Fortescue Metals falls 4.8pc, now below $7

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The rally in gold prices may have further to run yet, according to RBC Capital Markets. Commodity strategists at the group, led by Helima Croft, are forecasting the spot price will lift to $US1547/oz by the March quarter next year, representing a 3.4 per cent increase from the current level of $US1495.80/oz.

The precious metal hit a six-year high last week, extending the rally over the past year to nearly 30 per cent.

“It is quite clear that the intensified US-China trade war, Fed rate policy, and general market concern have breathed new life into gold, but the risks do not stop there,” strategists told clients.

“The greater appreciation of risk underlying the move lends notable sustainability to elevated prices.”

According to a survey conducted by UBS at the annual Diggers & Dealers conference in Kalgoorlie earlier this month, 56 per cent of respondents said gold would be the top performing commodity in the 12 months ahead.

by David Scutt

Morgan Stanley analysts Joseph Michael and Andrew McLeod believe 74 per cent of the 8.6 million premises connected to the NBN can be substituted with 5G fixed wireless. Morgan Stanley’s team say Australia’s telcos should investigate roll out a new product of fixed wireless following a successful trial by Verizon in the United States. Unlike mobile internet, fixed wireless provides a home or office with a dedicated connection (as NBN Co is using for its own fixed wireless-connected premises).

“As wireless technology has advanced…we think the total addressable market (TAM) for fixed wireless has expanded,” they write.

“In addition, we think there is a strong incentive for telcos to bypass the NBN with fixed wireless given the challenging margin outlook from reselling NBN services.”

“The TAM represents NBN premises where we believe 5G fixed wireless is comparable to the NBN in terms of speed, capacity and reliability…We believe the most appropriate strategy is to target low usage users first to avoid capacity constraints”.

ASX-listed rubber glove manufacturer Ansell has reported a full year adjusted attributable profit of $US150.9 million ($A222.2 million) for fiscal 2019, up 2.9 per cent on the previous year. It declared a dividend of US46.75 cents per share (68.84 Australian cents), up 2.7 per cent on the previous corresponding period.

Chief executive Magnus Nicolin said while fiscal 2019 had posed a series of challenging macro-economic conditions including a slowdown in some economies, the company “successfully navigated” these headwinds.

Challenges included higher raw material costs, a weakened European economy, Brexit, heightened US rhetoric with import tariffs, and some indications of a potential slowdown in the American industrial sector,” Mr Nicolin said.

“Even so, Ansell maintained its pursuit of market growth opportunities and expansion, its quest for strategic pricing and enhanced margin improvements as well as continued investments in strengthening our capabilities,” he said.

Ansell’s sales from continuing operations totalled $US1.499 billion, up 0.6 per on a continuing basis and 3.2 per cent on a constant currency basis. Total organic sales grew 1.9 per cent, which Mr Nicolin described as a disappointment.

Investors liked Ansell’s 2019 results, with its stock up 5.5 per cent to $27.29 shortly after 2.30pm.

By Darren Gray

Dicker Data director, David Dicker, will gift 460 employees $1000 worth of shares each “in recognition of their hard work and continuing contribution to the company”. The price for the bonus shares will be based on the closing price of Thursday, 29 August, the expected issue date.

Dicker Data shares are currently down 4.2 per cent to $5.84, but were as high as $7.67 at the end of July.

Employees who receive shares cannot trade them until August 2022 or if earlier if they leave the company. Each employee will receive about 174 shares, which will see the company issuing about 80,000 new shares. Directors are not eligible for the free shares. Dicker Data was founded in 1978 by Mr Dicker, who still owns 37.5 per cent of the company. More recently he founded sports car company, Rodin Cars, which was recently featured in the Financial Review.

David Dicker, chief executive of Dicker Data, is giving hundreds of staff free shares.

David Dicker, chief executive of Dicker Data, is giving hundreds of staff free shares. Credit:Dean MacKenzie

Among the 500 stocks on the All Ordinaries Dacian Gold is up 13.3 per cent to $1.27 after a production update this morning, and Strike Energy is up 12.5 per cent to 14 cents.

Engenco shares are up 12.1 per cent to 51 cents following a very optimistic market update released on Friday morning ahead of full year results later this month. The rail services company revealed it has sold some wagon for a total of $2.7 million, and said a new investment strategy “is already delivering benefits and provides a sold platform for significant long-term growth”.

Among the big declines today, Macquaire Media shares have dropped 18 per cent to $1.43 majority owner Nine Entertainment revealed it will buy all shares it doesn’t already own for $1.46 each, down from the last trading price of $1.74.

Portfolio manager at Tribeca Investment Partners, Jun Bei Liu, says it is very busy on institutional trading desks today given reporting season is in full swing.

She also suspects part of JB HiFi’s big gains today is short sellers buying the stock to cover their positions. JB HiFi has about 14 per cent of shares on issue shorted, according to shortman.com.au. It did have up to 20 per cent of stock shorted in October 2018.

“The result itself is in line and the outlook is weaker than expected,” Ms Liu says. “But they managed to pull out a good number”. The increase in dividends is a “show of confidence”, she added.

We will have more from an interview with JB’s chief executive Richard Murray shortly.

The S&P/ASX 200 is currently trading softer, down by 13 points to 6571.4. Falls in iron ore stocks continue to outweigh modest gains in the banks and strong gains in industrial and consumer stocks.

Shares in JB Hi-Fi got up to their highest value ever today, reaching $31.60 in early trade. They have since softened down to $30.15, which is 7.8 per cent higher than Friday’s close. Once one of the most heavily shorted stocks on the ASX, JB Hi-Fi’s biggest owner is Australian Super with a 10 per cent stake, followed by Legg Mason with a 9.3 per cent stake.

Similarly, REA Group, which runs realestate.com.au, touched an all-time high of $102.59 today. Shares are up 5.6 per cent after it was upgraded by equity analysts at Credit Suisse, Macquarie, and UBS following a weekend of strong real estate sales. This has also pushed up the stock price of majority owner News Corp, up 6.8 per cent to $21.26 today.

Meanwhile, Star Entertainment is down to one-year low after hitting $3.67 today. The stock price has fallen 13.5 per cent since 26 July.

Rural Funds Group managing director David Bryant appears to have topped up his shares in the short-seller target.

A directors’ interest notice lodged on Monday shows an on-market purchase of more than 1,500 shares at $1.95 apiece on August 9 worth about $3,000.

Rural Funds directors were buying on August 8, when the stock came out of a trading halt, and helped drive a 42 per cent recovery after it was smashed on August 6 by a Bonitas report. Bonitas accused the company trading under “RFF” of massively overstating its assets and claimed that its equity was “ultimately worthless”.

Rural Funds has denied the short-sellers assertion.

Notices lodged last week show three entities in which Mr Bryant has indirect interest acquired almost $500,000 worth of RFF securities at $1.70.

BHP Group and Rio Tinto are two of the best bets for sharemarket investors as valuations of most industrial stocks hit their upper limit in a volatile market, says the managing director of the $6 billion listed investment company Argo Investments.

Jason Beddow said on Monday the iron ore market was likely to stay solid although there would be short-term fluctuations, and both big mining groups were showing serious discipline in lifting shareholder returns.

“The iron ore price is looking pretty good and they’ve both been very disciplined in returns,” Mr Beddow said.

Read Simon Evans’ coverage here. The fund manager also warned: “I think the next 18 months are going to be pretty tough for the big four.”

Most regional equity markets are moving higher in early trade on Monday, ignoring the weak lead provided by Wall Street. Stocks in Japan, China and South Korea are up by between 0.25 to 0.5 per cent. Australia’s S&P ASX/200 has also trimmed earlier losses to trade flat for the session.

Sentiment may have been helped by continued sign that Beijing will not allow the Chinese yuan to weaken rapidly against the US dollar. On Monday, the People’s Bank of China (PBoC) set the reference rate for the yuan at 7.0211 per dollar, slightly stronger than the 7.0331 level estimated by Reuters. The Chinese yuan fell to an 11-year low last week against the greenback, contributing to a sharp lift in volatility across financial markets.

by David Scutt

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