Article / 16 August 2017 at 0:44 GMT

Today's Trade: S&P/ASX200 retreats on earnings impact

Trading Desk / Saxo Capital Markets
  • Markets are settling down after a tumultuous few days of geopolitical tension
  • An uninspiring session on Wall St saw the US dollar grind higher
  • Gold fell as North Korea delayed deciding on firing missiles towards Guam

By Saxo Capital Markets Australia

Overnight and early trading
  • The S&P/ASX 200 lost ground in early trading, giving up some of Tuesday's gains. The index was down 0.06% to 5,753.80 at 1039 AEST (0039 GMT).
  • Asian equities were set for a mixed start to Wednesday after an uninspiring US session that saw the dollar grind higher, with attention turning away from geopolitics and back to economic data.
  • Markets are settling down after a tumultuous few days spurred by heightened tensions between the US and North Korea. The latest data showed American consumers splurged in July, dragging Treasuries lower and buoying the greenback. The CBOE Volatility Index, known as the VIX, continued to fall amid a return to calm in the stock market, while the S&P 500 nudging slightly lower.

A steel mill blast furnace ... Spot iron ore fell as weakness in the futures markets in China spread; the fall came despite data showing robust demand in China. Photo: Shutterstock

  • Retailers pressured US stocks Tuesday, as a wave of quarterly reports disappointed investors.
  • Dick’s Sporting Goods, Coach and Advance Auto Parts were among the companies that fell short of expectations and contributed to declines in consumer-discretionary shares. The S&P 500 fell 1.23 points, or less than 0.1%, to 2464.61—a day after it posted its biggest gain since April.
  • The Dow Jones Industrial Average rose 5.28 points, or less than 0.1%, to 21,998.99. The Nasdaq Composite declined 7.22 points, or 0.1%, to 6333.01.
  • Gains in shares of financial companies helped mitigate retailers’ losses.
  • Synchrony Financial rose $1.35, or 4.6%, to $30.99, making it one of the S&P 500’s biggest gainers, after Warren Buffett’s Berkshire Hathaway disclosed Monday that it had opened a large investment in the U.S. store credit-card issuer. The financials sector of the S&P 500 rose 0.2%.
  • Retailers’ earnings were mixed. Dick’s Sporting Goods fell $8.04, or 23%, to $26.87—its biggest decline on record—after same-store sales fell short of expectations in the latest quarter and the company lowered its forecast for annual earnings. Advance Auto Parts shares also posted their biggest one-day percentage decline on record, shedding $22.24, or 20%, to $87.08, after the company lowered its 2017 guidance and missed analysts’ estimates on profits. Coach, whose profits beat expectations but sales fell short, shed $7.28, or 15%, to $40.64.
  • Home Depot said it grew same-store sales and raised its outlook for the second time this year. Shares fell $4.09, or 2.7%, to $150.17.
  • Shares of TJX Companies —the parent of the T.J. Maxx, Marshalls and HomeGoods off-price chains—added 54 cents, or 0.8%, to $70.16 after reporting strong quarterly sales.
  • Shares of many brick-and-mortar retailers have tumbled this year as increased competition from e-commerce giants like have cut into profits.
  • The Commerce Department said Tuesday that sales at retailers and restaurants rose 0.6% from a month earlier, the biggest jump since December, attributing much of the increase to internet sales.
  • Stock markets around the world were relatively calm Tuesday after swinging last week following some weak earnings and geopolitical tensions. The Stoxx Europe 600 rose less than 0.1%, while Japan’s Nikkei Stock Average added 1.1%.
  • Source: Bloomberg,,

US earnings results due out this week

  • Wednesday: Target, Cisco Systems, Tencent, Pershing Square Holdings, L Brands, Vipshop, NetApp, Performance Foods
  • Thursday: Wal-Mart, Alibaba, Madison Square Garden, Ross Stores, Applied Materials, Gap, Buckle
  • Friday: Deere, Estee Lauder, Foot Locker
Local markets
  • Bank of New York Australia ADR Index -0.7%, BHP Billiton ADR -1% to $A25.62 equivalent, little changed from last Sydney close, Rio Tinto ADR -1.2% to $A56.52 equivalent, ~10% discount to last Sydney close
  • Gold fell for a second day on Tuesday as North Korean leader Kim Jong Un signalled he would delay a decision on firing missiles towards Guam, encouraging investors to buy riskier assets and boosting stocks, the dollar and bond yields. The shift to riskier assets is doubly negative for gold because a stronger dollar makes dollar-priced gold costlier for holders of other currencies, while higher bond yields raise the opportunity cost of holding non-yielding bullion. Spot gold was down 0.75% at $1,272.30/oz. US gold futures for December delivery were settled down at $1,279.70/oz.
  • Also weighing on gold prices was the prospect of another increase in U.S. interest rates, with an influential Federal Reserve official saying on Monday he would support one more rise this year. Gold is highly sensitive to rising interest rates because they push bond yields higher and tend to strengthen the dollar. Data on Friday showed hedge funds and money managers increased their net long position in COMEX gold for the fourth straight week to a near two-month high in the week to Aug. 8. Gold stocks in Toronto edged lower again overnight dropping 0.39% on Friday. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Oil prices edged lower on Tuesday, weighed down by concerns over demand and a strengthening US dollar. Light, sweet crude for September delivery settled down 4 cents, or 0.1%, at $47.55 a barrel on the New York Mercantile Exchange, paring losses after trading as low as $47.02/b. Brent, the global benchmark, rose 7 cents, or 0.1%, to $50.80/barrel. Prices fell for the second day in a row after Chinese refiners cut back on crude processed and a strong dollar weighed on commodities prices. The summer rally that took prices up to $50/b has lost steam, even as the amount of oil in U.S. storage has continued to decline. In part, prices have stalled because investors are worried about whether there will be enough demand to soak up excess oil, especially as U.S. shale producers have increased activity and members of the global oil cartel show signs of slipping compliance with production cuts agreed on last year.
  • Recently, Chinese data showed a drop in July consumption as refiners processed less crude into products. Opec, along with other major oil-producing nations, agreed to limit output late last year in an attempt to cut down on oversupply. But July data showing a rise in Opec production has helped undermine faith in the cartel’s ability to rebalance the global oil market. Traders are also waiting to see whether Saudi Arabia’s plans to cut exports will help ease the global supply glut. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY
  • Spot iron ore prices fell further as weakness in the futures markets in China spread. Spot iron ore dropped 1.4% or $1.03 to close at $73.68. With the higher trading charges and a cap on daily positions kicking in on the Shanghai Futures Exchange, investor appetite has been dented. This is despite recent economic data showing a relatively robust level of demand in China. Iron ore stockpiles at Chinese ports fell 2.6mt to 126.4mt, according to Antaike Information Development. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Benchmark lead prices were the biggest gainers on the London Metal Exchange, closing 1.9% higher at $2,380 a tonne. LME nickel fell 1% to end the day at $US10,350, after inventories stored in LME-certified warehouses increased by 8970 tonnes to 384,258 tonnes. Three-month LME copper dipped 0.3% to finish at $6,379. Prices hit their highest in more than 2-1/2 years on August 9 at $6,515. Copper stocks: OZL, SFR;
  • Zinc climbed 1.5% to end at $US2960. LME aluminium gained 1.3% to close at $,2049 after touching $US2056, the highest since November 27, 2014. Aluminum has extended gains to the highest in almost three years amid signs of declining supply as China cuts capacity. Tin, untraded during closing rings, was bid down 1% at $US20,100. Nickel stocks: IGO, WSA; Aluminium stock: AWC
  • Commonwealth Bank (CBA): Is said to have met with Zurich, others on life unit: AFR; Trading ex-div.
  • ANZ Bank (ANZ): Seeking existing investors first with plans for hybrid issue: AFR
  • ARB (ARB): FY results expected; NOTE: FY17 adj. net income est. A$50.2m (6 analysts)
  • Aveo Group (AOG): FY results expected; NOTE: FY17 adj. net income est. A$106.7m (6 analysts).
  • BHP Billiton (BHP), Fortescue (FMG): Iron ore at risk of acute drop: Axiom
  • Fonterra (FSF): Whole milk powder avg price falls to $3,143/t.
  • Macquarie Group (MQG): The UK. is said to finish its $3bn Green Bank sale this week; Aviva, China Resources are said to mull bids for UK wind farms.
  • Mineral Resources (MIN): FY results expected; NOTE: FY17 adj. net income est. $A226mln (4 analysts).
  • Pact Group (PGH): FY results expected; NOTE: FY17 adj. net income est. $A101.7mln (8 analysts).
  • Seek (SEK): FY results expected; NOTE: FY17 adj. net income est. $A201.2m (11 analysts).
  • Sonic Healthcare (SHL): FY results expected; NOTE: FY17 adj. net income est. $A448.2mln (6 analysts).
  • Stockland (SGP): FY results expected; NOTE: FY17 FFO/shr $A0.332 (8 analysts)
  • Vicinity Centres (VCY): FY results expected; NOTE: FY17 FFO/shr $A0.187 (6 analysts)
  • In early reporting: Woodside Petroleum confirmed that their H1 profit rose 49% on higher crude prices. Average realised price +10% to $43/boe. Revenue $1.76bn v $1.94bn last year due to lower LNG production. Continues to target selection of Browse development concept in H2, 2017 and start of engineering and design in 2019. Started talks with contractors on Pluto about expansion studies for small to mid-scale LNG trains. Investigating a transfer pipeline connecting Pluto LNG and Karratha Gas Plant. Final commissioning of Wheatstone LNG is nearing completion.
  • Westfield released H1 Net Profit of $588.9mln and reaffirmed full - year guidance. The $15.7 billion global shopping centre giant Westfield Corporation has met guidance for the first half and expects full year fund from operations to remain in line with expectations. The retail landlord, run by Steven and Peter Lowy, reported FFO for the six months to June 30 of $343 mln, or 16.5 cents per security, up 4.5% on a constant currency basis. Comparable net operating income growth was 3.5% for the six months which is down from the 3.9% growth achieved in the first 6 months of 2016. First-half net income rose 20% to $589 mln from $491 mln a year ago, while revenue in the six months ended June 30 climbed 18.35 to $987.6 mln from $834.7 million in the year-earlier period.
  • A heavy write-down on the APLNG gas export project in Queensland has driven Origin Energy to a $2.2 billion net loss, more than three times the loss of a year earlier. The write-down was flagged last week and was driven by a reduction in Origin's assumptions for future crude oil prices. Sales climbed 16 per cent to $14.1 bn. Origin declared no final dividend for 2016-17.
  • Seven West Media said it swung to a full-year net loss of $744.3 million from $184.3 million a year ago. Revenue in the year ended June fell 2.7% to $1.67 bn. It said its sees fiscal 2018 underlying group EBIT about 5% lower than in the year just ended. It will pay a fully franked final dividend of 2 cents.
  • Vaccines and blood products supplier CSL said its full-year net profit climbed 7.6% to $1.34 bn ($A1.7 bn). Revenue for the year ended June 30 rose 12% to $6.62 bn. CSL declared an unfranked final dividend of $0.72 a share, up from $0.04 last year. It said it expects fiscal 2018 net profit in constant currency terms to climb to a range of $1.48 bn to $1.55 bn.
  • Share registry company Computershare said its net profit in constant currency trms rose 2.7% to $311.6 mln from $303.5 mln. Its actual earnings totalled $297.3 mln. Revenue rose 10.6% rise $2.18 bn and it reported a 4.65 rise in EBITDA to $557.2 mln. Chief executive Stuart Irving said the strategy to simplify and refocus the business put the company in a better position to enhance shareholder returns. Computershare's mortgage services business saw a 70.6% increase in revenues to EBITDA of $78mln. The Mortgage services business now accounts for almost one quarter of group revenue. On a constant currency basis, Computershare revealed that it expects FY18 earnings per share to increase by 7.5% on FY17. 
Broker upgrades, downgrades
  • Ansell (ANN): Cut to hold at Morningstar.
  • Challenger (CGF): Cut to neutral at Credit Suisse, price target $A12.70.
  • Charter Hall Retail (CQR): Upgraded to buy at APP; PT lowered to $A4.52
  • Domino’s Pizza (DMP): Cut to underperform at APP.
  • NRW Holdings (NWH): Cut to hold at Moelis & Company, PT $A0.99.
  • Rio Tinto (RIO): Cut to outperform at RBC.
Australian earnings
  • Wednesday: Westfield Corp, SEEK Ltd, Stockland, Fletcher Building Ltd, Vicinity Centres, Origin Energy Ltd, Dexus, CSL Ltd, Pact Group Holdings Ltd, Iluka Resources Ltd, Fairfax Media Ltd, Aveo Group, Computershare Ltd, Sonic Healthcare Ltd, Woodside Petroleum Ltd, G8 Education Ltd, InvoCare Ltd
  • Thursday: Telstra Corp Ltd, Viva Energy REIT, QBE Insurance Group Ltd, IPH Ltd, IRESS Ltd, Wesfarmers Ltd, Evolution Mining Ltd, Adelaide Brighton Ltd, Tatts Group Ltd, Treasury Wine Estates Ltd, Mirvac Group, Whitehaven Coal Ltd, ASX Ltd, Nanosonics Ltd, ARB Corp Ltd
  • Friday: Mantra Group Ltd, Sydney Airport, Mineral Resources Ltd, Charter Hall Retail REIT, Primary Health Care Ltd, Spark New Zealand Ltd.
GBPUSD under pressure

Earlier this month, GBPUSD made a reversal at 1.3268 that corresponds to 50% retracement (from the 2016 high of 1.5016 and the 2016 low of 1.1506).

Since then, GBPUSD has been under selling pressure and it extended losses on the back of disappointing CPI and PPI numbers last night, but selling seems to have stopped at the uptrend (from the March 17 low).

We would confirm further downside if we see a break below July low 1.2811.

GBPUSD chart

AUDCAD struggling
AUDCAD is clearly struggling to stay above the key resistance level 1.0040 area that coincides with 50% retracement (from the May high 1.0344 and July low 0.9734).

Futhermore, the 200 day moving average has been restricting advances. So we would look to sell any ralllies above parity.

AUDCAD chart

Create your own charts with SaxoTrader; click here to learn more.

Sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters

For more on forex, click here.

– Edited by Robert Ryan

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets.
Saxo Capital Markets (Australia) Pty Ltd | A part of Saxo Bank Group
ABN 32 110 128 286 | AFSL 280372
Level 25, 2 Park Street SYDNEY NSW 2000
Phone: +61 (2) 8267 9000 | Fax: +61 (2) 8267 9050
Please visit our website at:
The daily outlook is brought to you by Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286, AFSL 280372 (Saxo Capital Markets), in association with which is the property of Saxo Bank A/S, the parent company of Saxo Capital Markets. is a social trading facility offering clients of Saxo Bank Group access to in-depth market news, commentary, analysis and much more.
The content of the daily outlook should not be considered as a ‘personal’ or specific investment advice catered for your specific need, objectives or financial situation, or be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies expressed or that losses in connection therewith can or will be limited.
None of the information contained in the daily outlook constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. Saxo Capital Markets; shall not be responsible for any loss arising from any investment based on any forecast or other information contained in the daily outlook. Past performance is not a reliable indicator of future performance. Information contained in this daily outlook may have previously been distributed to; and acted upon; by other clients and persons who have shown interest in Saxo Capital Markets, as well as internal affiliates/employees of Saxo Capital Markets. Any trade ideas or positions contained herein relating to products or services offered by Saxo Capital Markets may be inconsistent to trades/positions entered into by Saxo Capital Markets and/or its affiliates. Further, any information contained may consist of opinions and views of the ‘Sales Trading Desk’ as a team, however does not reflect the ‘specific’ opinion of Saxo Capital Markets.
Trades in accordance with the information contained in the daily outlook, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the daily outlook do not occur as anticipated. Prior to making any investment or entering into any transaction, you should carefully consider your financial situation and consult your independent financial expert in order to understand the risks involved and ensure the suitability for you of any investment or transaction decision you enter. Any information or opinions in this material are not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be unlawful. Please refer to our Combined Financial Services Guide & Product Disclosure Statement available via Please also consider whether acquiring or continuing to hold financial products is suitable for you, prior to trading and investing.
If you would like to unsubscribe from the Daily Outlook, please reply ‘Opt Out’ to this email with your Client ID.
Terms & Agreement | Disclaimer | Financial Services Guide | Privacy Policy | Contact Us |


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail