ASX 200 closes up 29.9 points to 5358.9 after healthcare and banks shrug off negative leads and push higher. Asian markets mildly stronger with China up 0.25% and Japan up 0.33%. AUD 72.85 with US futures up 25 points.
A surprisingly solid day today with across-the-board gains. The banks shrugged off the Westpac rate fixing scandal headlines and Healthcare stocks gained after PM Turnbull announced some changes and support for pathology businesses. Consumer stocks were also in demand.
After a slow start and most commentators (including us) expecting some weakness given the negative leads, it was all systems go. The 10-year bond rate fell to historic lows and a number of high profile economic commentators were talking rates down as low as 1% in some cases by year end. In this environment it is an easy argument for high yielding equities. With 10 year bonds at 2.2% and bank yields at 3 times that (unfranked), it is no wonder stocks are looking good value.
The RBA releases its minutes tomorrow so we will get to analyse in detail the machinations and deliberations of the board but expect the easing bias to continue. Rates falling and a lower AUD seems to be dragging overseas investors into the market, especially given very favourable yields in the banking sector and Telstra. Safe consistent high yields are a magnet for investors in a negative interest rate world.
ASX 200 Index & Aussie dollar charts – Today
STOCKS AND SECTORS
- Resources were led by BHP +1.98% on a stronger Asian oil price. RIO +1.25% joined the party but South 32 (S32) -1.48% while Fortescue Mining (FMG) +1.04% only managed a modest gain. Western Areas (WSA) -5.29% slipped to recent lows after the great run it has had recently, as placement stocks came back to market.
- Gold stocks again in high demand with the AUD bullion price close to all-time highs. Newcrest (NCM) +1.05%, Evolution Mining (EVN) +0.9%, Silver Lake (SLR) +10.1%
- Energy stocks could not turn into positive territory with a small loss for the sector. Woodside (WPL) -0.67%, Oil Search (OSH) unchanged and Santos (STO) -0.72%.
- Banks and Financials were back in the green with the big four drawing fans. Westpac (WBC) +0.84% and Australian and New Zealand Bank (ANZ) +0.83% both the standouts. Insurers were mixed Medibank Private (MPL) -0.96% together with NIB Holdings (NHF) -2.91%. Macquarie Group (MQG) +0.53% and Suncorp (SUN) +0.79% in the positive. AMP +1.28% also managed a small gain after last week’s loss.
- Industrials: Telstra (TLS) +0.53% higher on the yield story with consumer stocks like Wesfarmers (WES) +0.87% and Woolworths (WOW) +0.40% also drawing out buyers. We saw good buying in the healthcare sector as the government moved to sweeten the terms of their leases in the pathology sector, hoping to make the changes to bulk billing slightly more palatable. Sonic Healthcare (SHL) +4.90% and Ramsay Healthcare (RHC) +1.06% while Cochlear (COH) +3.39% and CSL +1.89% benefited from the lower AUD.
- Speculative stock of the Day: Zambezi Resources ZRL +90.91% having signed a binding term sheet to become debt free after a royalty deal was struck with its major shareholder the Auctus Resources Fund.
- Asciano (AIO) +0.11% has now been hit with legal action from logistics group ACFS, seeking orders to clarify its rights under the JV Agreement and objecting to the proposed change of ownership.
- Elders (ELD) -7.79% says it expects to improve on last year’s annual profit despite a mixed outlook for the second half of its fiscal year. Elders says the winter cropping outlook for northern and western Australia is positive, with average winter production expected in southern Australia. ELD reported 1H profit up 55% to $24.6m.
- Sydney Airport (SYD) +0.42% today announced changes to the free parking at the airport. There will continue to be free parking but now it will be even further away. Using the existing “free” parking will now cost $4. Yet another example of the pricing power that SYD has and the attractions of the stock. Revenue from parking was $127m last year.
- Starpharma Holdings (SPL) +2.86% is teaming up with world No. 2 condom maker Ansell (ANN) +0.37% to supply Zika virus-proof condoms to the Australian Olympic team ahead of the 2016 Rio de Janeiro games.
- Murray Goulburn (MGC) -1.55% is now being sued by investors after allegedly misleading them with profit forecasts. The class action alleges the company was aware it “did not have reasonable grounds for making the misleading PDS representations”.
- Redbubble (RBL) +9.4% a new IPO listing today having raised $30m with an IPO at 133 cents giving it a market value of $268m.
- Ainsworth Gaming (AGI) -1.97% after the deal for Austrian gaming giant Novomatic to buy Len Ainsworth stock at $2.75 a share has been referred to the takeover panel.
- P2P lender Direct Money (DMI) has said it is unable to fund new loan applications due to demand and is looking for another lender apart from Macquarie Bank and will refer borrowers to their preferred list of lenders.
- Crude futures prices have risen 1.7% in Asian trade to around $47 a barrel for WTI crude oil.
- Uber’s rival in China Didi, which recently received an investment of $1bn from Apple, is now looking at a US listing perhaps as early as 2017. The company now has 14 million registered drivers in China, delivering more than 11 million rides a day, and last month said it’s on track to turn an operating profit.
52 WEEK HIGHS / LOWS
BEST AND WORST STOCK PERFORMERS