0302 GMT - Global and Australian shares could experience a correction or a potentially more volatile, constrained trajectory than seen so far this year, says AMP chief economist Shane Oliver. In a note, he says that the key threats are Iran's attack on Israel, which risks escalating the war in the Middle East, oil-supply threats and higher inflation delaying rate cuts. "The combination of stretched valuations, high levels of investor optimism and technically overbought conditions leave shares potentially vulnerable to a further pull back," says Oliver. "Geopolitical risks including events in the Middle East, delays to rate cuts and recession risks could provide a trigger." (alice.uribe@wsj.com)

0255 GMT - Australian general-insurance customers have been taking on higher excess as one way of addressing affordability concerns, Macquarie analysts say in a note. The investment bank says its survey finds that home-insurance excesses have increased more than personal motor excesses last year--10% versus 6.7%, respectively. For both home and personal motor insurance, new-business excesses are being increased more than on renewal business, says Macquarie, adding that "changes in excesses will be worth following for the coming around 12 months as a natural headwind for gross written premium growth." Still, Macquarie keeps its positive outlook on the Australian insurance sector.(alice.uribe@wsj.com)

0223 GMT - Recent buying of Australian banks' stocks have likely been led by overseas institutional investors, potentially on the back of a weaker China outlook driving fund inflows into Australia, say Macquarie analysts in a note. Though domestic institutional investors also remained net buyers of banks in the March quarter, Macquarie points out that it was more "discriminate than in the previous quarter as investors switched from CBA into other major banks." Westpac was rewarded by investors after a better than expected 1Q FY 2024 trading update. Macquarie says retail investors remained net sellers in the March quarter. "Investors reduced short positioning across all the major banks, with the exception of Bank of Queensland, where investors lifted short interest," Macquarie adds. (alice.uribe@wsj.com)

0140 GMT - Bank of Queensland is likely to report a drop in profitability in 1H FY 2024, says Citi analyst Brendan Sproules in a note. The investment bank has a 1H cash earnings forecast of A$161.4 million, in-line with consensus, but around 37% lower than the previous corresponding period, Citi says. "The sharp drop in profitability over the past 12 months, primarily driven by falling net interest margin, is set to drive another dividend per share reset," says Citi. It expects 1H DPS to fall to A$0.17 from A$0.20 in 1H FY 2023. Still, FY 2024 may be a trough for both earnings and dividends, as current NIM decline starts to wane, potentially stay broadly flat and BOQ's expected productivity benefits start to emerge, Citi adds. (alice.uribe@wsj.com)

0117 GMT - Domino's Pizza is facing external headwinds, including geopolitical risks, along with the challenge to rebuild its business spanning France, Japan and Taiwan, says UBS analyst Shaun Cousins in a note. Japan in particular has "too many immature stores," reckons UBS. While Domino's says its staying the course in that country, UBS sees that growth is likely to remain limited for longer. The investment bank keeps its forecasts for FY 2024-FY 2025 earnings per share unchanged but cuts its expectations for FY 2026-FY 2027 by 2.5% and 2.8%, respectively due partly to lower store growth. UBS keeps its neutral call. (alice.uribe@wsj.com)

0046 GMT - Star Entertainment gets a new bear in Jefferies as the Australian casino operator continues to lose market share and risks remain around its regulatory and governance regime. In a note, analyst Simon Thackray says there is concern about how a new inquiry in New South Wales state might play out, with the potential for Star to lose its casino license. Jefferies downgrades Star to underperform from hold and lowers its price target by 8.5% to A$0.43/share. Its EBIT forecasts fall 7%-11% in FY 2024-FY 2026. "The valuation of casino assets argument becomes more difficult under a new regulatory regime, and concerns on governance and regulatory change will weigh on the share price in our view," Jefferies says. Star is last down 9.3% at A$0.44. (david.winning@wsj.com; @dwinningWSJ)

0031 GMT - After Xero's February investor day, UBS now expects slightly higher average revenue per user growth over the next five years. The investment bank's analyst, Lucy Huang, also sees scope for or further upside to its 6.5% group ARPU compound annual growth rate estimate. In a preview of Xero's upcoming 2H FY 2024 earnings, UBS expects the company to report revenue of A$907 million, earnings before interest, taxes, depreciation, and amortization of A$284 million and net profit after tax of A$161 million. The investment bank reiterates its buy call on the stock and raises its target price 1.9% to A$141.90. Xero rises 1.3% to A$118.30. (alice.uribe@wsj.com)

0028 GMT - Australian buy-now-pay-later operator Zip's 3Q update beats many analysts' expectations, reigniting a share-price rally that had been in danger of stalling. Zip rises 1.5% to A$1.35 in early trading, after reporting 3Q underlying cash Ebitda of A$20.1 million, roughly double what Ord Minnett had forecast. In a note, analyst Phillip Chippindale highlights Zip's U.S. business where net bad debts performed strongly and the net transaction margin reached 3.9% in 3Q. "We would expect consensus revenue and earnings forecasts to be improved on the back of today's quarterly update," he says. Ord Minnett rates Zip at buy. (david.winning@wsj.com; @dwinningWSJ)

0002 GMT - Australian banks look to be on track to deliver on their 1H FY 2024 earnings expectations, says UBS analyst John Storey in a note. Lenders are due to begin reporting their earnings this week, with Bank of Queensland the first to report. BOQ has been a relative stock underperformer in the sector, Storey says. UBS says 2H FY 2023 was difficult for banks with intense competition eroding margins, but 1Q FY 2024 updates were more positive. The investment bank reckons this makes it more likely they will meet 1H expectations, partly driven by non-net interest income.(alice.uribe@wsj.com)

2308 GMT - Citi raises its price target on BlueScope Steel by 9.9%, to A$24.50/share, but retains a neutral call given a big lift in its earnings is unlikely to happen before FY 2027. The bank also concludes that BlueScope's stock isn't cheaper than rivals in the U.S. steel industry, which trade at 8x Ebitda but generate a higher return on invested capital. "For BlueScope to rerate to similar U.S. steel peer Ebitda multiples, we would need to see an incremental improvement in ROIC," analyst Paul McTaggart says in a note. "Unfortunately for the bulls, even in FY 2027 our BlueScope ROIC forecast is only 10%." So, McTaggart says it would be hard to justify an enterprise value-to-Ebitda multiple above 6x. BlueScope ended Monday at A$23.80. (david.winning@wsj.com; @dwinningWSJ)

0741 GMT - Iran's attack on Israel will be a key focal point this week, but barring unforeseen escalation, market focus will likely turn back to economic indicators and earnings, says Maybank Investment Banking Group's Tareck Horchani. "Hesitation seen from the U.S. and other allies to support a retaliatory strike by Israel could lead to a perceived isolation for the country, which might dampen immediate geopolitical escalation concerns," he tells Dow Jones Newswires. Corporate results will be key in setting the market tone, with big names like Netflix and P&G to report as earnings season starts. Good outcomes would buoy confidence and steer focus away from geopolitical tensions and back toward corporate health and economic recovery, says Horchani, head of dealing, prime brokerage at Maybank. (fabiana.negrinochoa@wsj.com)

(END) Dow Jones Newswires

April 16, 2024 01:01 ET (05:01 GMT)