ASX200, Australian Sharemarket, Ben Bernanke, BHP, bluescope, brambles, cba, Charlie aitken, commonwealth bank, CPU, crash 2016, diggers and dealers, dow jones, Fortescue mining, ides of march, Interest Rates, iron ore, Mario Draghi
ASX 200 rises 48.4 points to close at 5001.2. On stronger results and positive Asian markets. Brambles knocks the lights out with materials also performing well especially Fortescue Mining. Japan up 1.12%, China up 2% and US Futures up 88. AUD doing well too at 71.744.
A positive start to the week although somewhat tentative at the open. Confidence increased as Asian came online with a positive reaction in China to news that the regulator has been replaced. Corporate results were once again the focus as Brambles (BXB) +8.5%, NIB Holdings (NHF) +7.32% and Bluescope (BSL) +1.64% set the scene. So far results have been generally positive and has helped support the market. We breached 5000 sooner than I thought but are struggling to hold the gains. The big factor will be the BHP numbers tomorrow. If the market breathes a sigh of relief, then the market will kick on possibly to 5100. We are in the last week of reporting and traditional companies save the worst until last, so it may not get over the line.
ASX 200 Index Today Aussie Dollar Today US71.74c
Once again materials and industrials showing a clean pair of heels. Energy too tried its best to add to the green and it was really only healthcare and telecoms that were slightly out of favour.
Expect them to cut and paste from the RIO play book and the stock will breathe a sigh of relief on Samarco perhaps. Cost cutting and capex to be the corporate focus to deliver some growth options.
Stocks and Sectors
- Resources had another good day led by the iron ore sector. BHP +3.43%, RIO +3.21% and Fortescue Mining (FMG) +9.05% doing very well as the iron ore price increased overnight. The green spilled over into base metals with Western Areas (WSA) +5.94%, South32 (S32) +0.42% and Sandfire Resources (SFR) +1.33%. Gold stocks eased as bullion slipped slightly. Silver Lake (SLR) -8.96%, Oceanagold Corp (OGC) -11.3%, Evolution Mining (EVN) -3.3%.
- Energy stocks were mixed Woodside (WPL) -1.35%, Origin Energy (ORG) +3.41%, Oil Search (OSH) +1.68% and services to the oil industry company Worley Parsons (WOR) +7.01%.
- Financials were mildly positive with the banks scrapping out gains except Australia and New Zealand Bank (ANZ) -0.34% as news that Phil Chronican joining National Bank (NAB)+0.16%. Insurers were better with Suncorp (SUN) +1.57%, IAG +2.78%, QBE Insurance -1.96% and AMP +1.65%. Wealth managers continued to recover their losses with Macquarie Group (MQG)+2.27%, Henderson Group (HGG) +1.72% and BT Investment (BTT) +0.76%.
- Industrials were dominated by the results from Brambles (BXB) +8.5% and the updated guidance. Telcos were ignored at best and sold at worst. The question marks remain over the Asian growth strategy from Telstra (TLS) -0% together with increase competition at home weighing. Vodafone customers’ numbers coming in at 5.44m up from 5.30 a year ago are a symptom of the changing world. It is all about data.
- Healthcare stocks slipped with Sonic Healthcare (SHL) -4.17%, Ansell (ANN) -3.13% and Healthscope (HSO) -1.75%
- Speculative stock of the day: NRW Holdings (NWH) +48.48% following the contract announcement of the WA deal they have built on the gains with a positive earnings result and a debt restructuring.
- Corporate casualty Arrium (ARI) +46.67% was thrown a lifeline today with GSO Capital extending a US$960m funding package to the company. Whether this will be enough to save the company with its struggling Whyalla Plant and its loss making iron ore business remains to be seen. The company will raise a $262m rights issue at basically nothing which will be underwritten by GSO. It does look suspiciously like a quasi-takeover of the company by GSO, who are part of Blackrock. Complicated deal including a warrant over 15% of the company and two board seats. Bottom of the cycle?
- A solid set of numbers from NIB (NHF) +7.32%, Traction in New Zealand and a recovery of momentum in the domestic market helped both earnings and investor sentiment, but a key focus for analysts was a loss-making contract for inbound Saudi students which NIB said it is discontinuing from March. This contract underpinned an 85% lift in international inbound health insurance revenues to $41.5 million in the half but the underlying operating profit of this division fell a heavy 31 per cent to just $5.4 million, which it blamed on Saudi claims experience.
- Bluescope Steel (BSL) +1.64% doubled their interim profit at $200.1m with a positive asset revaluation and the sale of the McDonald’s lime business. Revenue rose 2% to $4.43bn on stronger sales in China. An unchanged dividend of 3 cents as CEO Paul O Malley’s cost cutting initiatives appear to be paying off. At least for now.
- Brambles (BXB) +8.5% announces a 2% increase in profits too US290.0m. Strong business wins in its pallet division coupled with a stronger outlook statement helped lift the stock dramatically today. Guidance is now for a 6-8% increase for the full year with the dividend raised to 14.5 cents from 14 cents. The company is also pushing into big data setting up a company called BXB Digital in Silicon Valley. Just what the market wanted to hear.
- Data#3 (DTL) +1.81% Data #3 said net profit for the first half rose 19.2 per cent to $4.3 million, on revenue of $457.5 million, up 12.6 per cent on a year ago. Gross profit jumped 9.6 per cent to $68.4 million. The business technology solutions provider will pay a half year fully-franked dividend of 2.5c a share, up 19 per cent on a year ago. The payout to shareholders will be made on March 31.
- AP Outdoor (APO) +2.63% said it swung to a full-year statutory net profit of $41 million from the year-earlier loss of $12.2 million. Revenue climbed 20 per cent to $300.8 million from $250.6 million. During the year, APN said it cut its net debt by $18.6 million to $57.5 million. The outdoor advertising company said it would pay a fully franked final dividend of 15.5c, ‘well ahead of its prospectus forecast of 10c’.
- G8 Education (GEM) -3.23% full year profit rose to $88.58m a rise of 68% with post tax ROE at 14.5%. There still seem come concerns about their debt and ability to continue to grow but the yield is now around 7.7% fully franked which should support the share prices although with the May budget looming and potential changes to child care on the agenda that may weigh on the share price.
- OOhmedia (OML) +2.95% said its full-year statutory net profit rose 58 per cent to $56.59 million from $35.9 million in the year earlier. Revenue rose 7 per cent to $279.81 million from $261.3 million. The outdoor advertising display company said it would pay a fully franked final dividend of 6.7c.
- Westpac (WBC) +1.07% has shown its pricing power again as it has raised its business interest rates out of cycle. bill margin, which are commonly used by commercial customers, will increase by 0.23 percentage points. Rates on various other types of business loans that are often used by smaller businesses, including overdrafts, will lift by 0.19 percentage points.
- Ripples from the real estate economists, there’s a business, with a US researcher now predicting a 50% drop in property prices. The group Variant Perception has written of a fall of 30-50% similar to what occurred in Ireland or Spain. These guys are so wide of the mark that it is not funny. Good click bait for a property mad public willing to click on any news of rises and falls in house prices.
- HSBC announced a US$858m loss in the last quarter compared with a US$1.95bn last quarter.
- Chinese stocks have rallied as the stock market regulator has been replaced. Xiao Gang has been removed from the post with Liu Shiyu taking his place with the poisoned chalice. Any market move will be now blamed squarely at his feet.
- Macquarie Group has raised $2.3bn 50% more than its target for its new Asian infrastructure fund. Nobody does it better. Makes me feel sad for the rest.
Europe and US
- News that Boris Johnson, or BoJo, had thrown his weight behind the UK leaving the EU campaign will have some effect on sentiment in the UK. The currency will be the biggest loser as the chances of the UK saying ‘No’ to Europe seem to be on the rise. In the end apathy and fear of change will win out but not before some anxious moments before the June 23 referendum.
- US Fed will raise the bar in the bank stress tests.
Ahead in Europe
- FTSE +42.50 points.
- DAX -94 points.
- CAC -16 points.