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US stocks slumped overnight as investors dumped shares of companies in growth and cyclical sectors, with energy and technology leading declines, on fears that the escalating US-China trade war will stymie global economic growth.

Further fuelling trade fears among investors, Beijing said Washington must correct its "wrong actions" for trade talks to continue after the US blacklisted Huawei Technology last week.

Among S&P 500 sectors, only utilities and real estate, both considered defensive areas, registered gains as investors moved to safe-haven assets such as Treasuries. Stocks pared losses in the last hour of trading, but Wall Street's major indexes all ended more than 1 per cent lower on Thursday.

Shares of S&P 500 technology and industrial companies, two sectors that have been bellwethers of trade sentiment, fell 1.7 and 1.6 per cent, respectively. Shares of S&P 500 companies in the cyclical financial and energy sectors also tumbled, with the 3.1 per cent drop in energy shares leading losses among S&P 500 sectors.

A 5 per cent plunge in oil prices in response to a dampened outlook for demand impeded energy shares, while a drop in 10-year Treasury yields, which hit their lowest level since October 2017, held back financial shares.

Adding to the downbeat mood in markets, data from IHS Markit showed US manufacturing faltered in May, with new orders falling for the first time since August 2009.

The Dow Jones Industrial Average fell 286.14 points, or 1.11 per cent, to 25,490.47, the S&P 500 lost 34.03 points, or 1.19 per cent, to 2822.24 and the Nasdaq Composite dropped 122.56 points, or 1.58 per cent, to 7628.28.

Stocks succumbed to selling pressure in May after Washington and Beijing engaged in tit-for-tat tariffs and other retaliatory measures, with the S&P 500 on track to post its first monthly decline since the December sell-off.

Shares of NetApp tumbled 8.1 per cent, the biggest percentage drop on the S&P 500, after the data storage equipment maker forecast current-quarter profit and revenue below Wall Street estimates.

L Brands shares jumped 12.8 per cent after the owner of Victoria's Secret and Bath & Body Works reported better-than-expected quarterly earnings.

International Markets

The Australian share market closed lower for the first time in seven days following losses by the mining, energy and financial sectors.

The benchmark S&P/ASX200 index finished 18.9 points, or 0.29 per cent, to 6,491.8 points, while the broader All Ordinaries was down 13.8 points, or 0.21 per cent, to 6,584.3.

The energy sector was the biggest loser, down 1.26 per cent, after oil prices dropped following an unexpected rise in US crude inventories.

Woodside Petroleum was down 1.1 per cent to $36.99, Oil Search fell 1.8 per cent to $7.58 and Santos was down two per cent to $7.21.

The financial sector was down one per cent as a whole, with all of the big banks in the red following a strong performance earlier in the week.

Westpac was down 2.26 per cent to $28.16, Commonwealth Bank was down 1.1 per cent to $78.15, ANZ dropped 1.6 per cent to $27.94 and NAB was down 1.4 per cent to $25.78.

Miners were also down following a drop in metal prices, with BHP falling two per cent to $37.32 and Rio Tinto down 0.7 per cent to $100.98.

Other sectors were positive, with tech stocks up 1.6 per cent and consumer discretionary shares up two per cent.

Pokies manufacturer Aristocrat Leisure was the best performer on the ASX200, up 7.1 per cent to $28.40 after lifting its first-half profit 15 per cent to $356.5 million.

Wesfarmers gained 1.56 per cent to $37.70 after entering into a scheme implementation deed to buy lithium miner Kidman Resources for $1.90 per share.

The $776 million takeover could be completed by September, assuming courts and Kidman shareholders agree to it.

Kidman shares rose 0.9 per cent to $1.90, having risen 47 per cent since Wesfarmers announced the takeover offer.

The Reject Shop was down 7.5 per cent to $2.10 after the discount retailer said it expected a full-year loss and announced store closures and the exit of its chief executive. shares fell 6.4 per cent to $5.85 after the Australian Competition and Consumer Commission said it would sue the retailer for allegedly misleading discounting practices.

Kogan denied doing anything wrong and said it would defend the lawsuit.

Fonterra shares were down 0.51 per cent to $3.94 after the New Zealand-based dairy processor cut its full-year guidance and said it would close a century-old factory in western Victoria that employs 98 people.

Source: Morningstar

NB Global Corporate Income Trust – Shortfall Offer

DJ Carmichael Pty Limited (“DJC”) has been invited to participate in a shortfall offer (“Offer”) being undertaken by NB Global Corporate Income Trust (“NB Global” or the “Trust”).

The Offer will consist of the shortfall from the Trust’s entitlement offer, which is being made on a 1:1 basis to eligible unitholders at a price of $2.00 per unit (“Unit”) to raise up to circa $414 million.

Shortfall Units will be issued pursuant to a product disclosure statement that was lodged with the Australian Securities and Investments Commission (“ASIC”) on 14 May 2019 (“PDS”). The PDS can be found at Investors should read the PDS before deciding whether to invest.

Participation in the Offer is available to all retail, Sophisticated and Professional Investors.

The NB Global Corporate Income Trust is a managed investment scheme structured as a unit trust, which has been registered with ASIC. The Trust was listed on the ASX as an investment entity on 26 September 2018 and trades under ASX:NBI.

Information on the Trust

Equity Trustees Limited is the responsible entity of the Trust (“Responsible Entity”) and is the issuer of the PDS. The Responsible Entity has entered into a Management Agreement with Neuberger Berman Australia Pty Ltd (“Manager”) authorising the Manager to provide investment and other services to the Trust, pursuant to the terms of the Management Agreement.

The Trust provides investors with an opportunity to receive monthly income by investing in the bonds of large, liquid companies globally.

The Trust’s investment objective is to provide unitholders with a consistent and stable income stream paid via monthly distributions, while achieving an attractive level of total return (income plus capital appreciation) over a full market cycle.

The investment strategy for the Trust is to invest in and actively manage a portfolio of high yield bonds, with a focus on BB and B rated bonds, issued by companies located globally across both developed (e.g. the U.S. and the U.K.) and emerging (e.g. Brazil and Indonesia) markets, with a strong emphasis on capital preservation by focusing on higher quality within the Global High Yield Market, large and more liquid companies and by avoiding companies with deteriorating financials.

Since listing on the ASX, the Trust has paid monthly distributions to existing unitholders amounting to 6.125 cents per Unit, with the first distribution being paid in mid-November 2018 in respect of October 2018. The distributions paid and declared are in line with the Trust's investment objective and keep it firmly on track to achieving its stated target distribution. Successful applicants under the Offer are expected to begin receiving ongoing monthly distributions in respect of new Units in mid-August 2019 for the month of July 2019.

The key benefits of investing in the Trust include:

  • Global: Exposure to global corporate bonds.
  • Income: The Manager aims to deliver a stable and consistent income stream, which is currently targeted at 5.25% per annum (net of fees and expenses), paid monthly, and expected to remain at the same target rate for the financial year commencing 1 July 2019 (“Target Distribution”).
  • Security: Access to a large, experienced and stable investment team employing a disciplined and repeatable investment process with a strong emphasis on capital preservation by focusing on higher quality (e.g. BB and B rated) high yield corporate bonds and avoiding companies with deteriorating financials.
  • Diversification: Exposure to a portfolio of 250-350 bonds issued by large, liquid global companies and diversified across countries, industries and credit quality.
  • Lower volatility: Access to an asset class with a track record of lower volatility and attractive returns, and, consequently, the potential to enhance the risk/return profile of an investor’s investment portfolio.
  • Scale and resources: Access to a large investment team currently comprising 55 investment professionals and located globally, supported by the resources of the broader Neuberger Berman research platform with over 200 investment professionals.
  • Experience: Access to the expertise of senior portfolio managers averaging 25 years’ industry experience and with a 21 years’ track record managing high yield corporate bonds.
  • Commitment: The Manager has committed to pay for all the Offer Costs.

An indicative timetable for the Offer is set out below:

*The Company has the right to close the bookbuild early with no notice

DJC will receive a fee of 1.25% plus GST on funds raised. For example, for an allocation of $10,000, DJC will receive $125 of which the Adviser will receive $62.50.

Please ensure you contact your Investment Adviser by 10.00am WST Friday, 21 June 2019 if you are interested in participating in the Offer.

CLICK HERE to read the PDS
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DJ Carmichael Pty Limited ACN 003 058 857 is a wholly owned subsidiary of DJ Carmichael Group Pty Limited ACN 114 921 247. DJ Carmichael Pty Limited is the holder of (Australian Financial Service Licence Number 232571). In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advises this email contains general financial advice only. In preparing this document DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its Directors, employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. DJ Carmichael Pty Limited, its Directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. The information contained herein relies on information obtained from third parties. DJ Carmichael Pty Limited believes that the advice herein is accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited.

The information contained has been prepared by third parties. No warranty of accuracy or reliability is given in relation to any advice or information contained in this document and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is given by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited.

This Research Report expresses the personal view of the Author. DJ Carmichael Pty Limited, including authors of this report, its directors and employees advise that at the time of publication they hold or may become entitled to securities of the issued capital of the company and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report.

The recommendation made in this report is valid for four weeks from the stated date of issue.  If in the event another report has been constructed and released on the company which is the subject of this report, the new recommendation supersedes this and therefore the recommendation in this report will become null and void.
Recommendation Definitions:

SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
ACCUMULATE - 10% or more out-performance, buy on share price weakness
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.

Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

To elect not to receive any further direct marketing communications from us, please reply to this email and type 'opt out ' in the subject line. Please allow five business days for the request to be processed.

© 2019 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.

DJ Carmichael Pty Limited Level 14, Parmelia House 191 St Georges Terrace Perth, WA 6000 Australia

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