ASX 200 falls 23.3 points to 5295 on late sell off to test 5300 again in quiet trading. Flight Centre continuing to slip together with energy and bank shares. Asian markets weaker with China down 0.91% and Japan down 1.03%. AUD slips to 71.95 whilst US Futures down 24 points.
A quiet day with little volume to speak of. Very mixed performance across the sectors with banks slipping back although we appear to be waiting for something. It may have been some guidance from the RBA governor at lunch time which proved slightly disappointing as Glenn waxed lyrical on the joys of travel and late night conference calls as part of his role as head honcho. He did get paid $1m a year to take all this conference calls so he should not complain too loudly. A career promoting industry super beckons.
The market seems to be becalmed at the moment drifting around on a lack of news and waiting for the next central bank stimulus package or fiscal tightening. Risks are rising as the calendar ticks over to June next week and players are retreating to the sidelines. Volume and volatility missing in action today. 29-point trading range.
Slight concern that the match out sell off pushed us below 5300 which could trigger more momentum selling tomorrow.
Stocks and Sectors Highlights:
- Resources: The big miners eked out gains with BHP +0.05% and RIO+0.45%. BlueScope (BSL)-3.03% gave back some of yesterdays’ gains following the profit upgrade as brokers went back to their models and adjusted price targets.
- Gold: Mixed. St Barbara (SBM)+3.17% bucked the general weakness in the sector.
- Energy: Stocks slip across the sector. Peninsula Energy (PEN)+4.84% bucked the trend
- Financials: Big four weaker by around 0.7%. Macquarie Group (MQG)+1.22% the stand out, Insurers doing well AMP +1.28%.
- Industrials: Flight Centre (FLT)-4.98% falling away on broker downgrades following yesterday’s shock. Wesfarmers (WES) -1.76% a casualty. A big winner was Capilano (CZZ)+5.03% after the rights issue yesterday was announced at 1950 cents. Telstra (TLS)-1.24% also down on continuing bad PR on outages. Healthcare stocks looked sick with Regis Healthcare (REG)-1.8%, Australian Pharma (API)-3.43% and Estia Health (EHE)-2.22%. Corporate Travel (CTD)+3.57% found friends as investors switched out of Flight Centre perhaps.
- Speculative stock of the Day: Strategic Elements (SOR) +24.14% after announcing that a JV with an Australian Uni has enabled a glass based transparent memory device to remember the same piece of information 100,000 times using a transparent memory ink.
- CSL-0.08%- Approval from FDA on the introduction of their flu vaccine FLUCELVAX QUADRIVALENT.
- SEEK (SEK)-2.37% Chinese subsidiary results from Zhaopin showing a 19% rise in revenue although EBITDA fell 12%.
- Former CEO of InterOil Phil Mulacek has hit out at the planned takeover from Oil Search (OSH)+1.51% and called it ‘a bad deal at the bottom of the market’. Which does then imply that it is a good deal for Oil Search. He former head accounts for around 7% of the share register between him and his group of other dissident shareholders.
- Tower Insurance (TWR) -11.18% reported an after tax loss of $8.7m for the half with flat premiums, an active storm season in the pacific increasing claims. Underlying NPAT of $7.6m. Interim dividend of 8.5 cents.
- Technology One (TNE)+4.08% after a slow start the market warmed to the results with a growth of 10-15% for the full year and 100% cloud growth. Revenue up 12% and NPAT down 17% on higher total expenses which will be dramatically reduced in the next period down from 16% to 11% in the second half.
RBA governor Glenn Stevens gave his last official speech today at the Trans-Tasman Business lunch before handing over to Philip Lowe in September.
- He gave little away on interest rates.
- Defended the RBA inflation goals.
- Said that inflation was probably a little on the low side.
- Housing isn’t a one-way bet. Reiterated his call on ‘Sunrise’ some years ago that geared housing is not a sure fire way to increase wealth.
- APRA Curbs though seem to be talking the irrational exuberance out of the market.
- The AUD is doing what he expected at the moment and was happy to have used ‘Jawboning’ in the past.
- Economic picture is for slowing growth, lower unemployment and low inflation.
- On government and Treasury assumptions for the economy he was sceptical that the forecasts could be reached.
- He also suggested that the transition in China has never been done before so it is hard to know how it will turn out.
- Today the AMP announced that it was restricting borrowing conditions in a number of postcodes in the outer suburbs and around 25 cities around 1 hours commute from a CBD. Mining towns such as Broken Hill and Gladstone were also targeted.
- At the opposite end of the spectrum Westpac Bank (WBC) told mortgage brokers the maximum loan-to-valuation ratio (LVR) for new mortgages for property investors would rise to 90 %, up from 80 %. The change means property investors need a deposit of 10 % of a property’s value, compared with 20 % previously.
- As an aside MyState is offering 3 year fixed rate home loans at 3.74% and a $1500 cash back offer if refinancing with an 80% LVR.
- President Obama is giving an historic speech in Vietnam.
- Sony cuts profit forecast to Y300bn on quake damage costs.
In Europe and US
- Waiting for the Fed?
Things to watch out for overseas:
- S. data on Tuesday are forecast to show sales of new homes climbed for the first time in April.
- Germany has a report on investor confidence due.
- While France has a gauge of business sentiment coming.
- Euro-area finance ministers will meet to discuss how to conclude Greece’s bailout review. The IMF has called for ‘unconditional’ debt relief from European creditors.