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ASX 200 closes very firm at 5360 up 41 points as gold miners shimmer (+12%) and base metals shine. Insurers the only weak spot on ‘Stormageddon’ in NSW. Volume on the low side. Asian markets ease on Brexit fears. Japan down 0.67% and China down 0.28%. AUD at 73.315 US futures up 2.
A surprisingly strong day today with little to go on overnight apart from gold and iron ore, we kicked higher at the open before some more buying kicked in. The ASX 200 topped out at 5374 before settling slightly down from there but still a very positive start to the week. Resources were in fashion with gold shares shining like a beacon in the night.
The dreadful US job numbers have triggered a rally in gold bullion which has sparked a serious rally in the gold miners. Other material stocks have also done well as Dalian Iron Ore futures have rallied around 4% in Asian trade.
No wonder shares are rallying. The yield on a 10-year Aussie government bond has dropped below 2.2 % for the first time ever, to 2.17 %.
‘In regione caecorum rex est luscus’
Iron-ore futures in Dalian climbed 5.2 % after the first decline in Chinese port inventories in three weeks. Stockpiles fell 0.4 % last week to 100.25 million metric tonnes.
Financial markets have been certain of two things recently. No not death and Taxes although they are certainties for sure. The new ones are: US Fed to raise rates either June or July. UK Brexit vote to be an overwhelming Stay. Now all bets are off it seems. Hence gold hence USD/AUD change.
The other certainties the markets have factored in Malcolm Turnbull and Hillary Clinton. What could go wrong?
Stocks and Sector Highlights:
- Gold stocks were the highlight: The sector was up 12%. St Barbara (SBM)+15.3%, Northern Star (NST)+14.4% and Newcrest (NCM)+11.6% the stars. Base metals and other miners joined in as shorts were squeezed as USD bets unwound. What seemed like a sure thing for a rate rise now looks less likely? Small cap miner Kidman (KDR)+28% were especially firm.
- BHP +3.72% and base metals like Independence Group +11.4% and Oz Minerals (OZL)+5%.
- Insurers in the spotlight today after the wild weekend of storms in NSW. They are classing it now as a ‘Catastrophe’ event. So far insurers have had 11,150 claims totaling $38m. So far QBE -1.6% has said the event is not as serious as last year. Global rates are also weighing as a rate rise looks far less likely given the US jobs numbers.
- Speculative stock of the Day: Northern Manganese (NTM)+400% after some positive results from its Golden Terrace South-Redcliffe Gold project. 15m at 14.47 g/t.
- Caltex (CTX)-2% reported its Refiner margins today. April US$8.80/bbl down from US$10.58/bbl
- United Group (UGL) –3% has warned that it may need to set aside an additional $200 million to end disputes on its two contracts for INPEX’s Ichthys liquefied natural gas plant, highlighting the difficulties on negotiating settlements on oil and gas projects. The company has previously set aside $175m in provisions for delays in the power plant project.
- Webjet (WEB)-Trading halt as it beds down a $72m capital raise with a 1:8.25 shares at 560 cents to but NZ company One Republic.
- Woolworths (WOW) +0.46% has decided to cut its ‘Select’ homebrand range over the next few months.
- AirXpanders (AXP) is a trading halt as it completes a $20m capital raising.
- Potential takeover target Ingenia (INA)+2.83% announced that it had beaten last years’ sales target with 130 sales already this year. They have settled 78 properties with an average profit of $87,000 per sale.
- Cardno (CDD)-14.7% after completing the institutional 1:1.07 entitlement offer (rescue) to raise $26m at 40 cents.
- Silver Lake Resources (SLR) +8.9% after good high grade gold results at the Break of Day project.
- Melbourne Institute monthly inflation gauge for May falling by 0.2 %. In the 12 months to May, the inflation gauge increased by 1.0 %, falling steeply from a rise of 1.5 % in April.
- Fruit and vegetables were the biggest losers with a 4.1% fall followed by durable household products down 2.2%. Fuel a winner up 2.4%.
- Job ads on the internet and in newspapers rose sharply, by 2.4%, in May and were up 9.1 % for the year, figures from ANZ show.
- Nestle is ramping up its online marketing and sales in China with 67 products about to be sold online that have never been sold in stores. These include Nido Milk powder and Damalk Chocolate.
Europe and the US
Anniversary of D-Day-72 years ago today.
- ITV poll shows Brexit ahead 45% to 41%; TNS Poll has 43% to 41% One-month GBP volatility hits seven-year high before June 23 vote.
- Norway is set to ban all petrol and diesel cars by 2025.
- Good write up for Macquarie Bank in the WSJ on their commodity trading activities as their US counterparts have pulled the pin after a Fed clampdown.
- Swiss voters have overwhelmingly rejected a proposal to introduce a guaranteed basic income for all. Final results from Sunday’s referendum showed that nearly 77% opposed the plan, with only 23% backing it.
And finally Clarence is considering a irregular blog entitled the Orange Crop Report to keep you in the loop with the big issues and of course a daily joke.
So far a few of you have expressed and interest..if I get a few more positive comments then it is on baby!!!!
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