ASX200 seesaws in quiet school holiday trade to close down 6.1 at 4931.5 with banks the key. Resources and energy the stars, on oil price and commodity price rises. Asian markets mixed with Chinese CPI and PPI helping Shanghai up 1.6%. Japan still suffering from the higher yen though with Nikkei down 0.44%. AUD at 75.46 and US futures -9.

A quiet start to the week with early weakness and then ‘relative’ strength in the banking sector determining the headline number. News from Scott Morrison that he did not see the need for a Royal Commission into the banks helped turn the index around from a low of 4910. Asian markets were mixed but China took some better than expected CPI and PPI numbers and investors were happy to join the party. Japan still an issue with the Nikkei down 0.95% again but Shanghai up 1.84%.

We saw a new company float today with Wisetech (WTC) +16.12% kicking off life as a listed company with a solid debut. The cloud logistics company has been around from humble beginnings 15 years ago to now have a valuation of over $1bn and a PE of 85. The IPO was done at 335 cents and it hit 380 in trading today, this company now joins the likes on Aconex and MYOB and Xero in the $1bn club on the ASX

Resources and energy stocks again in demand with the lithium stocks doing particularly well. We get some production numbers this week from both Fortescue Metals (FMG) +7.14% and RIO +2.36% and potentially our first real look at new CEO Jean-Sebastien Jacques.

We have a big week with US results season kicking off tonight will perennial disappointer Alcoa first cab off the rank. Expect a disappointing first quarter but the conference call to exude optimism and better days ahead.

Locally unemployment numbers on Thursday will be key as the chance of a rate it in May has moved up to 43% from lows of 8 % a few weeks ago

It seems that chance of out of cycle rate rises from the banks, are forcing the RBA hand to cut rates to increase bank margins. At least that is what the bond market is suggesting.

  • Range today of 4910 -4943.

ASX 200 Index & Aussie dollar charts – Today

Stocks and Sectors

  • Resources had another strong day led by the heavyweights BHP +2.29% and RIO +2.36%. Fortescue Metals (FMG) +7.14% raced ahead as production numbers due this week. Base metals also in demand with Independence Group (IGO) +4.01% Syrah Resources (SYR) +5.96% although South32 (S32) -0.68% gave back some recent gains. Alumina (AWC) -4.75% seemed to be anticipating bad numbers tonight from Alcoa. Iluka Resources (ILU) -3.09% too on falling zircon prices.
  • Energy shares rallied led by Origin Energy (ORG) +4.03%, Santos (STO)+3.13% and Oil Search (OSH) +2.33%. A Perth LNG conference also helping sentiment. Minnows Senex (SXY) +3.85%,AWE  +2.63% and services company WorleyParsons (WOR) +5.28% doing well.
  • Gold shining yet again. Newcrest (NCM) +3.42% broke through 1800 whilst St Barbara (SBM) +7.89%, Oceanagold Corp (OGC) +3.58% and Evolution Mining (EVN) +3.92%
  • Finance and banks again not too popular despite Treasurer Scott ruling out a Royal Commission. The big four flopped around with loss of up to 0.8%. Other financials fared better Magellan Financial (MFG) +2.68%, BT Investment (BTT) +1.51% and Henderson Group (HGG) +0.66%
  • Industrials mixed with Slater and Gordon (SGH) -10.2% plunging to record lows. Seems the Free Trade agreement with China goes only one way with China slapping higher costs for Australian products imported through the Free trade zones. Bellamys’ (BAL) -0.9% and Blackmores (BKL) -13.2% took it very badly but others did too, A2 Milk (A2M) 2.01% and Capilano (CZZ)-0.98%.
  • In other industrials, Crown Resorts (CWN) -4.75% pulled a busted hand today as did Star Entertainment (SGR) -2.15%. Consumer stocks also weaker with Woolworths (WOW) -1.51%, Lovisa Holdings (LOV) -4.76%. Ardent Leisure (AADF)3.92% also had a nice day at the theme park on hopes for a corporate breakup of the group and more tourists up on the Gold Coast.
  • Speculative stock of the day: China Dairy Corp (CDC) +40% after listing last week at 20 cents, it seems that the punters are still happy with this one and have driven it to 35 cents now on decent volume.

Corporate News

  • Telstra (TLS) -0.19%% following news today they have picked up a contract worth $1.6bn from NBN to plan design constrict and manage the HFC network. It looks like the ACCC though will be taking a look at the deal on some concerns on an unfair advantage for Telstra.
  • Slater and Gordon (SGH) -10.2% heading out the door following media reports that it had hired a corporate advisor to restructure its debt. The company has net debt of around $741m and amendments have to be agreed by the end of April otherwise all debts will be due March 2017.
  • Corporate Australia took another blow over the weekend with news that Target boss Start Machin had resigned due to irregularities in accounting. Today we saw disciplinary action taken by Wesfarmers (WES) -0.77% on some employees who are alleged to have inflated first half earnings by 40% by colluding with suppliers.
  • BT Investment (BTT) +1.51% released their FUM today showing a boost to annualised fee income of around $8.3m. Total FUM was $41.2m

Economic News

  • Lending to property investors grew 4.1% in over the month to February but remains down year on year, according to Australian Bureau of Statistics’ latest housing finance data.
  • While investment lending jumped, loans issued to owner occupiers grew by a modest 1.7% the month.

  • Rental yields for houses falling in every capital city except Hobart, while for apartments growth was only seen in Canberra and Adelaide.
  • March data shows that median capital city prices rose just 0.2%, with annual growth decelerating to 6.6% year-on-year. These figures are down from a July 2015 peak of 11.6% year-on-year and 11.9% in April 2014.
  • Chinese spending on Australian residential and commercial real estate rose to A$24.3 billion ($18.4 billion) in the 12 months through June 2015, up from A$12.4 billion a year earlier and A$5.9 billion in 2013, according to the Foreign Investment Review Board’s annual report.

In Asia

  • The Chinese Consumer-price index was at 2.3 % in March from a year earlier, matching February’s level, as food prices jumped 7.6 %. Producer price declines narrowed to 4.3 % from a drop of 4.9 % in February. Non-food prices climbed 1 % from a year earlier. From a month earlier, prices fell 0.4%. The central bank targets annual price gains of 3%.
  • China’s finance ministry signaled tougher requirements in determining which goods are allowed to be imported through cross-border e-commerce warehouses in pilot free trade zones across 12 cities, which were afforded preferential tax and customs treatment.
  • Japan’s core machinery orders fell less than expected in February in a sign that capital expenditure is starting to stabilise. The 9.2% monthly decline in core orders, a highly volatile data series regarded as a leading indicator of capital spending in the coming six to nine months, was less than economists’ median estimate for a 12.4% month-on-month fall, Cabinet Office data showed.
  • In January, core machinery orders jumped 15% from the previous month, the biggest gain since January 2003

Europe

  • More pressure on David Cameron and his financial affairs in UK.

FINANCE SUMMARY

 

Clarence

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NT Markets

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