE ONE World Markets 23/09/2018 16/09/2018 Wkly Chg Mthly Chg Yearly Chg SPINNAKER ASX 200 6195 6165 0.5% -2.5% 11.7% Dow Jones 21798 21988 -0.9% -1.0% 18.0%
Nasdaq 5284 5284 0.0% -0.2% 21.9% 23 September 2018 S&P 500 2930 2905 0.8% 0.5% 30.4% Issue 429 FTSE 100 7490 7304 2.5% -1.0% 8.1% DAX30 12431 12124 2.5% -1.0% -3.7% 12 month XJO chart Shanghai Composite 2797 2652 5.5% 2.2% -13.0% 6,500 6,300 Nikkei 225 23870 23095 3.4% 4.4% 27.2% 6,100 Hang Seng 27954 27286 2.4% -1.6% 22.3% 5,900 5,700 Currency 5,500 5,300 AUD/USD 0.7291 0.7179 1.6% 1.4% -8.4% 5,100 Commodities 4,900 4,700 Oil ($/bbl) 70.7 68.8 2.8% 0.9% 39.6% 4,500 Gas ($/gal) 3.0 2.8 8.1% 3.5% 2.7% Iron Ore ($/t) 0.0 53.9 -100.0% -100.0% -100.0% 12 month Dow Jones chart Copper ($/t) 6203 5947 4.3% 2.3% 6.3%
23,000 Lead ($/t) 1996 2050 -2.7% -3.4% -14.4% 22,000 Zinc ($/t) 2399 2328 3.1% -4.3% -12.6% 21,000 Aluminium ($/t) 2034 2016 0.9% -3.9% 17.5% 20,000 19,000 Nickel ($/t) 12955 12515 3.5% -3.4% 13.9%
18,000 Tin ($/t) 19100 19150 -0.3% 0.5% -10.7% 17,000
16,000 Gold ($/oz) 1201 1201 0.0% -0.9% 2.5%
15,000 Silver ($/oz) 14.4 14.1 1.5% -3.0% -16.0%
Platinum ($/oz) 833 799 4.3% 4.5% -11.2% Wheat ($/t) 521.000 509.250 2.3% -3.7% 27.6% Source: Iress State One Research Products Spinnaker Free Weekly Global Wrap Market Opener Free Daily
Daily Resources Clients Only Key points Overview 1. Easing trade war fears buoy markets For more research visit: www.stateone.com.au/research 2. Stock analysis: Iron ore
State One Stockbroking Ltd 3. High-powered resources investor roadshow on next week Head Office Level 14, State One House US 172 St George's Terrace
Perth WA 6000 The S&P 500 and Dow reached record highs on Friday ahead of Monday’s major sector Perth Tel: (+61 8) 9288 3388 reshuffle, capping a week that largely shrugged off trade worries. Sydney Tel: (+61 2) 9024 9105
Email: [email protected] Trading volume was expected to spike in anticipation of the S&P 500 sector change, Web: www.stateone.com.au when telecom will be folded into a new sector called communications services, along with heavy -hitting stocks such as Amazon.com, Facebook Inc and Walt Disney Co.
The S&P 500 and the Dow were up, with the tech-heavy Nasdaq losing ground. All three
were on track to post their second consecutive weekly gains, with the blue-chip Dow on its way to its best weekly percentage gain in over two months.
“Quadrupl e witching”, when stock options and futures expire, and the S&P 500 and the Russell 2000 rebalance their indexes, were also seen contributing to heavier trading
traffic.
August economic data released this week, including consumer and producer price inflation as well as retail sales, came in on the weak side. It was not enough, however, to meaningfully sway views that the Federal Reserve will push ahead with a 25 basis point
On the economic data front, weekly jobless claims fell to their lowest level in nearly 49 years last week, totaling 201,000, according to the Labor Department. Economists polled by Reuters expected claims to come in at 210,000.
This coming Tuesday a key consumer confidence index will be released followed by the Federal Reserve’s rate decision on Wednesday. The trade balance and GDP will be released on Thursday.
China
China's stock markets surged on Friday before a long holiday weekend, with investor sentiment boosted by hopes that a government effort to boost domestic demand could help offset effects of an escalating trade war, The Economic Times reported.
At the close, the blue-chip CSI300 index rose 3.0%, its biggest one-day gain since May 2016, to end at 3,410.49 points.
The Shanghai Composite Index gained 2.5% to 2,797.48 points. It was the Shanghai index's best week since March 2016.
Japan
Japanese stock indexes hit multi-month highs on Friday as ebbing concerns about global trade tensions and bullish views on the US economy supported commodities and manufacturing firms.
The Nikkei share average gained 0.8% to 23,869.93, the highest close since January 24.
Market analysts say gains have been supported by views that the impact of the Sino-US trade war would be less harmful to global growth than initially feared.
Earlier this week, China added $60 billion worth of US products to its import tariff list, hitting back at US duties on $200 billion of Chinese goods that go into effect on September 24.
A senior fund manager told Reuters the market was focused more on the strong US economy and inflation expectations and is less about the impact from US-China trade conflict.
He said investors were also looking ahead to the second round of trade talks between Japan and the US scheduled on Tuesday, when Governor of the Bank of Japan Haruhiko Kuroda will deliver a keynote address in Osaka. He will make a closely watched speech in Tokyo on Thursday.
Europe
European stocks posted solid gains by the end of Friday's session, as investors continued to digest the latest political and corporate news, CNBC reported.
The pan-European Stoxx 600 popped 0.43% by the provisional close, with almost all sectors closing in the black. On the week, however, the STOXX 600 soared 1.70%. On the bourses front, the FTSE 100 surpassed fellow indexes, closing up 1.67% as sterling came under pressure. The French CAC 40 rose 0.78%, and Germany's DAX jumped 0.85%. Most markets in peripheral Europe closed higher.
Looking at Europe's main sectors, basic resources outpaced fellow groups, jumping 1.71% with Kaz Minerals topping the index and the STOXX 600, with the stock finishing up 10%. The rise in miners comes as copper, zinc and nickel prices posted sharp gains on Friday. London-listed miners Antofagasta, Glencore, Anglo American and BHP Billiton all ended the session up more than 3.5% each.
German CPI will be released on Thursday, then euro zone CPI and German employment figures on Friday.
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Australia
The Australian sharemarket has closed the week higher as the US finally imposed additional tariffs against China, bringing an end to weeks of uncertainty, Fairfax reported.
The S&P/ASX 200 index closed the week 29.3 points, or 0.5%, higher at 6194.6, recording its best weekly performance this month.
US President Donald Trump imposed additional tariffs on $US200 billion ($274 billion) worth of Chinese goods, following the US market close on Monday. The 10% tariff was received positively by the market which had been expecting a 25% tariff. Industrial and precious metal prices both rose in response, with some hitting multi-month highs this week. This boosted the local materials sector, with BHP Billiton and Rio Tinto leading the market for most of the week.
BHP Billiton rose 5.5% to $33.58, while Rio Tinto advanced 8.7% to $79.49 this week. Rio announced on Thursday it would return $US3.2 billion in proceeds from the sale of its coal assets from earlier in the year, to shareholders via a share buyback. South32 closed the week 4% higher at $3.90 and Fortescue Metals lifted 7.9% to $3.95.
The major banks also lifted the index this week although their gains were more muted. Westpac was the best performing of the major four this week, rising 1.4% to $28.16. On Sunday, the government announced it would be establishing a royal commission into the aged care sector, which left many aged care investors trading defensively this week.
Commodities
Oil output in the US is expected to continue rising through the next two years, helped by a rapid expansion in the number of US oil rigs which are now at levels not seen since March 2015. The Energy Information Administration (EIA) said it expects oil output to lift across all seven major US shale oil basins by October. Those seven basins have accounted for almost all the US oil output growth in the past few years but have softened in the past few months. While there are some pipeline constraints in the US currently, a number of pipeline projects are expected to be completed by the end of the next year, likely pushing oil prices lower.
Zinc Zinc prices enjoyed a strong rebound from a near two-year, stringing together three positive sessions in a row this week on the back of more positive headlines regarding the trade tensions between the US and China. The metal, often used as an anti-corrosion agent in steel and iron production, has been in demand recently, with zinc stocks on the London Metal Exchange falling to their lowest level since April this week. On Thursday, the price of zinc rose 1.2% to $US2,445 a tonne and was the best performing base metal on the London Metal Exchange. The fall in inventories and jump in premiums could cause a shortage in the supply of the metal.
Stock analysis: Coal Coal prices buoyant – but discounted into share prices
Thermal coal prices are not supposed to be rising as governments tighten environmental controls, but that's precisely what is happening at the premium end of the coal market where prices have soared. Over the past six months the price of top quality thermal coal exported from the Australian port of Newcastle has risen by 25% to $115 a ton. The increase is more dramatic when looking back two years to a time when premium thermal coal exported from Newcastle was selling for $50/t, less than half its current price.
The net effect of recent events in the coal market is to create a wide gap between the best quality coal, which is also the least polluting, with lower-quality coals that are cheaper but more environmentally damaging. What could be happening is part of a change being seen across the world's mining industry where there is a flight to quality as environmental regulations tighten around gas emissions and the disposal of waste generated in manufacturing processes. As a rule, high-quality raw material creates less pollution. But there might be another factor at work in the coal market which is potentially more significant; declining supplies of premium coal as exploration for the fuel slows and government mining approvals become harder to get. China has been a key player in the high-quality drift which can also be seen in the market
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for iron ore where limited supplies of top quality material fetch up to $90/t whereas the benchmark price is closer to $70 a ton and low-grade ore has dropped to $40 a ton.
Over the next year the price gap is expected to narrow as producers of high-quality coal in countries such as Colombia and Russia are attracted to the high prices on offer in Asia. In the longer term, however, the drive for reduced pollution from coal burning could turn out to be a factor in coal prices staying high because tough environmental protection laws in several countries are limiting the development of new coal mines.
Coal company share prices have appreciated on the back of the buoyant coal price environment; however, upside from current share price levels appears muted – without another leg-up in the coal price. Whitehaven Coal’s (ASX:WHC) IRESS consensus target price of A$5.45 is some 2.5% above its share price of A$5.32. New Hope Coal’s (ASX:WHC) IRESS consensus target price of A$3.29 is some 13% below its share price of A$3.80.
2018 RIU Resources Investor Roadshow The 2018 RIU Resources Investor Roadshow will be held at the Intercontinental Hotel Sydney and the Hyatt Hotel Melbourne on Tuesday September 24 and Thursday September 27 respectively.
This event is the third of its type run by Vertical Events for the resources industry and follows the success of its Techknow Investor Roadshows run in the technology sector over the past year.
This event will feature presentation from 21 companies. The companies presenting offer insights into a broad range of commodities including base metals - copper, nickel, lead, zinc, precious metals – gold, green technology plays – graphite, lithium, cobalt, industrial materials – mineral sands, kaolin (HPA), iron ore, potash, and energy plays - gas and wave energy. No suppliers will be at the event making it a very high-powered investment event.
As co-sponsor of the event, State One Stockbroking will be making the Official Conference Opening speech; as valued clients of State One/amscot, it would be great to see you attend.
To get more information, and to register to attend, please click on the link here or go to https://resourcesinvestorroadshow.riu.com.au.
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Economic Calendar 24/09/2018 – 28/09/2018
Source: www.tradingeconomics.com
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Economic Calendar 1/10/2018 – 5/10/2018
Source: www.tradingeconomics.com
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All Ords Top 10 Week Ending 21 September 2018
10 Best Performing Stocks Weekly (%) 10 Worst Performing Stocks Weekly (%) PLS Pilbara Min Ltd 15.0 EHE Estia Health Ltd -18.3 SAR Saracen Mineral 11.5 APT Afterpay Touch -8.4 WSA Western Areas Ltd 10.2 AOG Aveo Group -7.2 ORE Orocobre Limited 9.3 BGA Bega Cheese Ltd -6.9 IGO Independence Group 8.7 PMV Premier Investments -6.8 SFR Sandfire Resources 8.7 SDA Speedcast Int Ltd -6.5 RIO Rio Tinto Limited 8.7 ECX Eclipx Group Ltd -6.2 LYC Lynas Corporation 8.5 PDL Pendal Group Ltd -5.3 SVW Seven Group Holdings 8.3 BKW Brickworks Limited -5.3 EVN Evolution Mining Ltd 7.9 QUB Qube Holdings Ltd -4.8
Source: IRESS
S & P Indices Week Ending 21 September 2018
S&P Indices 23/09/2018 16/09/2018 Wkly Chg Mthly Chg Yearly Chg S&P 200 Energy 11885 12016 -1.1% -0.2% 33.7% S&P 200 Materials 11841 11392 3.9% 0.3% 19.6% S&P 200 Industrials 6052 6163 -1.8% -3.3% 18.6% S&P 200 Consumer Disc. 2440 2474 -1.4% -5.6% 16.6% S&P 200 Consumer Staples 11061 11091 -0.3% -3.9% 29.3% S&P 200 Healthcare 31880 32308 -1.3% -5.6% 65.4% S&P 200 Financials 6160 6092 1.1% -2.6% -3.3% S&P 200 Info Technology 1213 1208 0.4% -2.7% 56.0% S&P 200 Telecommunications 1192 1208 -1.3% 0.8% -32.1% S&P 200 Utilities 7644 7564 1.1% -4.1% 1.4% S&P 200 Property Trusts 1431 1463 -2.2% -2.0% 6.7%
S&P 200 Financials ex PT 6870 6795 1.1% -2.6% -3.3% Source: IRESS
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Level 14 Suite 606, Level 6
172 St George’s Terrace 83 York St
PERTH WA 6000 SYDNEY NSW 2000
PO Box 7625 PO Box R1931
CLOISTERS SQUARE WA 6850 ROYAL EXCHANGE NSW 1225
P: +61 8 9288 3388 P: +61 2 9024 9100
1 Year Commodity Price Charts
1 Year Gold 1 Year Platinum $1,400 $1,050 $1,350 $1,000 $1,300 $950 $1,250 $900 $1,200
$850 $1,150
$1,100 $800
$1,050 $750
$1,000 $700
1 Year Oil $4 1 Year Natural Gas $80
$70
$3 $60
$50
$40 $2
$30
$20 $1
1 Year Lead 1 Year Zinc $2,900 $3,800 $2,700
$2,500 $3,300
$2,300 $2,800
$2,100 $2,300 $1,900
$1,800 $1,700
$1,500 $1,300
1 Year Copper 1 Year Aluminium
$7,500 $2,800
$7,000 $2,600
$6,500 $2,400
$6,000 $2,200
$5,500 $2,000
$5,000 $1,800
$4,500 $1,600
$4,000 $1,400
$3,500 $1,200
1 Year Tin
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
5 Year Metals Stockpiles
Nickel LME Stockpiles - 5 Year Copper LME Stockpiles - 5 Year
500,000 700,000
450,000 600,000 400,000 500,000 350,000
300,000 400,000 250,000 300,000 200,000
150,000 200,000
100,000 100,000 50,000
0 0
Lead LME Stockpiles - 5 Year Zinc LME Stockpiles - 5 Year
300,000 1,200,000
250,000 1,000,000
200,000 800,000
150,000 600,000
100,000 400,000
50,000 200,000
0 0
Tin LME Stockpiles - 5 Year Aluminium LME Stockpiles - 5 Year
18,000 6,000,000
16,000 5,000,000 14,000
12,000 4,000,000
10,000 3,000,000 8,000
6,000 2,000,000
4,000 1,000,000 2,000
0 0
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Alan Hill Mark Sullivan Yitz Barber Graeme Johnson Executive Chairman Institutional Dealer Equities Advisor Equities & Derivatives Advisor Phone: +61 8 9288 3388 Phone: +61 2 9024 9134 Phone: +61 2 9024 9107 Phone: +61 8 9288 3316 [email protected] [email protected] [email protected] [email protected]
Karen Tan David Zhang David Brennan Tammie Wong Equities Advisor Equities Advisor Senior Investment Analyst Equities Advisor Phone: +61 8 9288 3303 Phone: +61 2 9024 9130 Phone: +61 2 9024 9142 Phone: +61 2 9024 9133 [email protected] [email protected] [email protected] [email protected]
Ric Heydon Robert Chen Morris Levitzke Equities & Derivatives Advisor Equities Advisor Equities Advisor Phone: +61 8 9288 3307 Phone: +61 2 9024 9132 Phone: +61 8 9288 3315 [email protected] [email protected] [email protected]
General Advice Warning The contents of this document have been prepared by State One Stockbroking Ltd (ABN 95 092 989 083, Australian Financial Services Licence (“AFSL”) 247100) without taking account of your objectives, financial situation or needs. To the extent that any of the content constitutes advice, it is general advice. You should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.
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If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the financial product) and consider it before making any decision about whether to acquire the financial product.
For more information please refer to the State One Stockbroking Ltd Financial Services Guide (FSG) at https://www.stateone.com.au/Download/Download?file=stateone_fsg.pdf
Disclosure The directors and associated persons of State One Stockbroking Ltd may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products.
This research at all times remains the property of State One Stockbroking Ltd and is not for public circulation or reproduction whether in whole or in part and is not to be disclosed to any person other than the intended recipient, without obtaining prior written consent.
Level 14, State One House, 172 St George’s Terrace, Perth WA 6000 State One Stockbroking Ltd This information must be read in conjunction with the disclaimer/disclosure at the end of this document AFSL 247100