Friday 3rd April – Australian Market Wrap

ASX quick out of the blocks this morning but from there it was one way traffic as it slid badly into the weekend. It closed down 87 points on its low of 5067 (-2.4%). Up a mere 4.6% for the week. Felt more. Dow futures off 320 points and oil in Asian giving up 5% of its gains. Profit taking ahead of US NFP and book squaring took over as nerves grow about the banking sector. Research from brokers forecasting large dividend cuts and/or capital raisings put the knife into the sector with the Big Bank Basket dropping to $107 with CBA down 1.8% and WBC down 2.9% after its new King talked dividends in the media. Elsewhere in financials, the reversal took its toll, MFG dropped 7.0% and MQG fell hard too down 4.3%. Miners though were better on higher commodity prices, BHP up 1.6% and FMG up 5.7%, although energy stocks failed to extend gains with STO up 0.5% and WPL up 0.4% as gains evaporated faster than handsanitiser at Coles. The healthcare sector fell led by by CSL down 1.3% as the flu vaccine appears in surgeries, even RMD lost 1.5% despite US measures to increase production. Consumer stocks on the nose, WES down 3.4%, TLS down 1.6%, COL down 1.1% and ALL down 3.8%. The All Tech Index dropped 1.7% led by APT down 3.0% and CPU down 0.4%. In corporate news, NXT returned from the capital raising bench and rose 0.22%, well off its high and FLT appears to be raising $500m to shore up its balance sheet. In economic news, we saw Feb retail sales and car sales. Retail was so bush fire recovery and though car sales dropping off a cliff. Oh what a feeling. The 10 year yield was steady at 0.75% and the AUD at 60.65c. Asian markets fell with Japan down 0.68% and China down 0.27% as Wuhan looks to another lockdown perhaps.

  • ASX 200 down 87 to 5167. Happy Birthday ASX 200. 20 years old.
  • High 5247 Low 5022. Volume not bad at all.
  • Dow futures down 320 points.
  • Big Bank Basket $107.03
  • Crude futures down 5.6% in Asia.
  • 10-year bond yields steady at 0.75%
  • AUD falls to 60.65c.
  • Aussie gold rises to $2658
  • Bitcoin drifts higher to US$6785
  • Asian markets mixed with China up 0.28% and Japan down 0.28%

STOCKS                                               

  • PPH +9.38% thoughts and prayers.
  • Z1P +6.56% finds friends.
  • OSH +4.60% hangs in despite oil falls.
  • CTD -8.99% travel stuffed.
  • MSB -7.88% profit taking.
  • AMP -9.02% not this dogs day afternoon.
  • NEC -7.11% profit taking.
  • AEI +23.53% capital raising at 43c.
  • SLC +15.18% reaffirms guidance.
  • LEG +11.11% good drill results.
  • FLT – suspended raising $500m at 720c.
  • BGL +14.29% becoming a substantial shareholder.
  • APE -12.47% car sales dive.
  • XRO -0.18% defensive buy says MS.
  • Speculative stock of the day:Skin Elements (SKN) +89.47% binding agreement with Hollista Colltech (HCT) to launch all natural skin frekndly sanitiser. Will cost $100 for a small container no doubt.
  • Biggest Rises: ZIM, PPH, Z1P, FMG, IFT, OPT and NWH.
  • Biggest Falls:APE, SKC, DOW, BAP, AMP, CTD and ALX.

TODAY

  • Nanosonics (NAN) –6.00% underlying sales for Q3 FY20 were significantly up on the previous corresponding period. At the moment, sales of consumables are in line with the company’s pre-COVID-19 expectations. Understandably, direct access to hospitals is now becoming more limited which may extend the timeline of planned adoption of trophon by some hospital departments. The net impact on revenue and profit for Q4 / FY20 is uncertain at this stage.
  • CBA (CBA) –1.85%CEO Matt Comyn and Chairman of the Australian Banking Association has told newswires that Australian banks are in a strong enough position to continue to pay dividends. This follows the RBNZ who told NZ banks to cut dividends to conserve capital. He added that it was too early to assess whether or not the COVID-19 impact would necessitate higher provisioning to account for a spike in bad debts.
  • Westpac (WBC) –2.94% There are reports WBC may consider pausing dividend payments in May. CEO Peter King told the ABC’s National radio the bank would look at the balance sheet while noting that a number of self-funded retirees live on dividends.
  • Treasury Wine Estates (TWE) +4.71% served with a class action in the Supreme Court of Victoria, following claims the business breached continuous disclosure obligations between February 14 and January 28.
  • Harvey Norman (HVN) +1.81% cancels its interim 12c dividend due to uncertainty regarding the outbreak and its potential impact on trading. This will result in $149.5m of cash being retained in the business.
  • SKYCITY Entertainment Group (SKC) -11.75% To cut capital expenditure by $15m. All capital development projects in NZ have been put “on hold”, except for the NZICC and Horizon Hotel project. SKC will also eliminate all non-essential costs for the remainder of FY20. The plan will impact around 900 people and generate labour savings of close to $50m per annum.
  • Southern Cross Media Group (SXL) – Newswires this morning speculate that SXL will go to the market for a small equity raise and look to negotiate with lenders after turning back PE approaches.
  • Crown Resorts (CWN) -3.73% to defer the payment date of its interim dividend from April 3 to April 17. Subject to further deferral if necessary while CWN finalises financing arrangements. The board has also determined that the interim dividend will be unfranked.
  • Macmahon Holdings (MAH) – At this stage, MAC has not seen a material impact on the company’s financial performance or on the assumptions which underpin its FY20 guidance. To delay some of its previously planned capex spending and implement other cash preservation measures to ensure it retains an appropriate liquidity buffer for current conditions.
  • Superloop (SLC) +15.18% Business is currently tracking within guidance. Impacts so far mostly noticed in two main areas being a reduction in Guest WiFi services and an increase in wholesale IP transit and longer-term international capacity leases.
  • Hansen Technologies (HSN) –2.82% Doesn’t expect recurring revenues to be significantly affected by COVID-19. Notes significant funding available to assist with cash flow requirements. Has performed as expected for H2 of FY20. Given the uncertainty surrounding the potential effects of COVID-19, considers it prudent to withdraw formal earnings guidance for FY20.
  • Polynovo (PNV) – in trading halt pending announcement on clinical trial results, trading update and funding.
  • Afterpay (APT) -2.98% enters into an agreement with eBay to offer payment flexibility for online shopping in Australia. The partnership gives eBay’s 40,000 Australian small and medium-sized businesses access to Afterpay.
  • Flight Centre (FLT) – Is reportedly looking to raise $500m. The company is supposedly speaking to a number of fund managers and looking for early support for the raising which is speculated to be priced at 720c per share. FLT last traded at 991c and started the year above 4000c.

ECONOMIC and CV19 NEWS

ABS has reported:

  • Australian retail turnover rose 0.5% in February 2020, seasonally adjusted. There were rises for food retailing (0.8 %), department stores (3.1 %), household goods retailing (0.7 %), cafes, restaurants and takeaway food services (0.2 %), and other retailing (0.2 %). These rises were partially offset by a fall in clothing, footwear and personal accessory retailing (-2.9 %).

  • Due to the impacts of COVID-19 on retail trade, the trend series has been suspended from February 2020.
  • The seasonally adjusted estimate rose 0.5% in February 2020. This follows a fall of 0.3% in January 2020, and a fall of 0.6% in December 2019. The following industries rose in seasonally adjusted terms in February 2020: Food retailing (0.8%), Department stores (3.1%), Household goods retailing (0.7%), Cafes, restaurants and takeaway food services (0.2%), and Other retailing (0.2%). Clothing, footwear and personal accessory retailing (-2.9%) fell in seasonally adjusted terms in February 2020.
  • New car sales have recorded a 17.9% fall in the number of new vehicles sold in March, with 17,752 fewer vehicles sold in Australia compared with the same month last year. The sales slump was biggest in South Australia which experienced a 27.9% fall. The biggest selling vehicle in Australia continues to be the Toyoya Hi-Lux ute, a favourite of trades people, but even it suffered a 21.5%slide in sales to 3,556.

  • The new coronavirus has now infected 1m people globally. More than 51,000 have died and 208,000 recovered.
  • Cost now estimated at US$4.1 trillion globally. 5% of global GDP.

BONDS

ASIAN NEWS

  • More cuts to Cathay as it will now fly just two times a week to four long-haul destinations, London, Vancouver, Los Angeles and Sydney, and hopes to maintain three weekly services to eight regional destinations, including Tokyo, New Delhi and Singapore.
  • China reported 60 additional asymptomatic cases for April 2.
  • Starbucks rival in China collapses after news of accounting discrepancies. Luckin Coffee down 81% after reports of 2.2 billion yuan of fabricated coffee sales.

EUROPEAN AND US NEWS

  • Euro futures point to a weaker opening.
  • Apple told staff that its retail stores in the U.S. will remain closed and work-from-home procedures will stay in place until early May due to the CV19 pandemic.
  • Boeing continues to shrink operations and hopes that thousands of workers will retire or accept a buyout to leave.
  • Trump has attacked 3M over some problems with protective mask production.
  • US Non Farm payrolls tonight. Will be awful. Payrolls are forecast to decline in March for the first time since 2010.

  • UK screening and tests has been woeful. 12,000 a day and only people that are sick. Germany does 50,000 tests day. UK target is now 100,000 a day by end of April. Dreaming.

And finally….

What do you call 30 people standing around together

 

Four Weddings and a funeral.

Clarence

XXX

mt_tryforfree

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