ASX 200 rises 26.8 points to 5252.2 as Japanese markets closed for holiday. Banks lead the rally ahead of results next week. China barely moved +0.19% with yuan fixing raised the most since 2005. AUD 76.51 US futures down 6. Yen at 18-month high against the USD.
Another solid day with the banks performing better as results approach next week. Once again volume ($5.6bn) was hardly the stuff of brokers’ dreams considering option expiry yesterday. With Japan closed for a holiday, there was nothing to upset the apple cart today. A steady grind higher with resources and healthcare adding to the gains.
For the record we are up a massive 16 points for the week, or 0.3%. Big week next week.
Few highlights (and lowlights)
- The bid for Pacific Brands (PBG)
- The dis-inflationary CPI number throwing the cat amongst the pigeons
- Bank of Japan doing nothing new.
- FOMC meeting doing nothing new. GDP rose 0.5% annualised rate in the first quarter, worst performance in two years.
- Broadspectrum (BRS) losing Manus centre and then folding to Ferrovial.
- Murray Goulburn (MGC) crying over spilt milk.
- ScoMo knocks back Chinese again on buying S.Kidman & Co.
- Blackmores (BKL) profit report.
- Reliance (RWC) IPO lists at 18% premium.
- Apple disappoints. Amazon doesn’t.
- Oil above $45. Aramco would be tricky to sell with $27 oil.
ASX 200 Index & Aussie dollar charts – Today
STOCKS AND SECTORS
- Resources were mixed BHP +0.53%, RIO +2.51%, Fortescue Metals (FMG) +4.92%, Alumina (AWC)+1.32% and Bluescope Steel (BSL) -0.46%. Independence Group (IGO) +4.08% bounced after the drubbing yesterday on production numbers. Lynas (LYC) -7.41% suffered after its quarterly report showed cashflow still an issue and no rebound in rare earth prices.
- Gold stocks bounced again with AUD bullion back up to $1667. Evolution Mining (EVN) +4.81%, OceanaGold Corp (OGC) +4.31% and Resolute (RSG) +8.33%.
- Energy stocks firmed again as WTI broke above $45. Woodside (WPL) +2.24% the standout, followed by Oil Search (OSH) +0.57% and Santos (STO) +2.13%
- Financials and banks were in positive territory today with Westpac (WBC) +1.24% the best of the bunch after being pretty much unchanged for the week. Commonwealth Bank (CBA) +0.05% is the worst performer for the week -1.4% but it doesn’t have results next week. Or a dividend. Macquarie Group (MQG) -2.76% was the biggest loser as Citi downgraded it to a reduce due to USD exposure and uncertain markets.
- Industrials mixed. Food stocks were better led by Blackmores (BKL) +5.72%, Wellard (WLD) +6.33%, Patties Food (PFL) +2.99% and Treasury Wine Estates (TWE) +1.3%. Healthcare stocks were better with Ramsay Healthcare (RHC) +1.72%, CSL +1.19%, Virtus Health (VRT) +4.64% and Cochlear (COH) +3.38%. ResMed (RMD) -1.19% continued to suffer after results. Telstra (TLS) -0.37% after an NBN update on the wholesale market. NBN is now supplying 941,235 access services. Telstra is the most acquisitive followed by TPG (TPM) -0.83%.
- Speculative stock of the day: Phosphagenics (POH) +170.0% after signing a Japanese licensing option and R&D alliance. The company has not been named at present but it is one of Japan’s largest healthcare companies in the Nikkei 225.
- IPO Watch: Two new companies hit the bourse today with Reliance Worldwide (RWC) +18% delivering stags a good first day profit. Reliance is a leader in premium branded waterflow products for the plumbing industry. The $2.50 offer price represented a multiple of 21 times Reliance’s forecast 2016-17 profit and implies a market value of $1.3 billion.
- The other new float Motorcycle Holdings (MTO) +35.5% was an even better stag profit as Archer Capital has sold down its holding in this chain of motorcycle dealers. The issue was oversubscribed and raised $46.3m at $2.00.
- Broadspectrum (BRS) +32.14% after the board changed its recommendation following the closure of the Manus Island detention centre. It does though look like Ferrovial will get across the 50.1% line by Monday night although it now may be regretting declaring the offer unconditional given the looming and now lost court case.
- RIO +2.51% will buy back US$1.359 billion of bonds as it seeks to reduce its debt load. The company is repurchasing $339m of 2% notes due next year and $1.02 billion of 1.625% securities that also mature in 2017, both at premiums to their face value
- OceanaGold (OGC) +4.31% achieved record gold production from its Didipio mine in the Philippines in the first quarter and lifted group sales by 25%, although accounting adjustments dented profit. Sales climbed to US$161 million in the March quarter, from US$129 million a year earlier, while earnings before interest, tax, depreciation and amortisation jumped 28 % to US$77.9m, higher depreciation and amortisation, a higher tax bill and a loss on the value of hedges contributed to a 4% drop in net profit to $23.5 million. All-in sustaining costs were US$716 per ounce and cash costs were US$436 per ounce on sales of 117,387 ounces of gold and 4,745 tonnes of copper, the company said.
- Gemworth (GMA) -0.42% first-quarter net profit fell 25 % to $67.3m from $89.5m in the year-earlier period. Gross written premium, or revenue, fell 33% to $85m from the year-earlier $127.7m.
- Brazilian iron ore miner Vale has said it is unlikely to buy a stake in Fortescue Metals anytime soon. This follows the JV blending deal and the agreement that Vale could buy up to 15% of FMG.
- Z Energy (ZEL) +9.38% following the commerce commission allowing the company to buy 100% of Chevron NZ. The biggest takeover our Kiwi cousins have ever seen. The $785m deal will give Z Energy 49% of the country’s retail petrol market. The merger of the companies will become official on June 1, 2016. Only $115m of the purchase will be funded by cash held by Z Energy, the rest by taking on debt.
- Origin Energy (ORG) +0.37% quarterly production numbers showed eleven LNG cargoes were shipped from the project in the three months ended March 31, helping lift oil and gas revenue 45% to $316.4m from the year-earlier period. Production jumped 65% to the equivalent of 60.9 petajoules. Guidance for the LNG businesses’ contribution to underlying net profit remains a loss of between $170 million and $220 million after funding and other costs.
- The producer price index (PPI) fell 0.2% for the March quarter, dragging the annual producer price inflation rate down to 1.2%, from 1.9% in the December quarter.
- Private Sector Credit for March +0.4% m/m (expected +0.5, prior 0.6%) and +6.4% y/y (expected 6.6, prior 6.6)
- Business credit +0.3% m/m while personal credit down 0.3%
- Housing credit +7.2% y/y (investors +7.0% y/y)
- Treasurer Scott Morrison has knocked back the Chinese takeover of S. Kidman and Co. Cattle station yet again saying it is not in the National interest. The S. Kidman & Co portfolio constitutes the country’s largest private land holding, accounting for 1.3% of total Australian land and 2.5% of all agricultural land. The Chinese have until Wednesday to respond given this is a ‘preliminary’ view.
- 10 of 24 surveyed by Bloomberg now predicting a cut on Tuesday. Now a 58% chance of easing. That’s up from a just 13% chance tipped shortly before Wednesday’s CPI data.
- Japanese stock market closed today but futures down around 80 points. Better than yesterday.
- NIRP is not working and Kuroda knows it.
- Yen at an 18 month high against the USD. The yen has appreciated by 4.1% against the dollar so far this week, on track for its biggest advance since the week ended October 24, 2008.
EUROPE AND THE US
- UK holiday Monday
- French GDP (QoQ) Q1, A: 0.5% (exp 0.4% prev 0.3%) -French GDP (YoY) Q1, A: 1.3% (exp 1.0% prev 1.4%)
- Swiss Re Q1 profits comfortably beat expectations
- Amazon reported net income of $US513 m, or $US1.07 per share, for the quarter ended March 31, marking a fourth straight quarter of profits for the once perennially money-losing company. A year earlier, Amazon reported a loss of $US57 m, or 12 cents per share. Analysts on average had expected a profit of 58 cents per share and revenue of $US27.98 billion. The company also offered a bright outlook, with revenue guidance for the current quarter of $US28 billion to $US30.5 billion, compared to the $US28.33 billion analysts had expected.
**For those of you who are unable to make it to Omaha to hear Warren and Charlie speak at the Berkshire Hathaway AGM, this useful link may do the trick. It should take you to the live broadcast this Sunday morning. Charlie is 92 so this may be his last before retirement**
I am indebted to my long-time friend Richard Morrow, Chairman of the Melbourne Mining Club, for this picture he took of Warren Buffet’s house this morning.
Apparently the police tape is to keep the crowds out.
FINANCE SUMMARY 52 WEEK HIGHS / LOWS
BEST AND WORST STOCK PERFORMERS
Have a great weekend