Article / 15 February 2017 at 23:43 GMT

Today's Trade: Telstra result weighs on market

Trading Desk / Saxo Capital Markets
  • ASX200 was slightly higher at the start, up 0.2% at 5820.1
  • Telstra's net profit for the December half slumped by 14.4% to $A1.791 billion
  • AUDUSD broke above its recent resistance level and is stabilising at above US77¢

By Saxo Capital Markets (Australia)

The ASX200 was slightly up at the start but weighed down by Telstra, which reported its net profit was down by 14.4%. Telstra fell 5% in early trading. Meanwhile, the big banks and CSL were behind the lift in the index.


  • Investors bought financial stocks and sold government bonds overnight following data that suggested ongoing growth in the US economy.
  • The Dow Jones Industrial Average climbed 0.5%, to 20611. The S&P 500 added 0.5%, and the Nasdaq Composite rose 0.6%.
  • The strongest monthly gain for inflation in almost four years in January and retail sales that rose more than expected helped boost confidence in ongoing US growth, some analysts said. Along with an upbeat assessment of the economy from Federal Reserve chair Janet Yellen, who returned to Capitol Hill Wednesday to testify before the House Financial Services Committee, that data could spur the central bank to raise rates sooner than some expected.
  • Yellen on Tuesday suggested the Federal Reserve could raise interest rates as soon as its March meeting.
  • Low interest rates have helped underpin stock and bond prices in recent years. Still, many investors say the kind of gradual path of rate increases the Fed has signalled amid a growing economy shouldn’t derail major stock indices and would be positive for financial stocks that tend to benefit from higher rates.
  • Financial stocks in the S&P 500 rose 0.7% as investors bet rising interest rates would boost profits of lenders. Shares of utilities, which are often considered bond proxies because they typically pay high dividends, fell 1.1%. The yield on the 10-year Treasury note rose to 2.509%, according to Tradeweb, from 2.470% Tuesday. 
  • The US Dollar Index, which measures the dollar against a basket of currencies, was up 0.1% Wednesday after edging higher Tuesday. The US currency tends to gain on expectations of higher interest rates that make dollar-denominated assets more attractive to yield-hunting investors.
  • The probability of a Fed rate increase in March, as implied by futures markets, rose to 27% from 18% the previous day, according to CME Group data. CME Group said current market pricing underestimates the number of rate rises that are likely to come in 2017. It is betting on three to four rate increases, most likely starting at the Fed’s June meeting.
  • Shares in Procter & Gamble rose 3.2% to lead gains in the Dow industrials following news that activist investor Trian Fund Management LP had built up a more than $3 billion stake in the Cincinnati-based company. JP Morgan Chase added 0.9%.
  • An 8.9% fall in shares of American International Group weighed on the S&P 500, after the company posted a larger-than-expected $5.6 billion pretax charge, leading to one of the worst quarterly results since the financial crisis.
  • The Stoxx Europe 600 rose 0.4%, led by banking stocks. Shares in Credit Agricole rose 4.6% after the French bank reported a strong rise in fourth-quarter profit, excluding one-off write-downs at its domestic retail arm. Other European lenders saw their stock price rise, with Deutsche Bank up 2.5%.

Source: Bloomberg,

 Disappointing call. Telstra announced profits fell 14.4% while 
revenue was down 3.6%. Photo: Shutterstock

Local markets and commodities

  • Bank of New York Australia ADR Index +1.6% to highest since June 2015, BHP Billiton ADR +0.6% to $A26.42 equivalent, 0.5% discount to last Sydney close, Rio Tinto ADR minus 0.8% to $A59.57 equivalent, 13% discount to last Sydney close
  • Gold futures rose, ending the longest losing streak in two weeks, as political uncertainties in the US and Europe overshadowed prospects for rising US interest rates. Contract for April delivery gains 0.6% to settle at $1,233.10/ounce, after falling as much as 0.6%. 
  • Demand continues to come from ETFs, as investors across Asia and Europe continue to send funds into the safe haven. Gold stocks in Toronto were down 0.20% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Oil closed near $53/barrel as record US inventories tempered the impact of Opec's production cuts. American crude supplies climbed 9.53 million barrels to 518.1 million, the highest level in weekly data going back to 1982 and more than twice the 3.5 million-barrel gain forecast by analysts surveyed by Bloomberg before a government report Wednesday.
  • West Texas Intermediate for March delivery slipped 9 cents to settle at $53.11/barrel. Total volume traded was about 8% below the 100-day average. Brent for April settlement decreased 22 cents to $55.75/barrel. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY
  • Spot iron ore prices slipped a little overnight, down 0.7% to $91.05. All eyes are on Vale’s production report, which is scheduled for today. Analysts expect to see record levels of iron ore production for the second year running. 
  • Chinese mills were still not actively buying iron ore from the ports, despite their inventory levels falling to about 10 days' worth compared with at least 20 days before the Chinese New Year holiday, a mill source in north China told Metal Bulletin. At current price levels, steelmakers are taking a more cautious approach with buying. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Copper prices nudged higher by 0.1%, as the standoff at Chile’s Escondida mine extended into a sixth day, with talks deferred. The prospect of an extended strike has seen prices rally strongly, but the resumption of talks could see some of this unwind. 
  • Nickel prices continued their strong run of the past month; rising a further 1.1% as supply fears in the Philippines remain. Zinc closed down 1.1% at $2870. The global zinc market had a deficit of 286,000 tonnes last year versus a surplus of 189,000 tonnes in 2015, industry data showed. 
  • Lead ended the day 1.1% lower at $2329. The global lead market had a surplus of 11,000 tonnes last year from a deficit of 23,000 tonnes in 2015. Aluminium closed up 1.4% at $1913, having earlier hit its highest since May 2015 at $1916, while tin ended down 0.2% at $19,880. Copper stocks: PNA, OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC
  • Aristocrat (ALL): $1bn 1L TL for repricing; call February 16
  • ASX (ASX): Customers may have faced disconnections due to power outage
  • Bapcor (BAP): Interim profit rose 44% to $A27.82 million from $A19.3 million, A5.5¢ interim dividend, up from last year's A5¢ payout
  • Commonwealth Bank (CBA): MTN seeks financial deal after axing Tyme
  • Evolution Mining (EVN): Posted is back in the black, posting a $A136.7 million net profit for the six months ended December from a $A15.47 million loss a year ago
  • Goodman Group (GMG): Strong net profit of $A557million driven by $A275 million in property valuation gains.
  • Lendlease (LLC): Fitch affirms ’Bbb-’; outlook stable
  • Macquarie Group (MQG): May complete Thames Water stake sale in March: FT
  • Mirvac (MGR): Profit for the December half of $A508 million, up 7% on the previous year
  • Oil Search (OSH): Exxon’s Pacific gas partner courts Total to unlock PNG riches
  • South32 (S32): Swung into the black with a $620 million profit after tax
  • Spark NZ (SPK): First-half profit rises, maintains FY guidance
  • Star Entertainment (SGR): Net profit after tax of $A141.8 million, which is up 135.2% on the previous year
  • Sydney Airports (SYD): Posted a 13.4% rise in full year net profit of $A320.9 million on revenue of $A1.36 billion, up 11% on a year ago
  • Tatts Group (TTS): Results have been hit by a falling revenue for its lotteries business and a soft wagering performance
  • Telstra (TLS): Net profit for the December half slumped by 14.4% to $A1.791 billion on revenue of $A12.8 billion, down 6.4% on a year ago

Broker upgrades and downgrades

  • A2 Milk (ATM): Cut to neutral at Forsyth Barr, PT $NZ2.90
  • IOOF (IFL): Cut to hold at Bell Potter, PT $A9; Cut to neutral at Credit Suisse; Cut to neutral at Macquarie, PT $A8.50
  • Paladin (PDN): Cut to reduce at TD, PT $C0.10
  • Sims Metal (SGM): Raised to outperform at Macquarie, PT $A13.60

Stock to watch: ASX Ltd (ASX.xasx) 

ASX Ltd, which is due to report tomorrow sits at a critical level. The technical picture points to further gains upon a clearance of the post subprime highs at $A52.40 and the earnings may be that catalyst that aids the ASX to break above here. A failure to take out these levels (a low probability event) should see ASX retrace lower and to find support at $A50.50, which sits at the current sharp uptrend.
ASX Ltd monthly
 Source: SaxoTrader

The level 2.12 served as a major resistance for Evolution Mining (EVN) during 2010-12 but it became a decent support level last year. Although this level was broken late 2016, it seems to be restricting further losses this year. Recently EVN broke the recent downtrend (from the Jul 16 high of $A3.10), which also intersects 200 DMA. Yesterday’s close of $A2.35 coincides with 50% retracements between the Jul 16 high and Dec 16 low, but this morning’s positive profit announcements are likely to boost the current upward momentum towards the next resistance level of $A2.53.
Evolution Mining monthly
Source: SaxoTrader 


AUDUSD dropped sharply lower initially on the back of the strong US CPI and retail sales numbers but it didn’t take long to recover all of these losses to eventually break above the recent resistance level of 0.7695. 

We are yet to be convinced whether this was a genuine breakout as we still have to digest today’s AU employment figures at 1130 AEDT. It seems quite bizarre to see US Treasury yields moving in the same direction as gold (XAUUSD) and monitoring this divergence could be relevant for anticipating the price actions of AUDUSD, which has been showing strong correlation to gold.

AUDUSD monthly
Source: SaxoTrader. Create your own charts with SaxoTrader; click here to learn more 
Today's data sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters

– Edited by Gayle Bryant

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets. Follow the team on Twitter at:

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