ASX 200 rose another 35 points to 5389 as we headed towards 5400. Early enthusiasm waned slightly as banks failed to follow through. Materials, base metals and energy the standouts pushing higher into the close. Asian markets pushed ahead with Japan up 0.84% still focus on stimulus hopes with China up 0.21%. AUD remained above 76c while US futures down 29.

Brexit what Brexit?

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STOCKS AND SECTORS

  • Metals and miners the star performers today with Sims Metal (SGM) +6.14%, BlueScope Steel (BSL) +3.98% and Fortescue Metals (FMG) +5.52% all shooting out the lights. Orica (ORI) +4.19% also caught the bug with Whitehaven Coal (WHC) +1.33% infected New Hope Coal (NHC) +7.51%. In China iron ore futures were limit up helping things alone nicely.
  • Base metals were in demand as nickel pushed higher too in Asian trade, Western Areas (WSA) +13.16%, Oz Minerals (OZL) +4.91%, Sandfire (SFR) +9.84% and Orocobre (ORE) +3.59%.
  • Energy stocks better Peninsula Energy (PEN) +16.15% and Senex (SXY) +7.84% doing well. With Worley Parsons (WOR) +4.11% also in the spotlight.
  • Financials caught fire as Macquarie Group (MQG) +2.90% and other wealth managers like Henderson Group (HGG) +2.68% and BT Investment (BTT) +4.93%.
  • Industrials were a little underwhelming as defensives continue to lose support on risk on trades. Ramsay Healthcare (RHC) -1.23%, CSL -1.16% and Sydney Airport (SYD) -0.99% with Transurban (TCL) -1.33% also weaker.
  • IPO watch: Scottish Pacific Finance (SCO) +4.69% after listing today. Race Oncology (RAC) +32.50% also listed this morning on solid volume.
  • Speculative stock of the day: KBL Mining (KBL) +125.00% announced a finalisation of remedial works to its failed haulage road and the resumption of open pit production at the Pearse gold project.

CORPORATE NEWS

  • Catapult (CAT) – still in a trading halt pending a $100m capital raising and purchase of two new business in the US for around US$65m. The equity issue will be done with a 1 for 10.65 at a price between 270c-330c. They also announced profit guidance of revenue between $18m-19m
  • DOW EDI (DOW) +2.8% following an awarding of the City Rail Link contract in NZ worth around $460m.
  • Netcomm (NTC) +2.99% following the signing of a frame purchase deal with Nokia for a global JV on fixed wireless broadband.
  • Cedar Woods (CWP) +3.46% After the SA Government approved its conditional purchase of a 16.5h site in Glenside for $25.8m. CWP has received approval from its financiers to increase its finance facility from $135m to $175m to fund its projects. CWP also announced today that it had been selected by the SA Government to redevelopment up to 40 hectares of prime land across Port Adelaide.

ECONOMIC NEWS

  • Westpac-Melbourne Institute confidence survey for July, with the headline index slipping back into negative territor The bank said this morning the main index had dropped 3%, to 99.1 in July from 102.2 in June.

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ASIAN NEWS

In China:

  • In a sign of a changing economic balance, China freight numbers were down 7% but passenger numbers were up 12.4%.

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The ruling from The Hague last night on disputed islands, or rocks in the South China Sea, continues to cause issues for all concerned as Bloomberg lists the five ways the Chinese have lost out:

  • The tribunal dismissed China’s claims to the waters based on a 1947 map with a dashed line extending about 1,800km south of Hainan Island. The court found, there was no legal or historical basis for China to claim rights to resources within the sea area.
  • It found that Itu Aba, the largest natural feature in the disputed Spratlys, is not an island.
  • The tribunal found that China had unlawfully interfered with fishing within the Philippines’ economic zone.
  • The tribunal found that China had “permanently destroyed” evidence of the natural conditions of the rocks and reefs where it built
  • The court’s findings undercut China’s credibility as a responsible power in the region and upholder of law.

In Japan

  • The Japanese Sankei newspaper reported government officials are considering “helicopter money” as a policy stimulus option.
  • A key adviser to PM Abe, Koichi Hamada ,said Japan needs to keep various policy options open, including coordinated action by the government and the central bank. He called “helicopter money” a ‘very risky gamble’. He said Japanese investors have shown cowardice selling Japanese stocks below fundamental value.

Interesting graphic from the BOJ on average interest rates on cash deposits released today. Stimulus tomorrow.

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  • No wonder the Nikkei has had the best three-day rally in six years.
  • IPO fever has gripped Japan too with Line, a Japanese mobile-messaging app provider backed by South Korea’s Naver Corp raising US$1.3 billion after pricing its offering at the high end of an increased range. The IPO was almost 25 times oversubscribed. In the gray market pre-IPO, the stock is trading at a 15% premium. The stock opens officially on Friday.

EUROPE AND THE US

  • The UK will have a new PM later their time as David Cameron steps down and hands the reins to Theresa May.
  • We may see the stronger pound derail the UK optimism on an export boost.
  • The celtic tiger is roaring again. The Irish statistics office has said the economy grew by 26% in 2015.

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And finally…….sorry couldn’t resist!!! Look away children!

While playing in the backyard, Little Johnny kills a honeybee. His father sees him killing the honeybee and angrily says, “No honey for you for one month!” Later that afternoon, Johnny’s dad catches him tearing the wings off a butterfly. “That’s it! No butter for you for one month!” says his dad. Later that evening as Johnny’s mother cooks dinner, a cockroach run across the kitchen floor. She jumps and stomps on it, and then looks up to find Little Johnny and her husband watching her. Little Johnny looks at his father and says, “Are you going to tell her, Dad, or do you want me to?”

 

Clarence

XXXX

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