Twas the night before Brexit and all round the house nothing was stirring ….not even a mouse!!!
The choice is tricky!!!
ASX 200 up 10 points in cautious trade to 5281 ahead of the ‘Bremain’ vote tonight. Big miners driving modest gains in a wishy washy day. Asian markets mixed Japan +1.07% and China -0.74%. AUD 75.37 with US futures up 85.
Once again we saw a conviction less trading sessions as we flip flopped around. We had a high of 5293 and a low of 5269. Equity options expiry day did not seem to have much effect on sluggish volumes as most traders are set. The question is what happens next? We have got so used to worrying about some macro event we will have no excuse but to concentrate on fundamentals. That could get quite scary as cash levels are still at elevated levels with funds. There is also a huge $8bn of bank dividend cheques landing on investors doorsteps in July.July is also a good month for the market before the August jitters.
If the UK votes to stay the market has already priced that in so a sigh of relief and then back to business as usual. If they surprise everyone and the polls suggest it is tight then we are not in Kansas anymore. The market is convinced the bookies are right and the polls wrong. Just as they were with the Queensland election. And let us not forget Leicester City at 5000-1 to win the premiership.
Stocks and Sector Highlights:
- Energy sector was better than expected with strength in Whitehaven (WHC) +10.34% as coal comes back into fashion. Miners were also in demand on the improving iron ore price, Dalian iron ore futures at a five week high, and Fortescue Mining (FMG) +8.28% continuing pay down of debt.
- Gold stocks recovered after the drubbing yesterday. Newcrest (NCM)+2.8% and star Resolute Group (RSG) +8.04%.
- Industrials mixed although Wesfarmers (WES) +% rallied after the investor day yesterday selling Woolworths (WOW)-0.71% against it.
- Brexit exposed stocks mixed Henderson Group (HGG)-1.17% and BT Investment Management (BTT)+3.26%.
- Recent IPO Droneshield (DRO) -20% was sold off after the huge rise yesterday
- Today’s IPO star Applydirect (AD1) +52.5% following listing today. The company raised $8m at 20 cents. The company is an E-Recruiter using search engine channels to allow employers to control the recruitment process without intermediators.
- Speculative stock of the day: Carbon Energy (CNX) +46.15% after signing a MOU for renewable energy project at Bloodwood Creek with Photon Energy for a solar power generation plant in Queensland.
- Seek (SEK) -5.43% after disappointing the market with guidance unchanged and a Brazilian and Asian deal to increase ownership. SEEK has paid $182 million to completely buy out its Brazil business and up its stake in its Asia venture.
- Perseus Mining (PRU) -12.35% having completed their equity raising at 50 cents to raise $102m.
- Macmahon Holdings (MAH) in a trading halt following the ambush and kidnapping of two employees in Nigeria.
- Fleetwood Corporation (FWD) +8.09% following the announcement of a supply agreement to manufacture affordable manufactured homes in National Lifestyle Villages.
- Fortescue Metals (FMG) +8.28% has paid down another US$500m of debt saving $21m in interest payments and shows the power of their balance sheet.
- Telstra (TLS) -0.74% finalised the sale of their Chinese Autohome business today and are set to receive $2.1bn and possible capital management program.
- ERM Power (EPW) +7.01% after a director bought shares in a vote of confidence following the profit downgrade a day or two ago.
- APRA has said the domination of the big four banks means an external shock could bring them all down at once. The regulator has said the banks are the most concentrated they have ever been. The Commonwealth Bank, Westpac, National Australia Bank and ANZ had doubled their total market share since 1990 to 80% according to Charles Littrell from APRA.
- Potential for some supply disruptions in the nickel market with the Philippines appointing an anti- mining crusader to head the country’s environmental department. This could lead to a crackdown on small nickel mines which feed into the Chinese markets.
- China’s nickel ore imports from the Philippines rose to 3 million tons in May, the highest level in seven months, according to official figures. That accounted for 97 percent of the country’s total purchases. Shipments from Indonesia have dwindled after that country’s prohibition.
Europe and US
‘Rien ne va plus’
- There is only one poll that matters now as the world waits.
- Central banks are on standby to flood the markets with liquidity if the markets turn to custard.
- Ponder this. In the UK HSBC is now offering two year fixed home loans at 0.99%. Five year loans are 1.99%.
Finally, the most important legal case in the US, the writing credits for Led Zeppelin’s song “Stairway to Heaven’, is now heading to the jury as both Jimmy Page and Robert Plant were queried on their recollections of events 45 years ago.
Heaven and Hell
Heaven Is Where:
The French are the chefs
The Italians are the lovers
The British are the police
The Germans are the mechanics
And the Swiss make everything run on time
Hell is Where:
The British are the chefs
The Swiss are the lovers
The French are the mechanics
The Italians make everything run on time
And the Germans are the police
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