ASX 200 falls another 24.3 points to 5142.3 on low volume listless trading. Broad based losses with no guidance from Asia as we count down the days until Easter. Asian markets similarly heading down with Japan down 0.36% and China down 0.5%. AUD 76.425 and US futures -21.
Another soggy day as overseas leads and terrorist attacks in Brussels are taking their toll on optimism pre the Easter break. Once again volumes were low as most investors sat on the fence and were happy to take some profits off the table in a broad based sell off. Asian markets coming on stream hardly moved the dial at all and we drifted for most of the day. Listless and lacklustre sums it up.
A tight trading range of 5163 to 5124.
Goldman Sachs was on the front foot today warning that our banks are looking at shrinking margins and JP Morgan was out telling short term traders that risks were increasing and to take money off the table.
The data shows the short positions in the banks has actually increased in recent weeks to 2% of the majors from 1.4% three months ago, despite theories that the recent bank rally has been driven by short covering.
There were few pockets of green with some retailers and results driving stocks but mainly a distinct red wash to proceedings.
ASX 200 Index & Aussie dollar charts – Today
STOCKS AND SECTORS
- Resources slipped away again as profit taking continues BHP -1.68%, RIO unchanged and Fortescue Metals (FMG) -4.36%, with Iluka Resources (ILU) -8.14% taking a pounding. The gold sector too was very weak despite some safe haven buying of bullion last night, with the Australian bullion price back to $1622 a far cry from $1750 a few weeks ago. Newcrest (NCM) -4.76%, St Barbara (SBM) -15.44% and Evolution Mining (EVN) -6.49% all suffering sizeable drops. The gold sector has been the star this year and has got ahead of itself a little and some falls were expected. St Barbara has been particularly savage. Incitec Pivot (IPL) +5.11% was a rare green box in a sea of red.
- Energy stocks weaker as crude prices dipped in Asia. Beach Energy (BPT) -3.57%, Origin Energy (ORG) -3.5% together with coal stocks Whitehaven (WHC) -6.29%.
- Financials suffered too today with National Bank (NAB) -1.98% the worst performer in the big four. Insurers too fell away with QBE Insurance (QBE) -1.47%.
- Industrials were mainly weaker with one or two bright spots. Wesfarmers (WES) +0.67% and Woolworths (WOW) +1.4% managed to buck the trend. With other defensive consumer related stocks also perking up, Treasury Wine Estates (TWE) +0.87% and Bellamy’s (BAL) +2.26% amongst the winners.
- Speculative stock of the Day: Red Chip (R3D) +189.47% after listing today. Red Chip is a global Investor Relations firm focused on small and mid-cap stocks with a digital media presence. The company raised $2.5m through 12.5m new shares. Their main product is Money Report delivered online to 60,000 investors.
- Woodside (WPL) -0.88% has decided not to proceed with its $40bn Browse FLNG project in conjunction with BP and Royal Dutch. WPL has cited the big fall in the oil price after it had completed its FEED study. The lease does not expire until 2020 so it may yet develop the project if prices rise substantially in the future. The company has shown a disciplined approach to its projects with Leviathan and the Browse shelved and the tilt at Oil Search pulled.
- Nufarm (NUF) -0.12% has swung to a $91m first-half loss from a $23.2m profit in the year-earlier period because of foreign exchange losses and one-off restructuring costs. The company said underlying EBITDA rose lifted 10% to $112.3m in the six months ended January 31, while underlying EBIT rose 12% to $71.2m. Revenue was flat at $1.19bn, compared with $1.18bn in the company’s previous first half.
- Telstra (TLS) -0.38% has decided that customers have had enough chances to download the entire Game of Thrones 26 seasons on their free data days and as a result have told customers they will be taken on a case by case basis for inconvenience and losses due to the most recent outage. Not a great look for the supposed most reliable network.
- Fonterra (FSF) unchanged after more than doubling its profits last year to NZ$409m following a move up the value chain by the company as global milk prices continue to fall. The Australian division though was the problem child with the gross margin falling 25% and a NZ9m profit unsatisfactory. EBIT loss was NZ$28m.
- Brickworks (BKW) +0.44% produced a good result today in a booming new house construction environment. EBIT rose 9.8% to $98.8m with its building arm showing a 24.9% rise to $32.6m. Including one off items the company made $76.9m, up 82% on last year. Commentary from the company was also positive, although they did highlight issues with meeting demand for the building materials sector.
- ANZ has joined the growing chorus of forecasters who are now championing no cut in RBA rates this year. In fact, as the economy is transitioning form mining to services they have gone so far as to say they will not cut in 2017 either.
- Once again the so called ‘Tobin Tax’ is back on the agenda in China with regulators still toying with the idea of taxing FX trading to curb speculative activity. Hardly a good sign for a reserve currency and shows they have still a little way to go to understand the free market concept.
- The People’s Bank of China raised its daily reference rate, which restricts onshore moves to 2% on either side, by 0.05 % to 6.4936. A Bloomberg replica of the CFETS RMB Index, which China uses to measure the yuan’s performance against 13 currencies, has fallen about 2.8% this year to 98.04.
EUROPE AND THE US
- All eyes will be on the tragic events in Brussels tonight and although financial markets have reacted with a numb acceptance we may see more reaction as things unfold.
- Once again Sterling (GBP) will be interesting given the upcoming ‘Brexit’ vote in under three months. Last night the pound had its worst day for some time. The UK Financial Policy Committee (FPC) is due to meet next week and Bank of England Head Mark Carney has said that the ‘Brexit’ is shaping up as a significant risk event and the ‘biggest risk to financial stability’.
- Seems we are not the only ones with a deficit problem. Actually the whole world has this issue but the UK plan to meet its deficit reduction targets has come unstuck just days after the budget.
- The Office for Budget Responsibility has revealed the government borrowed GBP7.1bn last month taking the Public Sector borrowing to GBP70.7bn for the year. Some economists have said that in order to make the targets they would need to only borrow GBP1.5bn in March. Highly unlikely and more revisions now coming.
- The road to surplus is paved with good intentions but they are unlikely to ever get there.
UK Budget predictions
SECTOR PERFORMANCE 52 WEEK HIGHS / LOWS