ASX 200 slides into the weekend with a 30.3 point fall to 5329 on banks and big miners. Lower volumes with majors falling on profit taking and some Friday 13th nerves. Asian markets slip too with China down 0.28% and Tokyo down 1%. AUD trading weaker only slightly above 73 cents with US futures down 52.
After a tentative start, and a positive move up early, we threw in the towel with banks and financials proving an obvious profit taking target. We did rally off our lows towards the close with a nadir today of 5309 just after lunch. Resources were always going to be weaker after base metal falls overnight. It was Friday 13th after all and the day lived up to its expectations for a dose of fear and horror. For the week the index is up a massive 37 points (0.7%), which considering two of the banks are ex dividend is not too bad a result, especially given the recent run we have had. All this against a backdrop of week one in the election campaign where the only standout was the Duncan Storrar fund raising campaign. Plenty of fun and games to come although no one is taking much notice at the moment.
- Next week we see National Bank and Macquarie go ex-dividend putting more pressure on the sector.
- Volume picked up in the afternoon session to be around $4.8bn.
- We tested 5400 this week and couldn’t hold it, suspect next week we may test the 5300 level on the downside.
ASX 200 Index & Aussie dollar charts – Today
Stocks and Sectors
- Resources were dominated by BHP -2.1% and RIO -2.72% together with Bluescope (BSL) -4.1%, Sims Metal (SGM) -3.62% and Iluka Resources (ILU) -5.65%. Fortescue Metals (FMG) -1.71% and South32 (S32) +0.6% escaped the selling. However other base metal stocks fared worse, Sandfire (SFR) -2.26%, Independence Group (IGO) -1.09% and Oz Minerals (OZL) -2.45%.
- Gold shares were mixed with Evolution Mining (EVN) -0.89% and Resolute Mining (RSG) -4.95% with Northern Star (NST) +1.91% basking in glory following its presentation to the Macquarie conference this week. AUD bullion price knocking on the door of $1745.
- Energy shares were soggy with Santos (STO) -2.8%, Oil Search (OSH) -1.6% and Woodside (WPL) -0.48%. AWE unchanged following the bid at 80 cents this week which the company knocked back.
- Financials and banks back in the sellers sights with Westpac Bank (WBC) -1.32% and Commonwealth Bank (CBA) -1.09% the heaviest fallers. Macquarie Group (MQG) -0.84% escaped the selling today as their dividend may be holding them up. REITS stayed stable whilst insurers slipped slightly after the disappointing AMP results yesterday. AMP-0.91%, Suncorp (SUN) -0.31%, QBE Insurance (QBE) -0.68% finding friends and wealth managers
- Industrials were focussed on gains in Aristocrat (ALL) +7.08% and Woolworths (WOW) -2.95% going in opposite directions. We did see some buying in boring industrial stories like Brambles (BXB) +%, Amcor (AMC) +1.69% and AGL Energy (AGL) -1.34%. Consumer stocks better again APN Outdoor (APO) +0.86%, Ooh!Media (OML) +2.16%, Myer (MYR) +2.08% and Harvey Norman (HVN) +0%. Telstra (TLS) -1.39% gave up some of its recent gains as did Sydney Airport (SYD) -0.97%. Healthcare stocks were a steadying influence with Ramsay Healthcare (RHC) +1.35% and Ansell (ANN) +1.4%
- Speculative stock of the day: Capital Mining (CMY) +100% the latest minnow to enter the lithium game with a purchase of 13 prospecting licences in the Pilbara. The valuation has doubled to nearly $7m on the back of a $150,000 deal for the tenements.
- The hits keep on coming for Kingsgate (KCN) with shares now suspended until May 27th as the Thai government looks to close their Chatree gold mine. Prime Minister Prayuth Chan-ocha this week told reporters that gold mining in the country would be abolished by the end of the year. The company is now assessing its legal options.
- APN News and Media (APN) +15.7% has completed a $160 million entitlement offer to institutional shareholders, reporting a strong 95% uptake of new shares. The offer was priced at 53 cents per share.
- No wonder the board of Broadspectrum (BRS) +4.23% were unwilling to recommend the offer for the company by Spanish giant Ferrovial. News today of a bloody night of resignations from the board as 4 non-executive directors have resigned and will be replaced by Ferrovial members.
- ANZ -0.78% and Westpac (WBC) -1.32% are signing up to launch Android pay.
- Aristocrat (ALL) +% which had a positive day yesterday on an update was in demand again as brokers raised their price targets.
- Woolworths (WOW) -2.95% as rumours of a takeover from Private Equity firm KKR seem to be waning as Perpetual Investments raised their stake in the business to more than 5% on as turnaround and played down the prospects for a bid. Then again they would.
- Domino’s Pizza (DMP) +2.77% continued to deliver as Bennelong Funds Management revealed a substantial shareholder notice for 4.47m shares or 5.1%. Broker upgrades also helping the shares higher on progress of their international operations.
- Commonwealth Bank economist has moved his forecast now for two rate cuts from the RBA in 2016 to a record low of 1.25%. He is surprised about the RBA’s level of concern for inflation. He is slightly more conservative than JP Morgan which now expects a 1% interest rate this year from the RBA.
- Total new loans (personal, business, housing and lease) rose by 0.7% in March after a 3% rise in February.
- The value of new personal loans rose 6.3% to $7.1 billion. Commercial loans, which include investor housing finance, rose 0.9% to $43.16 billion in March, while lease finance slumped 7.7% to $557 million, compared with February.
- Loans for new cars were up by 20.4% on a year earlier while loans for used cars were up 15.5%.
- Chinese shares suffered their longest losing streak in two years. It is now down 20% for the year.
- Weekend numbers from China, Industrial output is forecast to rise 6.5% in April from a year earlier. Retail sales are seen increasing 10.6% and fixed-asset investment is seen climbing 11% in the January-April period, according to forecasts.
A tale of two superpowers.
China still got a long way to go to catch up with US economy.
Europe and US
- Flat start to European sessions. Brexit debate heating up with BOE head Mark Carney now entering the discussion with a warning about a possible recession if the Brexit vote gets up..
- Apple has invested a US$1bn in the Chinese rival to Uber, Didi. The company is in the process of a funding round to raise more than $2bn on a valuation of about $25 billion. Didi operates in 400 Chinese cities and works with more than 14 million Chinese car owners.
- 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost US$44 billion, according to a law firm. The tally doesn’t include Chaparral Energy Inc., Penn Virginia Corp. and Linn Energy LLC, which filed for bankruptcy this week owing more than US$11 billion combined.
- Fun and games in South America with iron ore economy Brazil impeaching the President and installing an interim President Michel Temer. The economy is suffering its biggest recession in 30 years.
- Janet Yellen has not ruled out negative interest rates in a letter to a congressman.
- For the first time this century global alcohol consumption has fallen.Hope every one is doing their bit.
And finally good luck to Australia in the Eurovision song contest. Still not completely sure we should be there but then maybe UK will be kicked out next year and make way for a permanent spot.
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