ASX 200 falls another 70.9 points to 4924.4 as the 5000 level fails to hold. RBA keeps rates on hold as banks and resource stocks sold off by offshore investors again. Nine Entertainment downgrades and energy shares feeling the heat. AUD back at 76 cents after a brief rally above. Japan slides 2.4% as yen hits 2014 levels. China back online with a 1.27% rise at lunch. US futures down 41.

AUD reacts to rates decision.

ASX 200 Index & Aussie dollar charts – Today

 

Another very disappointing day. That word again. Disappointing as the ASX 200 sold off heavily to close down 70.9 points at 4924. A high early of 4992 and a low late of 4909.

It started badly and accelerated as the Japan came online falling away and with no respite from the RBA decision to leave rates unchanged. This was widely expected and the commentary was pretty much a ‘cut and paste’ exercise from previous commentary. Failing to hold the 5000 level is being seen as significant and without any good news from big miners or the big four banks it is hard to see anything more than a ‘dead cat bounce’ in sight.

The trading update from Nine Entertainment set the scene early and volume picked up after a quiet and almost restrained start. It did not last though with trade data and consumer confidence weighing. Japan was also once again very weak following the recent Tankan survey and the appreciating Yen hurting sentiment.

Again the banks are feeling the brunt of offshore selling as the shorts build and worries abound on housing and the increasing bad debt provisions. Resources were also weaker on commodity price falls with energy stocks suffering as we head into the OPEC meeting in two weeks.

Once again oil weakness is causing equity market weakness

Stocks and Sectors

  • Resources again weaker led by BHP -3.27% which has become very much chained to the oil price. RIO -2.01% and Fortescue Metals (FMG) -1.93%. Base metal stocks were also in the sellers sights with Independence Group (IGO) -5.24%, Iluka Resources (ILU) -2.29%, Sandfire Resources (SFR) -6.35%. South 32 (S32) -3.51% too.
  • Gold shares were mixed with Evolution Mining (EVN) +0.65% eking out some gains as did Oceanagold Corp (OGC) +3.98% and Resolute (RSG) +6.84% whilst Newcrest eased (NCM) -0.41%.
  • Energy shares were once again very weak led by Oil Search (OSH) -4.72%, Woodside (WPL) -4.16% and Santos (STO) -5.33%. One of the worst in the sector Liquefied Natural Gas (LNG) -9.71% despite the gas prices in the US rising even as oil fell.
  • Banks and financials were again very weak. The big four were sold off aggressively with Commonwealth Bank (CBA) -2.29% the worst hit whilst the other three fell around 1.5%-2.0%. REITS also had a rare day in the red with Vicinity Centres (VCX) -1.58% and Dexus Property (DXS) -1.41% leading the way. Wealth managers and insurers red too, NIB Holdings (NHF) -2.04% and BT Investment Management (BTT) -3.02%
  • Industrials were mostly red across the screen. Amcor (AMC) +3.3% was a pocket of green as were media stocks APN Outdoor (APO) +6.43% and Oooh! Media (OML) +2.27% on a broker upgrade but others were hit hard after the Nine update. Fairfax (FXJ) -4.91% and STW Communications (STW) -1.5%.
  • Nowhere to hide with Healthcare lower, Greencross (GXL) -6.4% and Estia Health (EHE) -6.92% had days they would rather forget. Leaders also slipped away with CSL -1.9% and Sonic Healthcare (SHL) -2.67%. Consumer stocks on the nose Ardent Leisure (AAD)-4.46%, Gaming stocks weaker and tech stock 1Page (1PG) -10.14% continuing their shocking run as the euphoria unwinds and results needed to justify valuations.
  • Speculative stock of the day: Broken Hill Prospecting (BPL) +48.15% after answering an ASX query on recent price moves. They have a cobalt project which seems to be attracting some investor interest as this is used in lithium ion-cobalt batteries which are all the vogue at the moment.

Corporate News

  • Downer (DOW) -9.63% has announced that Fortescue Metals (FMG) -1.93% would perform their own mining services work at Christmas Creek in WA. The contract was thought to be worth around $400m to Downer and FMG has decided to use an owner operator model to cut costs.
  • Channel Nine (NEC) -23.68% has announced a profit downgrade smacking the shares down today. Revenues were down 11% in the third quarter as the cricket was a major culprit. Bringing the West Indies out in prime time has cost the network dearly. The team performance was terrible and has really hurt the network. The company also has had problems recently with a number of other programs and has said that the advertising market remained subdued in March, expecting it to record a low single-digit decline for the current financial year, versus previous guidance of ‘flat to down marginally’.
  • Virgin Australia (VAH) -0.0% has had its credit rating put under review. For a possible downgrade from Moody’s.
  • Media reports that Westpac (WBC) -1.95% are the next bank to be investigated by ASIC on allegations of market misconduct and manipulation. A bank spokesman said they are ‘continuing to cooperate with the industry wide investigation’.

Economic News

  • The RBA has left rates unchanged again. The jawboning of the AUD that was widely expected was very muted. They said they did not want to ‘complicate‘ the adjustment under way in the economy. Complicate the recovery. It seems that the RBA is comfortable although a little sweaty with the current AUD rate. They also said it was hard in an environment where monetary developments elsewhere are playing a role. In other words, with negative rates elsewhere it is tricky to talk the AUD down.
  • The trade deficit has blown out to $3.41bn in February, coming in well below the $2.5bn deficit predicted.
  • This came as imports were hardly changed at $28.675bn, while exports fell 1% to $25.265bn.
  • The January gap was revised down from $2.9bn to $3.16bn.
  • ANZ-Roy Morgan consumer confidence index fell 1% in the week ending April 3, with levels now having edged lower for three consecutive weeks.
  • While confidence levels remain above the long-range average, the slip of the index to 113.4 means the four-week moving average is now falling.

In Asia

  • Demand at a sale of 10-year Japanese bonds climbed to the highest since August 2014, pushing auction yields to a record low. The Finance Ministry’s offering of 2.4 trillion yen ($21.6 billion) of the debt with a 0.1% coupon had an unprecedented yield of minus 0.069%.
  • The strength of the yen is not in the script and Japanese companies are feeling the pain. Strongest since 2014 as maybe Kuroda heads back to the drawing board.

  • BOJ chief Kuroda maintained his optimism in Parliament that Japan’s economy was recovering moderately, despite last week’s Tankan survey that showed business mood souring on weak emerging market deman
  • He reiterated the BOJ’s readiness to ease again if risks threatened prospects for accelerating inflation, now at a dead halt, toward its 2 % target.
  • The BOJ would not hesitate to take action either by accelerating asset purchases, buying more risky assets or pushing interest rates deeper into negative territory, he said.

Europe 

  • A potential buyer for Tata Steel in the UK believes he could take over all the business without mass job losses. Sanjeev Gupta, the head of the Liberty Group said he had “very encouraging” talks with the UK Government so far but there was still a lot of work to do.
  • Latest Brexit poll in UK.

FINANCE SUMMARY

SECTOR PERFORMANCE                                   52 WEEK HIGHS / LOWS

 

BEST AND WORST STOCK PERFORMERS

Clarence

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