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So that’s it for Brexit and its goodnight from me and its goodnight from him…those were the days!

ASX 200 up 39 points to 5142 as fears receded and buyers tentatively stepped back in. Banks the swing factor but big miners were the stand outs. Asian markets steadied with Japan up 1.56% and China up 0.38%. AUD steady at 73.90 cents and US futures turned positive with a 31 point gain.

After the volatility of the last few days it was good to see some green on the screens again. We have held up better than most so it was inevitable that the reaction today would be more muted. There is no doubt that in a low interest rate world, the attractions of an AAA rated country with solid banks and an economy growing at 3.2% are obvious. Even with no growth we will shine like a beacon in the globe with Europe now under a cloud, Japan suffering and the US the only other source of positivity.

The banking sector was once again the swing vote, with a bounce off that significant $146/147 level for the basket of the four big banks. Big miners were in demand as copper hit an eight week high and iron ore refuses to lie down and die.

Stocks and Sector Highlights:

  • REITs were all ex dividend across the board knocking around 10 points off the headline index at the open.
  • Gold shares were remarkably solid given the fall in the bullion price. Resolute Mining (RSG) +8.26%, Saracen Mineral (SAR) +5.76% and OceanaGold Corp (OGC) +4.02%.
  • UK facing stocks were in demand as Brexit bargain hunters snapped up oversold Henderson Group (HGG) +0.54% and Clydesdale Bank (CYB) +1.95%. Our own banking sector showed a clean pair of heels with the big four basket up to $150.60.
  • Industrials and healthcare stronger with Qantas (QAN) +6.13% especially firm on a substantial shareholder notice from Franklin Resources up to 6.05%. Qube Holdings (QUB) +2.35%
  • Energy stocks responded well to the rising oil price and the positive update from Caltex (CTX) +3.14%. Woodside (WPL) +1.24%, Oil Search (OSH) +2.02% and Santos (STO) unchanged.
  • Speculative stock of the day: Aspire Mining (AKM) +383.33% after an announcement from the Chinese, Russian and Mongolian governments of a rail corridor as part of the One Belt One Road Chinese initiative. Aspire will be able to build and operate a 547km section of the railway for their Ovoot Coal project in Mongolia.

Corporate News

  • Vocus Communications (VOC) in a trading halt is seeking to raise $650 million to buy Ontario Teachers Pension Plan and CIMIC Group’s (CIM) cables and data centre owner, NextGen Networks. Vocus is raising $652m in a fully underwritten entitlement offer and placement with $452 million from a 1-for-8.90 accelerated renounceable entitlement offer. The institutional offer closes on Thursday and will be followed by a book build on Friday. The offer price under the entitlement offer is 755 cents per share.
  • Caltex (CTX) +3.14% pleased the market today with guidance that pre-tax profits will fall to $310-330 million, down from $375 million a year earlier. The pre-tax profit of the supply and marketing arm is expected to rise more than 10 per cent to between $345 and $360 million, the company said. The average refiner margin was $US9.80 per barrel of oil, down from $US16 a barrel a year ago.
  • Pilbara Minerals (PLS) +8.18% appointed a new chairman Tony Kiernan to replace Tony Leibowitz.
  • UGL limited (UGL) +12.12% has secured an agreement to supply and maintain locomotives for Pacific National worth $594m.
  • Praemium (PPS) +18.97% after announcing that it would supply client reporting solutions to JB Were worth around $1m.
  • Urbanise (UBN) +1.19% secured a $6.8m contract with South African’s King Insurance which will deliver UBS around $6.8m in revenue over 5 years. Urbanise delivers cloud based building services.
  • Magnis Resources (MNS) +7.49% has announced outstanding lithium-ion performance from its blend of Nachu graphite with silicon additives for an anode with a cycle efficiency of 99.8% after the third cycle.
  • Wesfarmers (WES) +0.71% have lost another executive as Tom O’Leary has resigned from the Energy and Fertilisers division to take up the position as CEO of Iluka Resources. (ILU)-%.
  • TFS Corporation (TFC) +4.58% today announced the sale of a portfolio of loans and receivables to Indian sandalwood plantation investors and an on-going funding program with two local financiers.

Economic News

  • Detached house sales in New South Wales dropped by 11.5% the most since August 2010 according to HIA data today.

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In Asia

  • Japanese Prime Minister Abe has pledged to use all available policy tools to keep the wheels of the economy turning
  • Japan’s retail sales were unchanged in May. Sales fell 1.9%, compared with a forecast decline of 1.6% in the survey. The biggest contributor to the drop was fuels, reflecting declines in oil prices.
  • Japan’s 10-year bond yield was minus 0.22%, near the all-time low of minus 0.23%.

Europe and US

  • Goldman Sachs has suggested that the Brexit uncertainty may knock EUR 32bn off the earnings of the euro banks through t0 2018. They have cut the recommendation on Barclays to neutral as they are worried about operational risk due to a practice known as ‘passporting’. This is where a UK bank or institution can carry on cross border activities in European Economic Area nations. Possible this may be one of the casualties of any UK exit from Europe.

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A survey of U.K. consumers by Retail Economics found:

  • 61% were concerned about the future of the UK economy.
  • 58% would hold back spending on non-essential items.
  • Electronics and home-improvement categories likely to be hardest hit.
  • More than half of those surveyed likely to save more.
  • 61% worried about rising food prices.
  • Airbnb is seeking to raise money in its latest round of funding with a valuation of US$30bn, effectively tripling its value in two years. Uber is valued at US$62.5bn.

 And finally…..

How many Brexiters does it take to change a lightbulb?
Whoa, whoa, whoa. I didn’t say there was a lightbulb
Why did Britain cross the road?
Actually, we never said we’d cross the road entirely.
Roy Hodgson has just been made prime minister
He has a fantastic record of leaving Europe swiftly.
English players are frantically googling “football” after playing Iceland.

Clarence

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