Gone but not forgotten!
ASX 200 up 35 points to 5282 as early post-election woes were shrugged off. Miners performed exceptionally well as banks fell on fears of a Royal Commission at worse. Low volume as we wait the results and recriminations. Asian markets closed mostly higher, Nikkei up 0.60% and China up 1.76% with the AUD surprisingly stable against an uncertain backdrop higher at 75.14c. US markets closed tonight.
After an uneasy start the market dusted itself off and miners propelled us higher given good metal moves in Asia. Seems that the market is positively sanguine faced with another three years of hung or minority government. Clearly politicians make no difference. We tested the bottom around 5218 and closed on our highs of 5282.
We can now add the hung parliament risk to Trump. It will mean equity markets will struggle although underpinned by central banks yield and little alternative unless you want to pay the banks to look after your money.
Maybe we don’t need governments after all…Spain doesn’t have one..nor the UK nor Austria!!!
STOCKS AND SECTORS
- Big miners showed their global attraction with BHP +2.3%, RIO +3.71% and Fortescue Metals (FMG) +7.16%
- Gold stocks resumed their upward momentum led by Newcrest (NCM) +4.74% and Evolution Mining (EVN) +8.53%. Base metals stocks were very positive led by Independence Group (IGO) +7.69% and Western Areas (WSA)+7.17%.
- Defensive industrials also in demand Transurban (TCL) +1.25% and Sydney Airport (SYD) +2.29%. Telstra (TLS) -0.18% suffered slightly but off their lows on NBN fears.
- Banks the weak spot today on fears of greater scrutiny and potential Royal Commission.
- Speculative stock of the day: Terracom (TER) +200.00% as it announced it had acquired the Blair Athol Coal Mine for the cost of sending a letter. The mine ceased production in 2012 but has remained in good condition and the company plans full rehabilitation and a resumption of production. The company hopes to be producing 2 million tonnes per year of thermal coal by the end of 2016.
- Treasury Wine Estates (TWE) +2.48% after selling its non-core US brands, offloading 12 brands with around 1m cases affected but no financial implications.
- Austal Limited (ASB) -8.26% after an update on the US ship program showed a lower profit going forward with a loss of around $116-$121m due to delays in the Littoral program and a cost blow out due to modifications. EBIT is expected to come in for a $45m-$55m with margins in the US steady at 5-7%. ‘Shock trials’ of the new LCS 6 boats will be used for revised baseline design.
- Vocus Communications (VOC) +0.33% returned to trading today following the capital raising receiving string institutional support with a clearing price of 842c with $430m raised.
- Pilbara Minerals (PLS)+16.26% following a binding off-take agreement being announced with a major Chinese lithium chemicals company. 140,000ktpa of lithium spodumeme concentrate from the Pilbara from Q1 2018 for an initial six-year period.
- RCG Corp (RCG) +24.32% after acquiring the Hype DC for 6 times normalised FY2016 EBITDA. The price is expected to be around $105m They also issued guidance of $60m around the top end of expectations with $90m in FY17 following the acquisition.
- TFS Corp (TFC) -4.05% after reaffirming guidance for FY16 EBITDA to increase by 5% to 10%. TFS is the world’s largest owner and manager of commercial sandalwood.
- IMF Bentham (IMF) +6.00% after an update on its Australian court cases with Lehman Brothers liquidator declared and paid two dividends.
- Metals Ex (MLX) +9.03% Blackrock raised its shareholding to just above 10.5%.
- Clean Seas Tuna (CSS) +29.41% and Beston Global Food (BFC) +3.61% after announcing a strategic alliance to access the Chinese and South Korean market for fresh and frozen kingfish.
- Moody’s has reiterated the credit rating of AAA saying it is not under immediate threat.
- Fitch Ratings also reaffirmed the AAA rating but noted that any political deadlock would result in pressure on the rating.
- TD-MI Inflation Gauge: The Melbourne Institute’s monthly inflation gauge shows consumer prices rose 0.6% in June, after a 0.2% fall in May. Petrol prices rose 7.6% being the main driver for the rise.
- ABS Building Approvals: Approvals for the construction of new homes fell 5.2% in May, worse than market expectations of a 3.5% drop. YOY building approvals were down 9.1%, according to the ABS.
- ANZ Monthly Job Advertisements:
- Japanese companies have cut their forecasts for inflation for five years’ time, to 1.1% of inflation in five years’ time. The price outlook from companies undermines the BOJ forecasts of reaching the 2 percent inflation target by March 2018.
- Jiangxi Copper rose as much as 8.5% in Hong Kong and Sumitomo Metal., Japan’s biggest nickel supplier, surged more than 6% in Tokyo
- Silver tops $20 an ounce for first time since August 2014. It is up 47% this year against 27% for gold.
- Brent crude holds above $50 after Nigeria facilities attacked.
- Nickel near an eight-month high amid concern output will be disrupted in the Philippines after the new anti-mining environment minister announced plans to audit all mining operations.
- Rubber also bounced 3.9% as rain disrupted Thai production.
- Rebar on the Shanghai Futures Exchange rose as much as 5.3% to 2,468 yuan ($370) a tonne and iron ore on the Dalian Commodity Exchange advanced as much as 4.9% to 441.50 yuan per tonne
EUROPE AND THE US
US and Canadian markets closed tonight.
- UK Chancellor George Osbourne is considering slashing the UK corporate tax rate to 15% to stimulate the economy. Chancellor aims to keep U.K. corporation tax lowest in G-20. He proposal would bring the U.K. corporation tax down to a level closer to Ireland’s 12.5%, upsetting Germany and others in the process.
- London Stock Exchange shareholders set to say ‘ja’ to the Deutsche Boerse deal.
And finally best tweet I saw Saturday night was from someone who voted for the Animal Rights party and the Shooters in the Senate just to confuse the counter!!!!
Democracy in action
Only a matter of time before we get an update!!!!!!
And finally a word from our sponsors!