ASX 200 falls 16 points to 5221 as resources sour but banks hold the line. Lacklustre conditions in a shortened week and a Budget next Tuesday. Asian markets weaker with Japan down 0.49% as yen strengthened for a second day. China down 0.28% with AUD 77.14 and US futures up 6.

A lacklustre start to the week as school holidays wound up and Sydney Airport was overrun with braided haired kids flying back from Bali. We are heading into the Budget next week and investors seemed to take a pause to gather their thoughts. We have had two stunning weeks of rises led by commodities and the US dollar weakness. Back on 8th April we closed at 4937 and now we are at 5220 up around 5.8% up. An impressive rally. BHP was 1618c (now 1976c) on 8th April. RIO 4326c (now 4944c) FMG 266c (now 315c).

Today we saw commodity stocks take a breather whilst banks firmed as some traders squared up their books in front of the results season next week. Westpac (WBC) +0.83% seems to be the preferred banks at the moment as they have launched an inquiry into the rates they pay mortgage brokers.

After a cautious negative start the market briefly turned positive on an improving banking sector before it succumbed to some selling after Asian markets also turned negative. Volume was almost respectable for a first day back after a spell, at around $4.6bn at the close.

Recent speculation on the Chinese commodities exchanges has seen authorities move to increase margin requirements and this has led to weakness. Iron ore futures on the Dalian Futures Exchange have fallen 3.9 % today. Volume has increased 400% from a year ago in iron ore futures.

ASX 200 Index & Aussie dollar charts – Today


Stocks and Sectors

  • Resources bore the brunt of the selling as iron ore futures fell in China. BHP -2.95%, RIO -3.06% and Fortescue Metals (FMG) -6.25%. Base metals stocks also fell victim to profit taking, Western Areas (WSA) -3.79% Metals X (MLX) -5.36%, Independence Group (IGO) -2.4% although Oz Minerals (OZL) +3.45% gained against the trend.
  • Golds were weaker despite the AUD falling in the last few days. AUD Bullion pricing around $1603 at the moment. Newcrest (NCM) -1.01% Northern Star (NST) -4.03%, St Barbara (SBM) -6.11% and OceanaGold Corp (OGC) -4.27%
  • Energy shares under pressure again Santos (STO) -3.68% and Origin Energy (ORG) -3.71% the casualties in the big stocks but Peninsula Energy (PEN) -17.02% having a bad day at the office.
  • Banks and financials were a shining light. Well at least Commonwealth Bank (CBA) +0.77% and Westpac Bank (WBC) +0.83% were the other two banks fared less well being down for the day with Medibank Private (MPL) -1.92%, QBE -1.59% and Suncorp (SUN) -1.51% also slipping away. REITS were better again, Scentre Group (SCG) +1.77% the best of the bunch but GPT +2.29% not far behind.
  • Industrials offered a mixed picture. Telcos tried hard to rally with Telstra (TLS) +0.37%, TPG Telecom (TPM) +2.73% and Wesfarmers (WES) +0.86% joining in. Woolworths (WOW) -1.01% though continued to be unloved. (REA) +3.77% rallied on its new purchase of an online flat sharing company. Other internet companies fell with Carsales (CRZ) -0.34%, Freelancer (FLN) -3.33%, Computershare (CPU) -1.07% and Data#3 (DTL) -7.21%. Gaming stocks lost out with Tabcorp (TAH) -1.11%, Tatts Group (TTS) -0.79%, Skycity Entertainment (SKC) -2.44% and Crown Resorts (CWN) -1.44%
  • Speculative stock of the day: Abundant (ABT) +175.0 % a new listing today. The company raised money to acquire a private seed technology business that creates new varieties that can sustain non-ideal conditions. The company raised $3.5m at 20 cents.
  • Volpara Health Tech joins the boards tomorrow. VHT is the code.

Corporate News

  • Quickflix (QFX) has called in the administrators as Netflix and Stan competition take their toll. It was inevitable really given the lack of content and cost to improve the quality that QFX offering. The company also had shareholder in Stan when Nine and Fairfax acquired a $11.7m redeemable preference share from HBO. The market capitalisation of QFX based on the last sale price was around $2.2m.
  • AMP unchanged Chairman Simon McKeon will retire due to a ‘change in circumstances’. Director John Palmer will take the helm until a replacement can be found.
  • (REA) +3.77% has more money than it knows what to do with and has bought for an initial $25m with upside for the team at Flatmates depending on revenue targets. Flatmates is the biggest shared accommodation web site with 2.6m visitors a month.
  • Broadspectrum (BRS) -10.8% following news that Spanish bidder Ferrovial has not extended the bid past next Monday. The bidder who is currently offering 150 cents must get over 50% acceptances. Currently the board is not recommending shareholders accept the offer. Ferrovial has 16% of the company so far.
  • Newcrest (NCM) -1.01% has slightly improved gold production, helped by a return to full production at its biggest mine. It produced 636,521 ounces of gold in the three months to March 31, more than 2.5 % higher from the December quarter’s 620,691 tonnes. The company has maintained its full year production guidance.

Economic News

  • France has won the contract to build 12 submarines for the RAN at a cost of $50bn. The good news is they look as if they will be built by South Australians using Australian steel.
  • According to Deloitte in their budget monitor, they are forecasting the budget has deteriorated by $21bn in the last 4 months.
  • The starting point for the 2015-16 budget deficit is $38.6 billion, rather than the $33.7 forecast in the last official update in December.
  • The Deloitte forecasts add between $4 billion and $5 billion to each of the deficit forecasts for 2015-16, 2016-17 and 2017-18, and $7 billion to the forecast for 2018-19.

In Asia

  • Alibaba Group Holdings finance arm, Ant Financial, has raised a record US$4.5bn in an equity fund raising round. Ant Financial had aimed for at least $3.5 billion at a valuation of US$60 billion and is considering an IPO on the Shanghai stock exchange this year, the company runs China’s biggest online payment service, Alipay, and controls the company that manages Yu’E Bao, the nation’s largest money-market fund. Ant Financials micro lending business handled about 30 billion yuan of loans in January. More than 200 million users buy financial products through Ant Financial via services including Yu’E Bao and Zhao Cai Bao.

Europe and elsewhere

  • In the UK the clothing and homeware retailer BHS has collapsed into administration leaving an unfunded GBP571m hole in its pension account. BHS was recently owned by a consortium led by an ex racing driver Dominic Chappell and has been a fixture of the British high street for 88 years.
  • Saudi Arabia is looking to offload a 5% shareholding in the state owned Aramco, in the world’s biggest float this year. The proceeds will be used to create a future fund like no other, for a life without oil.

  • All eyes on Apple tonight.


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