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What happened today?

The ASX 200 closed up 2.5 points. No fireworks today. Consolidating gains.

  • A quieter day today with consolidation the name of the game. Good to see the ASX200 push through the 5700 level, although it failed to hold there. I guess the question is where to from here? Looks like the Greek question is still a little up in the air, as the Greek PM still has some work to do convincing the Troika he is serious…and the Party that he hasn’t sold them down the Cephissus. End of year window dressing may keep us bubbling along but it is starting to look a little tired. Provided we can get a solution this week the markets will be happy to cross that one off the risk list.
  • Stocks are poised for the biggest quarterly loss in three years at around 2.6%, while government bonds also dropped around 3% more than any quarter since June 2009.

  • In M&A activity, Programmed Maintenance (PRG) +1.07% finally got their man with the takeover of Skilled Services (SKE) +7.12% signed, sealed and delivered. They upped the offer to 0.55 of its shares plus 25c cash for every Skilled share, valuing Skilled shares at A$1.79 each based on Programmed’s latest closing price.
  • Once again the big four led the way with rises around 1%. We are enjoying the ride having increased our weighting to the sector on June 11, just before a nearly 8-10% run for some of them.
  • Resource stocks were also slightly better today as metal prices increased overnight with copper and nickel leading the charge. As a result Oz Minerals (OZL) +1.58% turned in a better performance as did unloved divorcee South32 (S32) +2.37%.
  • In big industrials, Telstra (TLS) + 0.96%, Amcor (AMC) + 1.32% and CSL +0.51% had good days but Woolworths (WOW) -0.56% continued to churn as didWesfarmers (WES) – 0.07%
  • The Killing Season continues for recent Blue Chips gone bad, Flight Centre (FLT) -8.80% and IOOF (IFL) -3.8% as analysts’ downgrades and independent reviews hit the stocks again.
  • Slater & Gordon (SGH) -5.55% failed to dispel pessimism after its investor day today, slipping again before announcing to the market that neither Pitcher Partners (its auditors) or indeed Slater & Gordon itself had received any targeted enquires from ASIC regarding its accounting practices.
  • News today that Jeff Kennett has joined the board of Seven West Media (SWM) –5.75% was greeted with a resounding vote of confidence. Not. The list of disappointing corporate outcomes whilst politicians have been directors is a long and illustrious one. Internet guru Michael Malone, formerly of iiNet, will also join as will Tim Worner and Sheila McGregor. Hopefully that is better sign of things to come.
  • Also making news today was Myer (MYR), which announced a $600m refinancing which may alleviate the need for an equity raising at these depressed prices. While we are talking Myer, it is interesting to chart the performance of Mark McInnes (ex DJs) and Solly Lews’ (retail genius) vehicle Premier Investments and Bernie Brookes at Myer.

Pretty damming really on the performance of Myers v Premier Investments

  • As the predators circle for a2 Milk (ATM) -2.86% another food company Sunrice, Australia’s last grain export monopoly, has posted a 46.8% profit surge, beating its 2015 forecasts, as it shifts to more value-added products. Net profit for the 12 months to April 30 jumped to $49.2m, while consolidated revenue leapt 8.3% to $1.25bn. Unfortunately this one is not listed on the ASX but the National Stock Exchange – although they have been eyeing an ASX listing for a while.
  • Both Talisman (TLM) +9.64% and Sandfire Resources (SFR) +2.86% have gone into a trading halt pending an announcement which leads us to believe that they have further significant results from their joint Springfield project. Talisman recently reported some stunning results from its nearby DeGrussa like exploration with around 14m massive sulphides encountered.
  • Asian markets were again strong and the huge volatility of yesterday in China was nowhere to be seen today. Japan’s Nikkei rocketed to the highest level since 1996, showing gains of around 20% since the start of the year thanks to signs of a pickup in economic growth, earnings optimism and hopes Greece will avoid a debt default.
  • Fresh from its $6bn fine successes in the currency markets, the US Justice Department is now turning its sights on the $12.7 Trillion Treasuries market.
  • And finally a sobering thought from the good people at Macropolis. They showed that of the €226.7 billion euros disbursed to Greece since the first Greek bailout, an equivalent to almost 125% of Greece 2014 GDP, “the combined allocation to the Greek state’s operating needs was just 11 percent of the total funding, at circa 27 billion Euros.” Most of it has gone back in interest repayments and recapitalising the banks!

Clarence

XXX

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