The Morning Report

Last Updated: Wednesday 20/10/2021

GLOBAL MARKET WRAP

The S&P 500 rose 33pts overnight to close 0.7% higher at 4,520, as investor sentiment remained upbeat amid continuing strength in company earnings. The Health sector was the strongest performer (+1.3%). The US 10-year treasury yield rose 4bps to 1.64%, while the USD Index fell 0.2% to close at 93.78 this morning.

Coronavirus update – New research by the US government suggests the Pfizer/BioNTech coronavirus vaccine is 93% effective in preventing hospitalisation among 12-18 year old’s. The US Centres for Disease Control and Prevention study was conducted between June and September when the Delta strain was the most dominant variant.

Eurozone: CPI is expected to increase 0.5% in September, following on from 0.4% growth in August whilst the yearly rate is expected to rise 40bps to 3.4%.

UK: CPI is expected to rise 0.4% in September after increasing 0.7% in August, with the yearly rate expected to remain unchanged at 3.2%.

Japan: The trade deficit is expected to narrow to ¥519.2 billion in September, down from ¥635.4 billion in August, with expectations imports and exports will rise 34.4% and 11.0%, respectively.

Canada: CPI is expected to grow 0.1% in September with the yearly rate expected to increase 20bps to 4.3%.

LOCAL MARKET WRAP

The ASX 200 fell 6pts yesterday to close 0.1% lower at 7,375, with the Resources sector the weakest performer (-1.5%). The SPI Futures Index is trading 41pts higher this morning at 7,383. The 10-year treasury yield fell 2bps to 1.73% and the AUDUSD rose 0.9% to 0.7474 this morning.

Coronavirus update – As at 18 October 2021, 85.1% of people aged over 16 years old have had at least one dose of a COVID-19 vaccine and 69.2% are fully vaccinated.

Brambles Limited (BXB) provided a trading update yesterday with 1Q22 sales from continuing operations up 9% ccy to US$1,292.1 million, reflecting rollover pricing benefits from the prior year and ongoing commercial discipline to recover inflation and other cost-to-serve increases across all regions. Volumes were broadly in line with the prior corresponding period as net new business growth of 2%, primarily in the European pallets and Australian RPC businesses, was offset by lower like-for-like volumes in North America primarily due to pallet availability constraints. BXB provided FY22 guidance with expectations of sales growth of 5-7% and underlying profit growth of 1-2%, reflecting short-term transformation costs. BXB shares rose 0.2% to close at $10.17.

Northern Star Resources Limited (NST) released its quarterly activities report yesterday, generating revenue of $848 million from gold sales of 386,160oz at an average realised price of $2,345/oz. NST achieved a group AISC of $1,594/oz, driven by continued solid performance at Yandal which sold 109,844/oz at an AISC of $1,345/oz. NST outlined it is currently on track to deliver FY22 guidance of 1.55-1.65Moz at an AISC of $1,475-1,575/oz, with production weighted towards the second half, benefitting from increasing grades at Yandal and increasing mining rates at Pogo whilst AISC is expected to decline over the year. NST shares fell 0.1% to close at $9.40.

The RBA minutes for its October meeting revealed little evidence of a potential change in policy with the bank reaffirming it will not increase the cash rate until actual inflation is sustainably within the 2-3% range, which is not expected to be met until 2024. The board noted that underlying inflation pressures in Australia were more moderate than in other advanced economies, reflecting a range of factors including the relatively slower rate of wages growth in Australia.

IMPORTANT NOTICE: This page is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No. 421445 (Lonsec).

Copyright © 2020 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This document is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this page may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This document may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.