Risk on......for today at least

Good morning, foreign bourses were all stronger with Shanghai leading by putting in a rise of 1.4%, Japan was more modest with a rise of just 0.1%. Bond yields are slightly higher with the US yield curve flattening slightly from the long end, the 2/10 spread is now 91 points from just on 100 late last week. By contrast our curve has maintained a steady shape over the past couple of months, something I shall have to contemplate and seek the counsel of wiser heads.

Morgan Stanley beat forecasts and reported gains across most of its businesses, and, delivered more revenue than Goldman Sachs! The bank reported an 11% gain in June quarter profit of USD1.3 billion.

Reckitt Benckiser has sold its North American food business to McCormick for USD4.2 billion.

The major banks rebounded strongly yesterday after APRA described the banks’ capital levels as “unquestionably strong”.  Key points in APRA’s statement were the banks won’t need to raise new capital or cut dividends however there is a sting in the tail as APRA still has to consider risk weightings for mortgage lending which may yet cause the banks to tap shareholders for capital.

BHP forecast increased iron ore production but hosed down investor joy by noting that an extended strike at Escondida in Chile will hit its bottom line.

Wine Australia reported China remains the major buyer of Australian wine with exports rising by 44% to $607 million in FY17. Total exports of wine were up by 10% at $2.3 billion.

Today marks 48 years since Neil Armstrong became the first man to walk on the moon.

Kind regards

Alex