ASX 200 falls 32.4 points to 5318.9 after a helter-skelter start to the week. Miners and banks slip with energy stocks. Asian markets mixed with China up 0.34% and Japan down 0.52%. AUD at 72.50 and US futures down 14.

Looking at the headline today you would think that it was a quiet day. Anything but, as a soft opening gave way to a serious bout of selling, culminating at 11.30am and a retest of the 5300 level again which once again proved impregnable at least for the time being. Buyers stepped back in using 5300 as a trigger. The range for the day was 5364-5297 on around $3.8bn of volume. Not bad for a Monday.

The bounce was strong enough to take us from down over 50 points to a positive headline. Unfortunately, the down grade from Flight Centre put paid to the positive vibe although the turnaround in the banking sector held relatively firm for a modest loss for the day. The surprise today wasn’t that we were up for a time but that we were down 50 points as one stage. Not sure anyone sure that coming. Falling Dalian iron ore price, did not help the resource sector despite the positive upgrade from BlueScope Steel this morning.

Port inventories in China have climbed above 100m tonnes and futures have fallen around 5.2% in Singapore with Dalian futures down 6.5%

And this is why:

iron ore

Stocks and Sectors Highlights:

  • Resources: BHP -2.55%, RIO-2.31% and Fortescue Mining (FMG)-3.96%. BlueScope Steel (BSL) +7.35% the highlight.
  • Gold: remains solid Newcrest (NCM)+1.7% and Evolution(EVN)+4.9% the standouts in the big end. Regis Resources (RRL)+4.36% also a feature.
  • Energy: Oil Search (OSH)-3.22% and Origin Energy (ORG)-3.51% the biggest losers.
  • Financials: Clydesdale Bank (CYB)-0.63% results tomorrow. First time as a separate company. Westpac (WBC)-1.25% and insurers eased QBE Insurance (QBE)-1.09%, Suncorp (SUN)-1.06%. REITS also weaker Westfield Corp (WFD)-1.15%. Big four banks turn negative.
  • Industrials: Flight C entre (FLT)-8.93% earnings downgrade. Domino’s Pizza (DMP)-2.56% and Aurizon Holdings (AZJ)-1.78%. Telstra (TLS)-0.0% suffers from more outages especially in NSW and blames faulty hardware.
  • Speculative stock of the Day: Poseidon Nickel (POS)+25.71% following news of lithium bearing Pegmatites at their Lake Johnson project.

Corporate News

  • BlueScope Steel (BSL)+7.35% a great performance from the company as it upped its guidance to $270 for the half year with a full year profit before tax of around $500m. The last update from the company in February was a $209m profit for the half. Targeted cost reductions, higher steel prices and better domestic steel dispatches helping. The North Star plant in the US is also back online after an explosion last week at a cost of $5m.
  • Flight Centre (FLT)-8.93% announced its full-year underlying earnings before tax is expected to fall by 2 to 5 % from last year’s $366.3 million, down from an earlier forecast of a 4 to 8 % rise in profit. The reasons are many it suggests from the Zika virus, the election, Brexit and poor trading in the US leisure markets. Some analysts have suggested that margin pressure and market share loss were more to blame though.
  • Capilano Honey (CZZ)-3.08% have raised $16.5m with a 1:10 rights issue at a price of 1950 cents. The issue is to fund their bee keeping activities and provide flexibility for further acquisitions’ an update the company has achieved record revenue and earnings growth. The Manuka honey JV with Comvita in NZ has been formalised.
  • The Good Guys look to be heading down the IPO route rather than the trade sale to either JB Hi Fi (JBH)-2.3% or Harvey Norman (HVN)-2.36%.
  • Macquarie Group (MQG)+0.04% has moved to tighten its LVR lending to 120 postcodes down to 70% and restricted lending to investors that have five or more properties in these areas.
  • Mayne Pharma (MYX)+5.67% after the company received FDA approval for Doryx MPC tablets.
  • Mesoblast (MSB)+7.89% received a government grant for $6.2m for R&D activities.
  • Vicinity Centres (VCX)-1.22% acquires the DFO Brisbane outlet centre.

Economic News

  • No local news today

In Asia

  • Japan’s exports tumbled 10.1 % in April from a year earlier, in line with expectations, reflecting sluggish demand from China and emerging markets. Imports fell sharply, which in turn boosted the country’s trade surplus above expectations. It was the seventh straight month of export declines and the biggest since 12.9 % in January.
  • Exports to the U.S. fell 11.8 % in April from a year earlier, while shipments to the EU rose 9.9 %.
  • Exports to China, Japan’s largest trading partner, dropped 7.6 %.
  • Imports fell 23.3 %, the biggest decline since October 2009. Oil and liquefied natural gas contributed the most to the decline. The petroleum and coal tax was raised in April, which also could affect declines in energy imports.
  • Also in Japan, the Markit/Nikkei preliminary survey for May showed total new orders declined at the sharpest pace in 41 months.

In Europe and US

  • Bayer AG offered to acquire Monsanto Co. for about $62 billion to create the world’s biggest supplier of farm chemicals and genetically modified seeds. The company offered $122 per share in an all-cash bid, it said in a statement.
  • Greece has passed austerity measures in a bid to secure the next tranche of bail out money. Alexis Tsipras’s Syriza party, backed the last part of a €5.4bn austerity package that includes further tax hikes as well as automatic spending cuts if budget targets are missed.
  • Politics continues to dominate with Brexit and Trump in focus. The Trump/Clinton latest poll shows how tight things have become in the US race to the Whitehouse.
  • Plenty of Fed chiefs speaking to night to keep the market on its toes. Head of Boston Fed says conditions are almost right to raise rates in June.




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