ASX 200 down 7.1 points to 5150 as we gear up for the ECB meeting tonight (rarely a negative). Banks and energy stocks up slightly in low volume. Asian markets mixed with China down 0.95% and Japan up 1.31%. RBNZ cuts rates by 25bps. AUD knocking on 75 cents. US futures up 19.
‘Rien ne va plus’ – No more bets please…the ECB is about to speak.
A much quieter day with moves far more muted than previous days as players were happy to sit on the sidelines before the ECB meeting tonight. After a string of $7bn plus days it was back to more normal trading conditions. Some consolidation has been inevitable with a very mixed scoreboard today. After an early burst of enthusiasm following the surprise RBNZ rate cut the market fell then rallied after Chinese inflation numbers only to slip back ahead of ECB tonight – narrow trading range of 27 points on the ASX 200. Energy stocks were up but off their highs. Modest rises in banks with REITS very firm again.
Stocks and Sectors
- Resources were mostly up with RIO +0.97%, Fortescue Metals unchanged while BHP was down 16c after going ex-dividend 22 cents this morning.
- Gold stocks slid with Evolution Mining (EVN) -4.46% and Oceana Gold Corp (OGC) -2.83%, St Barbara (SBM) +2.8%.
- Base metal stocks were mixed – South32 (S32) -1.57% finally gave back some gains as Oz Minerals (OZL) +2.53% and Syrah Resources (SYR) +4.38%
- Energy stocks in demand although off their highs. Oil Search (OSH) +1.38%, Santos (STO) +1.06%, Senex Energy (SXY) +4.35% and Origin Energy (ORG) +1.2%.
- Financials another sector modestly higher – Australia and New Zealand Bank (ANZ) +0.04% continue to ignore the possible effects of the ASIC inquiry into rate fixing. The rest of the big four were little changed.
- REIT’s held firm again. Westfield Corp (WFD) +1.11%, Dexus Property (DXS) +1.68% and Stockland (SGP) +0.94%.
- QBE Insurance (QBE) -4.04% after going ex-dividend 30 cents
- Industrials were mixed – Wesfarmers (WES) -0.63% and Woolworths (WOW) -0.9% though Blackmores (BKL) +1.54% and Bellamy’s (BAL) +3.3%, Domino’s Pizza (DMP) +2.31% and Flight Centre (FLT) +1.21% though Flexigroup (FXL) -4.55%.
- Telecoms were firm as the gains in Telstra (TLS) +0.58% continue after going ex-dividend at the beginning of the month.
- Healthcare stocks were hit today with Ramsay Health Care (RHC) -3.55% leading the sector down on talk of changes to the French health care environment. Seems that as government budgets run into trouble they are looking to cut health care costs and rebates to providers.
- Speculative stock of the Day: Altura Mining (AJM) +40% following a bullish research report from boutique research house Beer & Co.
- Surfstitch (SRF) +10.97% surprised the market today with news that CEO and founder Justin Cameron has stepped down as he discusses taking the company private in conjunction with Private Equity. Seems like a conflict of interest just weeks after downgrading the company forecasts.
- Lynas (LYC) -6.17% – continued weak cash flows continue to plague the company reflecting low rare earth pricing still. Total loss attributable to shareholders was $123m compared with $142.2m in the previous year.
- More than 500 workers at Clive Palmer’s Nickel refinery will be out of work from tomorrow evening following Palmer buying the plant off the administrators.
- Wesfarmers (WES) -0.63%.The ACCC has announced it won’t stand in the way of Coles buying a number of Supabarn supermarkets in the ACT and Sydney. Coles had initially proposed buying nine Supabarn stores, but presented an amended plan to the Australian Competition and Consumer Commission on February 29, downsizing their acquisition to only five stores.
- The Reserve Bank of New Zealand governor Graeme Wheeler said the board had opted for the surprise cut, to 2.25%, because of the worsening outlook for global growth, particularly in China, and Europe. Softening inflation expectations, a problem across the world, and a relatively strong local dollar had also forced the bank’s hand, he said. The RBNZ also left the possibility for further cuts if things deteriorated further.
- ANZ in NZ have only passed on 10bps of the rate cut to mortgage holders once again showing how the game has changed for central banks.
- The Kiwi dollar dropped 2 cents immediately to 66.5 cents and continued to drift off.
- In China food prices rose 7.3% as total consumer price inflation rose 2.3%. Producer prices fell 4.9% extending the declines to 48 months.
Europe and the US
- All eyes on ‘Super Mario’ tonight as he tries to land a killer blow against stagflation and low growth in Europe. More negative rates to come but is that going to be enough – he may have to go ‘Full Kuroda’ and cut deposit rates again and incur the wrath of the banks. Expect a cut of at least 10 bps for the deposit rate.
- As we head into the ‘Brexit’ vote, it is interesting to reflect on the ‘Braveheart’ vote in Scotland. Of course the Scots unsurprisingly voted to stay in the UK which seems just as well given they have run up a budget deficit of GBP15bn around twice that of the UK. 9.7% of GDP compared to the UK at 4.9% of GDP. The second highest in record. Just as well they did not go it alone. The oil price is hurting.
Ahead in Europe
- FTSE -3.7 points.
- DAX +1.8 points.
- CAC -2.2 points.
- Volume was $5.60bn (Daily average $4.656bn financial year to date)
- Dow Jones Futures up 15 points.
- Dow Jones was up 36 points overnight.