ASX 200 rises another 52.8 points to 5142.8 and BHP strong as iron ore stocks explode. Energy stocks firm with banks under an ASIC cloud but still positive. Asian markets see China up 0.27% and Tokyo down slightly. AUD holding above 74 cents at 74.07 and US Futures down 24.5 points.
A very solid start to the week as miners once again led us out. After a jump at the open we traded sideways to up for the rest of the day, nudging 5150 a couple of times before some profit taking lopped off the top.
Big miners built on their gains from Friday night in the UK and US and banks shrugged off moves from ASIC to investigate interest rate rigging.
There was a huge surge in iron ore stocks in the last hour with FMG going vertical as well as smaller iron ore stocks. Industrials were somewhat overshadowed by the huge moves in the oversold energy sector.
News from the Chinese People’s Congress of a commitment to growth of at least 6.5% seems to be the line in the sand, much like the Draghi ‘whatever it takes moment’.
ASX 200 Index Today Aussie Dollar Today US74.11c
STOCKS AND SECTORS
- Resources were the stand out. BHP +4.47%, RIO +3.5% and Fortescue Metals (FMG) +23.69% which has now doubled off its lows in mid-February. Extraordinary rises today in small iron ore stocks Atlas Iron +46.67%, Arrium (ARI) +33.33% and BC Iron (BCI) +52%.
- Base metal stocks too benefiting from high commodity prices with South32 (S32) +6.25%, Independence Group (IGO) +5.77% and Western Areas (WSA) +4.37% looking strong but Oz Minerals (OZL) -0.92% in profit taking mode.
- Energy stocks powered ahead as WTI continues to recover back towards the $40 level. Santos (STO) +1.54%, Origin Energy (ORG) +1.95%, Oil Search (OSH) +1.79% and small caps doing extremely well. Sundance Energy (SEA) +53.57%, AWE +8.82% and Beach Energy (BPT) +9.86%.
- Banks were in demand but not as much as expected with one of two negative reports from analysts about the potential liability from ASIC inquiries. National Bank (NAB) +2.25% was the best of the four as fund managers rallied too but again not the spectacular gains in the oversold resource sector. Macquarie Group (MQG) +1.57%, BT Investment Management (BTT) +1.28% and HFA Holdings (HFA) +2.58%
- Once again industrials looked like a patch work quilt with healthcare coming in for profit taking with Australian Pharma (API) -4.95%, Sirtex (SRX) -3.17% and Sonic Healthcare (SHL) -1.94%.
- Telcos going nowhere led by Telstra (TLS) unchanged and Vocus Communications (VOC) -2.32% coming in for profit taking.
- Builders and service companies looking a little better. Reece (REH) +2.62% and Cimic Group (CIM) +2.65% together with Seven Group (SVW) +4.5% all finding friends.
- Speculative stock of the day: Petrel Energy (PRL) +88.89% after releasing the half yearly accounts and recently raising funds at 2 cents a share.
- CSL +0.57%. The haemophilia B drug, Idelvion, will be available imminently in the key US market after the drug was approved by the US Food & Drug Administration. CSL has been developing its new, longer-acting, recombinant drugs for the blood clotting disorder for over a decade. In revenue terms, the global Haemophilia market is worth about $US10.5 billion ($14.1 billion), and the market has been shifting towards recombinant treatments and away from plasma-derived therapies.
- Australia and New Zealand Bank (ANZ) +1.84 is under court action from ASIC with regards to the alleged manipulation of the Bank Bill Swap Rate. It never rains but it pours though, as it looks like Maurice Blackburn is trying to instigate a class action into bank conduct and clients’ losses.
- ANZ has paid a $212,500 penalty for breaching the laws through its ‘ANZ Assured’ overdraft facility following a crackdown by the Australian Securities and Investments Commission.
- Tonight on Four Corners Commonwealth Bank (CBA) +1.52% will come under the spotlight after an investigation into its life and trauma insurance business concentrating on victims of heart attacks. The headlines will not be pretty and Ian Narev will have to wear a hair shirt for a few days but expect he will turn the PR tide and do the right thing, at least as far as the headlines are concerned.
- Seven West Media (SWM) +5.15% has signed a deal putting some of its exclusive content like MKR on the Google platform YouTube. While the initial content will be restricted to snippets and small clips, eventually it will add full length shows which are currently hosted on the Plu7 Streaming service.
- Bunnings who recently took over Homebase in the UK has sacked the entire management team. This could backfire for Wesfarmers (WES) +0.37% who until recently had been singing the praises of the CEO John Gillam and CFO Don Davis. WES completed the $700m acquisition last week.
- Spanish group Ferovial has upped its stake in target Broadspectrum (BRS) +0.41% to 2% although it has said it is not that interested in the company and is not looking at raising its current bid from 135 cents.
- APA -0.24% today launched a takeover bid for the The Ethane Pipeline Income Fund (EPX)+29.9% for 188 cents in cash. In addition, shareholders will retain the distribution declared for the quarter of 3.25 cents per share.
- A monthly survey by ANZ showed total job advertisements fell 1.2% to 154,748 per week on average in February, from January when they increased by 0.9%.
- Ads were still 8.2% higher on February last year.
- Internet ads dropped by 1.3% in February, while newspaper ads rose 6.9%. Newspaper ads have been in decline for years and account for only a fraction of the total.
- Hong Kong home sales are down 70% as the slowdown continues. In February, 1,807 homes were sold in Hong Kong, compared with 6,027 a year earlier. Home sales fell from 2,045 in January, the data show.
Here are some of the promises the authorities have made following the first weekend of the Chinese NPC.
- To target 2016 GDP growth of between 6.5 % and 7%.
- To target 2016 CPI around 3 %.
- To target 2016 M2 growth target around 13 %.
- Sees 2016 budget deficit at 3 % of GDP.
- To use various monetary policy tools to maintain reasonable liquidity.
- To continue to implement prudent monetary policy.
- To continue to implement proactive fiscal policy.
- Will keep renminbi exchange rate basically stable in 2016.
- Will continue to improve yuan exchange rate regime in 2016.
- To deepen reform of financial sector.
- To further liberalise interest rates.
- To deepen reform of state owned commercial banks.
- To reform stock and bond markets.
- To promote sound development of multi-level capital market.
- To crack down on unlawful activities in the securities and future markets.
- To ensure no systemic or regional financial risks arise.
- To keep urban registered jobless rate below 4.5 % in 2016.
- Will create 10 million new jobs in 2016.
- Will appropriately deal with zombie firms in 2016.
Meanwhile in Japan BOJ Governor Kuroda said the economic fundaments remain strong. Then why are interest rates negative and heading lower?
EUROPE AND THE US
Things are starting to turn nasty now in the US Presidential election with headlines on Bloomberg such as “Trump Tower Funded by Rich Chinese Who Invest Cash for Visas”. The establishment must be starting to get concerned about the rise of Trump. Expect some serious mudslinging and raking as we see Trump continue to do well in the polls. And it has only just begun.
Early Euro calls
Ahead in Europe
- FTSE -10.6 points.
- DAX -8.8 points.
- CAC +2.8 points.
- Volume was $7.897bn (Daily average $4.656bn financial year to date)
- Dow Jones Futures down 24.5 points.
- Dow Jones was up 63 points overnight.