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ASX 200 up 37.7 points to 5225.4 after materials drive index higher despite “eruptions” in Tokyo. Japan falls 3.6% on no more sugar hits despite woeful economic numbers. China down 0.6%. AUD rises to 76.3 with US Futures down 116.

Another choppy day with central banks again the focus. The ‘will he, won’t he’ moment is building for Glenn Stevens next Tuesday, just to complicate Budget day. The market is now hoping that the evidence is enough to push him to cut by 25bps. Not so sure but we shall see. After an initial surge following better leads from overseas and a weaker dollar, the rally ground to a bit of a halt following news from Japan that the BOJ had left the stimulus program largely unchanged and had pared back estimates for growth and inflation. There is a serious issue developing in Japan. Something that seems to be lost on the markets with its obsession with all things Chinese. News of Kuroda keeping things steady as she goes were greeted with widespread selling in Tokyo and the market fell from up 1.4% to down 3% and more. Not a positive for our market which slipped on the news from Tokyo, although we steadied into the close. Safe haven buying perhaps? Perversely the yen once again strengthened. Not sure that is in the text book.

News out this morning that Bonds underwear-maker Pacific Brands is the subject of an agreed takeover by HanesBrands, valuing the company at $1.1bn. It was another positive together with updates from Blackmores (BKL), Cochlear (COH), Mirvac (MGR) and Stockland (SGP).

We were one of the few regional markets that managed to stay positive in the face of the Japanese stimulus tsunami. Volumes though on the low side.

In the last month the Materials sector has risen 14% whilst Energy is up 6%.

Will the chickens come home to roost tomorrow? Will we see a nervous end to the week? Tune in, same time, same channel, to find out how this nail biter finishes.

ASX 200 Index & Aussie dollar charts – Today

STOCKS AND SECTORS

  • Resources the highlight again with BHP +4.68%, RIO +3.86% and Fortescue Metals (FMG) +6.21%. Base metal miner Independence Group (IGO) -11.18% following a quarterly activities report. South32 (S32) +1.54% continues to climb higher. Both Iluka Resources (ILU) +2.24% and Oz Minerals (OZL) +2.83%.
  • Golds were mixed with Newcrest (NCM) +0.71% but Evolution Mining (EVN) -4.1% and Northern Star (NST) -0.81%.
  • Energy stocks did well as WTI crude burst through $45. Woodside Petroleum (WPL) +0.98%, Santos (STO) +3.52% and Origin Energy (ORG) +3.21% the best of the big ones. Whitehaven Coal (WHC) +3.92% and Paladin Energy (PDN) +4.08% also both doing well.
  • Financial and Banks tried really hard to join the party. Australia and New Zealand Bank (ANZ) +0.59% following its deal with Apple but Westpac (WBC) -0.87% punished again following its foreign buyer ban yesterday.
  • Industrials mainly green with Woolworths (WOW) +3.62% and Wesfarmers (WES) +1.04% in demand on restructure plans and potentially lower interest rates.
  • Clean and green were in demand following the Blackmores update. Even Murray Goulburn (MGC) +4.84% managed to turn positive today as it bounced form the massive 42% fall yesterday. BWX +2.17%, Tassal Group (TGR) +3.19%, Wellard (WLD) +1.28% and Bellamy’s Australia (BAL) +2.5%.
  • Speculative stock of the day: IOT Group (IOT) +48.72% after replying to a speeding ticket with no explanation for the rise. The company has recently signed a deal with a Chinese group for the manufacture of the flying selfie stick

CORPORATE NEWS

  • Woolworths (WOW) +3.62% after media reports that the impending restructure of the liquor business may pave the way for a separate float of the business. The new business will be called Endeavour Drinks Group. Liquor is the jewel in the Woolies crown with Dan Murphy the market leader. The business could be worth around $8bn.
  • Blackmores (BKL) +3.08% after a profit announcement showing a 145% gain in the last nine months to $75.6. Sales were 63% stronger at $532m. Total sales were up 59% in the March quarter to $190m. CEO Christine Holgate also confirmed the company was still experiencing very good sales numbers although no guidance was given.
  • Cochlear (COH) -0.65% following an investor day where it reaffirmed guidance of between $180-190m, up around 23-30% on FY15 assuming a 74 cent exchange rate.
  • Pacific Brands (PBG) +22.87% following an agreed bid by US global group HanesBrands pitched at 115 cents a big 22% premium to the market price.
  • ANZ +0.59% has signed a deal with Apple to use Apple pay in conjunction with smartphones. Less reassuring was off-the-cuff remarks from the ANZ CEO that things for banks are a little bit hard in geographical pockets associated with mining and resource towns. And so close to the results, is this another softening up.
  • Online betting will be banned by the government on sports after the kick off. Live in play betting will now not be allowed. The practice is banned in Australia over the internet but allowed via telephone calls and William Hill has controversially offered the service to its customers via its “click-to-call” function, where a voice call is made online.
  • Stockland (SGP) -0.23% after CEO Mark Steinert reported that the company had maintained high sales volumes and that strong market conditions are continuing. Stockland’s residential business secured 1706 net deposits in the quarter, with new projects and new townhouse sales helping to generate 279 more sales than the corresponding period in fiscal 2015. Mr Steinert said the residential business was on track to achieve full year settlements slightly above its target range of 5000 to 6000 lots.
  • Thorn Group (TGA) -16.76% tried to sneak a profit downgrade through the market last night. It has closed its consumer loans business following higher costs to acquire customers. The NCML business it bought in 2011 has been a disappointment and it is writing off the $6.7m in goodwill The profit is now expected to be between $19-21m.
  • Broadspectrum Services (BRS) in a trading halt as the Manus Island ruling is digested. Shareholders have until Monday to accept the takeover from Ferrovial at 150 cents.

ECONOMIC NEWS

More grist to the mill for the RBA number crunchers.

  • House prices gained momentum in April after stalling in March, preliminary figures from CoreLogic RP Data show. Prices rose by 1.5% in April after gaining only 0.2% in March.
  • Over the ditch the RBANZ left rates on hold this morning but left the door ajar for further cuts as necessary. Rates there are 2.25% having cut five times in less than a year.

IN ASIA

  • Plenty of reasons for the Bank of Japan to add further stimulus measures but it has blinked and lost considerable credibility after baulking at any further measures.

Numbers today included:

  • Core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, fell 0.3 % in March from a year earlier, more than the median forecast for a 0.2 % annual decline.
  • The core-core CPI, which excludes food and energy, rose 0.7 % in the year to March, slower than a 0.8 % annual increase in the previous month.
  • Household spending in March fell 5.3 % from a year earlier due to lower spending on clothes, leisure activities and gasoline. That was more than the median estimate for a 4.2 % annual decline and marked the fastest decline since March 2015.
  • Industrial production rose 3.6 % in March from the previous month, compared with a 2.9 % increase forecast by economists.

Doing nothing was not an option. The market caught by surprise.

EUROPE AND THE US

  • Deutsche Bank AG said Thursday that its first-quarter net income fell 58% to €236 million, reflecting difficult markets and the impact of the bank’s decision to exit certain markets.
  • Deutsche said first-quarter net revenues were €8.1 billion, a 22% decline from the same period a year earlier.

FINANCE SUMMARY                                     52 WEEK HIGHS / LOWS

SECTOR PERFORMANCE  

 

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