ASX 200 closes slightly positive up 5.8 at 5010 as banks once again throw in the towel after a solid 50-point bounce. Industrials and golds stocks star in quiet trading conditions. Japan slips 0.8%, China rises 1.36% and AUD back above 76 cents at 76.2c. US Futures up 8 points.
Another disappointing day given the ‘sugar shot’ from Janet Yellen last night and stronger overseas leads. After a leap at the opening to hit 5058 we collapsed into a sea of indifference and apathy with the banks wilting under the pressure again. The range for the day was 5058 to 4989 with lows in the early afternoon. The only saving grace was that volume remained on the low side at $4bn as investors struggled after the Easter break. That and the ASX 200 managed to bounce off the 5000 level after turning negative at one point.
Once again the four bank stocks hold the key to the headline number and we prosper or fail on the back of the sentiment. The jury seems to out on the sector with analysts divided on the prospects for dividends and bad debt prospects. We will get no clarity until we see the figures in a months’ time. Expect the rhetoric from the banks to ramp up in the meantime with soothing words but some softening up on the outlook also creeping in.
Last night’s change in tone from the Fed has been welcomed by global markets and the AUD has strengthened as the US dollar fell away. AUD back up to 76.215.
ASX 200 Index & Aussie dollar charts – Today
Stocks and Sectors
- Resources were mixed in the big miners, BHP -0.54%, RIO -0.36% and Fortescue Metals (FMG) +1.18% bucking the trend. South 32 (S32) -2.05% and Sims Metal (SGM) -3.47% slid away as did Sandfire Resources (SFR) -1.55% and Metals X (MLX) -2.6%
- Gold stocks were a stand out on the lower USD feeding into a higher gold price. In AUD terms though it is still hovering around $1620. That did not stop the punters piling into Newcrest (NCM) +2.88%, Evolution Mining (EVN) +4.38%,Regis Resources (RRL) +4.62% and St Barbara (SBM)+8.09%.
- Energy stocks lost out today as the falling oil price weighed. Woodside (WPL) -2.55%, Caltex Australia (CTX) -2.9% and Santos (STO) 0%. Stand out in the sector was Senex (SXY) +7.41% as they appear open to corporate M&A activity.
- Banks and financials once again the bears were in charge as good solid early gains evaporated like Canberra mist. Australia and New Zealand Bank (ANZ) -0.39% continue to be the focal point of selling with Bank of Queensland (BOQ) -1.84% also hit on its resource exposure through housing. This week Commonwealth Bank (CBA) +0.26% will be paying out $3.4bn in dividends to loyal shareholders. Much of this money will end up back in the stock itself.
- Industrials were mixed Healthcare were better led by a recovery in CSL +1.82%, Sirtex Medical (SRX)+4.56% and Cochlear (COH) +1.55%. Retailers were better, JB HiFi (JBH) +1.17%, Adairs (ADH)+5.33% and Harvey Norman (HVN) +1.51%. Clean and Green horror story Select Harvest (SHV)-8.66% continued their shocking run whilst A2Milk (A2M) +2.41%, Blackmores (BKL) +0.57% and Dongfang Modern Agri (DFM) +7.14% after replying to a speeding ticket from the ASX.
- Speculative stock of the day: West African Resources (WAF)+30% after returning a RC drill result of 534g/t gold from their M1 south project in Burkina Faso.
- Virgin Australia (VAH) -9.33% after remerging from a trading halt following news that Air NZ is keen to dump its stake in the company. It seems their patience has run out with the company not able to turn a profit. The 26% Air NZ stake is worth around $345m and their CEO Christopher Luxon has resigned from the Virgin board.
- More bad PR for Australia and New Zealand Bank (ANZ) -0.39% as they are set to refund $5 million to 25,000 vulnerable, low-income customers with basic bank accounts after it charged incorrect late payment and over-limit fees over a nine-year period.
- In the clean and green space Swisse which was recently acquired by a HK group Biostine has revealed they generated $49m in profits for the first three months of ownership. Sales of $169m. Extrapolating these numbers out shows that the group is now selling as much as Blackmores.
- Dexus (DXS) -0.51% has sweetened the deal to buy Investa Office Fund (IOF) +1.22% in its $2.6bn takeover play. IOF said its shareholders will receive an additional 7 cents for each share in the fund by way of a special distribution, conditional on the Dexus proposal being successful.
- Moves today from the Treasurer to allow competitors to take on the ASX +1.23% in their clearing business. This has long been a monopoly business and the government will not allow competition at least in the next 18 months while they sort out the regulation. The Treasurer said it was unlikely that anyone would appear on the horizon to challenge the ASX but wanted to allow the possibility. To sweeten the blow to the ASX they also allowed a single buyer to move to greater than 15% of the ASX and that will be examined and potentially waived by the Treasurer.
- News today from Scott Morrison (busy man) that the government is considering letting the State levy their own income taxes. This move will make tax avoidance by geography and where a tax payer lives, a whole new area of loopholes. Hopefully this plan will not get up as it will become an administrative and bureaucratic nightmare for companies and individuals.
- ANZ-Roy Morgan Consumer Confidence fell 1.3% to 114.5 this week after a 0.3% fall in the previous week. The government’s decision to bring forward the Commonwealth Budget and the prospect of a double dissolution election is likely to have been a factor in the decline last week.
A surge in Google searches for the meaning of ‘Double Dissolution’ or maybe it’s ‘Disillusion’
- Still no sign of a recovery in the Japanese economy. Japan’s industrial production dropped the most since 2011 in February, as falling exports sapped demand and a steel-mill explosion halted domestic car production at Toyota.
- Output slumped 6.2 %after rising 3.7 %in January, the trade ministry said on Wednesday. Economists surveyed by Bloomberg had forecast a 5.9 % drop.
The report also shows:
- The transport sector was the biggest contributor to the drop. Motor vehicles make up about 16% of the index.
- Shipments from factories dropped 4.6% from January, which was also the biggest fall since March 2011.
- Shipments of capital goods excluding transport equipment, an indicator of business investment, fell more than 10 % in February from the previous month. That’s the biggest drop in a year
- Production is forecast to fall 0.7% in the first quarter from the previous three months, if applying the ministry’s March forecast figure
- Tata Group has confirmed plans to sell its UK steel business as cheap Chinese steel and high costs take their toll. This may signal the end of the UK steel business completely.
- The Bank of England is faced with similar problems to our RBA here as they try to cool the housing market and protect the banks from their own greed and ensure they can survive more financial turmoil. Like ‘Negative Gearing’ here, the so called ‘Buy to Let’ market in the UK is under attack. Last year, George Osborne, the Chancellor of the Exchequer, set out plans to restrict mortgage interest rate relief for landlords from 2017.
- Anyone who owns more than one property also faces a 3% stamp duty surcharge on purchases from next month.
- Seems though that the Banks have other ideas as they hope to expand their bottom lines with more ‘buy to let’ lending.
SECTOR PERFORMANCE 52 WEEK HIGHS / LOWS