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ASX 200 drops 50 points at 5312 as global growth concerns mount. Banks and resources lead market down in quiet pre long weekend trade. Asian markets fall most in a month with Japan down 0.5% and China down 0.4% AUD sells off to 74.16 cents and US futures down 17.

A dismal day from the off with heavy losses in the miners as the USD rallied and questions again on the BHP liability on the Samarco tragedy. Banks too sagged on the looming mortgage wars initiated by CBA yesterday. With a bank holiday looming and the FOMC upon us next week it was no market for heroes and discretion won out as traders battened down the hatches and escaped for the long weekend.

**Queen’s Birthday Holiday on Monday**

Stocks and Sector Highlights:

  • Broad based losses with banks down around 1%-1.5%. Resources also hit hard with BHP -4.13% or 9 index points. RIO -3% didn’t want to feel left out. Amcor (AMC)-2.4 % continued their fall on the Venezuelan issue.
  • Gold stocks bucked the downward spiral with Newcrest (NCM)+1.23% although others not so positive.
  • Blackmores (BKL)-5.55% has been promoted to the ASX list of the top 100 companies, replacing caterer and cleaner Spotless (SPO)-0.4%. A2 Milk (A2M) +2.45% was added to the S&P/ASX200 index and Liquefied Natural Gas (LNG)-22.8% was removed.
  • Speculative stock of the day: Odin Energy (ODN)+37.5% following an award for their gridComm as ‘Best Potential in Asia’. This product is the subject of the takeover at present and makes smart cities smarter with connection of street lights to the internet.
  • IPO of the day: Livehive (KVH)-10% on its first day. Another bad sign. Recent debutante 9 Spokes (9SP) +13.3% after a fall yesterday.

Corporate News

  • BHP -4.1% after a Brazilian police investigation into the Samarco tragedy has resulted in accusations of crimes including wilful misconduct for three companies and eight employees.
  • Virgin Australia (VAH) -3.57% China’s Nanshan group is set to buy Air NZ’s 19.9% stake in Virgin. The deal is worth around $262m and is being done at 33 cents. This will leave Air NZ with a remaining 2.5% stake.
  • Warrnambool Cheese (WCB)+3% has tapped shareholders in a renounceable right issue to raise $142m to repay debt.
  • Wellard (WLD)-19.3% profit downgrade due to shipping schedule changes and record high cattle prices compressing margins. Wellard now expects to post net profit of about $23.5 million to $30 million. It has previously lowered its forecast by over 8% to $42.5m.
  • Domino’s Pizza (DMP) -0.4% will introduce new technology from next week that will allow your pizza shop to not only track the pizza but also to track the customer so it knows when to pop it in the oven for maximum freshness and taste. The company is assuring pizza lovers that the tracking finishes when you pick up the pizza. The new product is the 1984 pizza.
  • Ainsworth Gaming (AGI) -0.8% after postponing the EGM to decide the sale of the founders’ 53% stake to Austrian gaming behemoth Novomatic for $473m
  • Mesoblast (MSB) the suspension continues.

Economic News

  • Global yields are the ‘lowest in 500 years of recorded history’ Janus Capital Bill Gross has written. He believes that the US$10 trillion of negative rate bonds will be a “supernova that will explode one day”.
  • The yield on the UK’s 10-year gilt dropped below 1.25% for the first time. The yield on the German equivalent also sank to a record low of 0.027%

In Asia

  • Japan’s 15-Year bond yield falls below zero for the first time on record.
  • Line Corp, Japan’s most popular mobile-messaging service, is on track to announce details of its initial public offering at the close today. Line is seeking to raise $1 billion to $2 billion with a dual listing in the U.S. and Japan.

Europe and the US

  • Amazon is making inroads in the supermarket and grocery business with an announcement of an online delivery service. Amazon Prime customers in central and east London will be able to order a full weekly shop and get it delivered the same day. It plans to roll the deliveries out further across the UK.
  • Britain is the world’s most vulnerable state on a key measure of short-term debt and credit markets might suddenly seize up if voters opt for Brexit, Standard & Poor’s has warned.
  • European equities could lose about a quarter of their value in the immediate aftermath of Brexit a study showed. Risk-modelling firm Axioma found that stocks would be the hardest hit among asset classes when it simulated the effects of a “Leave” vote on a hypothetical portfolio composed of 54 % bonds, 41 % shares and the rest in alternative investments.

France 2016 kicks off tonight. Strikes throughout France just to make it more fun.

Ron Chestna, 89 years of age, was stopped by the police around 2 a.m. and was asked where he was going at that time of night. Ron replied, “I’m on my way to a lecture about alcohol abuse and the effects it has on the human body, as well as smoking and staying out late.” The officer asked, “Really? Who’s giving that lecture at this time of night?” Ron replied, “That would be my wife”.

Have great long weekend. Laters!

Clarence

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NT Markets

Get a Global take on things at http://www.ntmarkets.com

 

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