ASX 200 races through 5400 before coming back with a thud. After hitting 5425 we closed at 5372.5 up 29.5 points as profit taking hurt the banks and resources remained firm. Woolworths in the spotlight after KKR spotted looking again at the books. Asian markets positive with China up 1.05% and Japan up 0.08%. AUD at 73.57 and US futures down 42.

A mirror image day to the previous two – as we thought might happen this morning. A leap out of the blocks was never going to be sustainable given the relative outperformance in the last two days. After soaring through 5400 to hit 5425, the banking sector came under pressure as profit takers moved in. The resources picked up some of the slack, with the index ending under 5400 to close at 5372.5. A couple of corporate moves adding to the mix with rumours of takeovers in Woolworths and an opportunistic bid for AWE in the energy sector.

Another good day on volume at $5.6bn.

Consumer confidence numbers may have taken some of the momentum out of the market showing the rate cut has buoyed sentiment alleviating perhaps the need for the RBA to move again. One and done?

We have now had four straight weeks of gains and are up 10% since the Valentine’s Day massacre. According to Citi, the resources are trading on 27 times earnings and the rest at 16.25 times. The resources would be hugely distorted by writedowns and bad debt charges.

Day Three – Are we there yet?

ASX 200 Index & Aussie dollar charts – Today

 

STOCKS AND SECTORS

  • Resources were the standout today with BHP +4.04% leading the charge on growth strategies from the CEO. RIO +1.34% followed in its wake with Fortescue Metals (FMG) +2.11% bouncing hard after a few days of pain. Base metal stocks also increased with South32 (S32) +3.85%, Iluka Resources (ILU) +4.08%, Oz Minerals (OZL) +3.45%, Independence Group (IGO) +3.92% and Sandfire (SFR) +3.85%
  • Gold stocks better again despite the AUD bullion price being stable, Newcrest (NCM) +3.43% skipped over $20 with St Barbara (SBM) +5.91%, Evolution Mining (EVN) +4.9% and star Northern Star (NST) +7.89% all doing very well.
  • Energy failed to fire with small gains on the back of the crude price. Woodside (WPL) +0.04% and Santos (STO) +0.74% were outdone by coal miner Whitehaven Coal (WHC) +5.26% and services company Worley Parsons (WOR) +2.6%.
  • Finance and Banks gave back their gains a little with some profit taking in the big four. Although Westpac Bank (WBC) +0.03% managed to eke out a slight gain. Two standouts in the sector were Macquarie Group (MQG) +1.1% as its rally continues plus a rethink on QBE Insurance (QBE) +2.54%.
  • Industrials were positive generally, led by Woolworths (WOW) +5.46%. Telstra (TLS) +0.53% was also in demand. Consumer stocks rose in response to the sentiment numbers Domino’s Pizza (DMP) +3.14%, Corporate Travel (CTD) +2.28%, JB Hi-Fi (JBH) +0.41%, Retail Food Group (RFG) +5.23% and tourism stocks also rose. Mantra Group (MTR) +0.76% and Ardent Leisure (AAD) +2.71%
  • Speculative stock of the day: Silver City Minerals (SCI) +153.33% after announcing the potential for Lithium in the Broken Hill; area. Seems any mention of lithium is enough at the moment.

CORPORATE NEWS

  • CSR (CSR) +5.49% reported a 13% rise in underlying full-year profit to $166m, buoyed by record earnings in the company’s building products arm. Group revenue for the year ended March 31 rose 14% to $2.3bn while group earnings before interest and tax rose 18% to $276.8m. CSR declared a final dividend of 12¢ a share, up 18%.
  • Graincorp (GNC) -2.0% has reported a 32.5% slide in half-year net profit amid a “subdued market” and dry weather. Net profit fell to $20.4m in the six months to March 31 compared with $30.2m in the same period the year before. Revenue firmed 4.8% to $2.07bn. The result included $7.2m in restructuring costs. Underlying net profit was $32m. The company will pay an interim dividend of 7.5 cents a share on July 15
  • Fairfax (FXJ) +4.88% confirmed it was in merger discussions with APN for its NZ business.
  • APN News and Media (APN) is in discussions to merge its New Zealand businesses with Fairfax media NZ. It is also raising $182m in cash with a one for three share issue priced at 53 cents. Radio and outdoor ads the growth areas.
  • AWE +16.26% has rejected an unsolicited $421m takeover proposal from private equity fund Lone Star, with the board describing it as “opportunistic” and lacking in value. Priced at 80c a share in cash.
  • Woolworths (WOW) +5.46% after rumours resurfaced of a private equity bid from KKR, with the company facing a board meeting on Friday to discuss the Masters wind up. Seems that the market is impatient with the turnaround story under Brad Banducci already.
  • Cudeco (CDU) -37.74% returned to the bourse today after a long absence and some serious boardroom shenanigans. The company has raised $63m in a rights issue at 80 cents. Shareholders are already under water unfortunately.
  • Kingsgate Consolidated (KCN) was put into a trading halt following news that the Thai government is moving to close its Chatree mine. Not a great sign for this troubled miner.

ECONOMIC NEWS

  • Westpac-Melbourne Institute Index of Consumer Sentiment surged 8.5% in May to 103.2, up from 95.1 in April. Mortgage holders were the most confident after the rate cut news last week.

  • Loans for investment housing rose 1.5% in March, cushioning an overall 0.9% fall in home loans. Economists had expected a sharper drop of 1.5%.

  • The value of owner-occupier mortgages fell by 1.2% over the month to $20.7bn on a seasonally adjusted basis.
  • In contrast, the value of loans taken out by investors rose by 1.5%, seasonally adjusted, to just over $12bn, down from the 3.1% increase seen in February.

IN ASIA

  • A very quiet session in Chinese futures markets with iron ore hardly registering a move on the dial up 0.39% and coking coal down 0.7%.
  • Hong Kong Exchanges & Clearing, Asia’s biggest exchange operator, said first-quarter earnings fell nine percent on lower trading turnover and higher costs. Net income dropped to HK$1.43bn ($184m) in the period, down from HK$1.58bn a year earlier.
  • Toyota Motor Corp. said annual net income will probably decline for the first time in five years, as currency swings that had spurred record profits now pose stiff headwinds. Net income may drop 35% to 1.5 trillion yen (US$13.8bn) for the fiscal year ending in March

EUROPE AND THE US

  • Sanders wins in West Virginia confusing things for Hilary.
  • Flat start in store for European markets after a good session yesterday.

And finally bookmakers have been offering odds on which of the newspapers will be the first to shut down. SMH is $3.20, the AFR is $4.80 and the Australian is $5.50.

For those interested in how quickly the landscape has changed this is a fantastic representation of the rise of China. Well worth a look.

FINANCE SUMMARY 

52 WEEK HIGHS / LOWS

SECTOR PERFORMANCE   

BEST AND WORST STOCK PERFORMERS

Clarence

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NT Markets

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