ASX 200 up 43 at best and closed up another 24 points to 5512 as banks, healthcare, financials and industrials outpaced Gold (sector down 4.4%) and base metals (down 0.4%). We closed at an 11-month high. Asian markets pushed ahead with Japan up 0.77%, China up 0.58%. AUD 74.92c and US futures down 3 at the moment.

 

STOCKS AND SECTORS

  • Gold stocks were especially weak as the bullion price continues to fall on a higher USD and with risk appetite returning. Newcrest (NCM) -3.00%, Northern Star (NST) -7.88% and Saracen Mineral (SAR) -9.71%. Base metals weaker but finding support with lithium stocks slipping and Oz Minerals (OZL) -2.87%.
  • Big iron ore plays improved slightly with BHP +0.05%, RIO +1.08% and Fortescue Metals (FMG) +1.5%
  • Lithium producer Orocobre (ORE) -9.98% came under pressure after a huge rally as nameplate capacity was pushed out in the latest update and there was disappointment as the long term chairman resigned.
  • Banks were firmer yet again although still muted compared to healthcare and industrials. The big four rose around 1%.
  • REITS firmed led by Lendlease (LLC) +3.84% and Growthpoint (GOZ) +1.22%. PSC Insurance (PSI) +8.82% on a profit upgrade of over $20m against prospectus forecasts of $17.8m
  • In industrials, Mantra Group (MTR) +8.11% bounced hard on tourist numbers and underperformance recently.
  • IT stocks rose with Integrated Research (IRI) +6.19% and CSG Limited (CSV) +4.73% and Rhipe (RHP) +7.78%.
  • Fairfax (FXJ) +4.57% has quietly risen and is back above 100c again on potential moves to spin off Domain and other digital businesses.
  • Healthcare stocks continued their positive moves with Cochlear (COH) +3.42%, Australian Pharma (API) +2.81% and Admedus (AHZ) +19.05%.
  • Speculative stock of the day: S2Resources (S2R) +42.37% following high grade gold zone discovered at Monsoon after the first RC drill program.66m @ 11.4g/t. Drilling to resume in late August.

CORPORATE NEWS

  • Oil Search (OSH) +1.09% decided not to raise their bid for InterOil and took the $60m break fee instead.
  • Western Areas (WSA) +1.55% announced record monthly mill throughput in June and record annual throughput in the full-year of 616,279 ore tonnes. They also reported record annual production at its Spotted Quoll. Full year cash costs at the low end of guidance at $2.26 a pound. Cash at bank of $76 million and debt free.
  • South32 (S32) -1.08% has beaten production guidance at most of its major assets in the June quarter and confirmed its push into copper and base metals. The Worsley Alumina refinery in WA did marginally better than the 3,950,000 tonnes forecast, while the 7 million tonnes of coking coal produced in the Illawarra was 2% better than guidance.
  • Woodside (WPL) +0.95% on their June production report. Highlights include the US$1.9bn Greater Enfield project approved with 2P reserves of 69MMbbl. Production is down 6.3% with sales and revenue down 12.8% and 16% respectively. The production falls were the function of reduced NWS LNG production.
  • Nanosonics (NAN) +10.2% has reported strong quarterly results. Highlights include record 4th quarter sales of $15.1 million, up 25% on the previous quarter and full year sales up 93%.
  • Qube Logistics (QUB) +2.97% has been cleared by the ACCC in its long quest to own Asciano assets together with its Canadian partners. Some regulatory approvals remain though including FIRB.
  • Evolution Mining (EVN) -3.99% – their Quarterly report saw record gold production of 216,444oz at a cash cost of $732oz or US$546oz. AISC of $1117oz. Record cash flow of $119.5m.$115m in debt repayments.
  • Paladin Energy (PDN) -14.58% after a strategic review and a plan to raise over US$ 200m with a proposed sale of 24% of the Langer Heinrich Mine and a potential sale of up to 75% of the Manyingee project.
  • Silver Chef (SIV) -16.65% the chrome has fallen off the coffee machine slightly, following a business update for full year. NPAT between $23-24m including the first time impact of deferring a contract acquisition cost.
  • Metcash (MTS) +2.42% after ACCC approval to potentially buy Woolworths’ Home Timber & Hardware wholesale business and merge it with Mitre 10.
  • Aurizon Holdings (AZJ) +2.20% after a profit update and a further full year impairment of $73m in Aquila Resources and $29m in rolling stock. EBIT expected to be $871 versus guidance of $845-885m.
  • Adacell (ADA) +1.20% has announced guidance of between $10.5-$10.7m, an increase of 80% over FY15. Net cash $15.5 and further growth anticipated.

ECONOMIC NEWS

  • National Australia Bank’s quarterly survey of more than 910 firms showed its index of business conditions rose one point to +11 in the second quarter, well above the long-run average and the highest since the GFC.

ASIAN NEWS

  • Markets in Asia rose to 2016 highs as Hong Kong erased the loss for the year.
  • Japan’s Topix index climbed to a one-month high after Japanese media reported that the government is considering a 20 trillion yen (US$187 billion) stimulus program.

EUROPE AND THE US

  • ECB meeting tonight but no change in policy is expected.
  • Elon Musk unveiled his “master plan” for Tesla including  an integrated solar and battery storage system and building a freight trucks and buses. Even a ride-sharing business and of course driverless cars.
  • Lufthansa has cut its full-year profit target following a sharp decline in long-haul bookings to Europe blaming “terrorist attacks in Europe” and “greater political and economic uncertainty”.
  • The Italian Five Star Movement has called on the EU to approve an Italian bank rescue package.
  • European markets showing small losses at the open on some profit taking.
  • The probability of Britain sliding into its first recession since 2009 stands at 40%, up from 18% in June according to a survey of economists from Bloomberg.

And finally….

A taxi passenger tapped the driver on the shoulder to ask him a question. The driver screamed, lost control of the car, nearly hit a bus, went up on the footpath, and stopped centimeters from a shop window. For a second everything went quiet in the cab, then the driver said, “Look mate, don’t ever do that again. You scared the daylights out of me!” The passenger apologized and said, “I didn’t realize that a little tap would scare you so much.” The driver replied, “Sorry, it’s not really your fault. Today is my first day as a cab driver – I’ve been driving a funeral van for the last 25 years.”

 

And bonus one!!!

Two cowboys come upon an Indian lying on his stomach with his ear to the ground. One of the cowboys stops and says to the other, “You see that Indian?” “Yeah,” says the other cowboy.  “Look,” says the first one, “he’s listening to the ground. He can hear things for miles in any direction.”  Just then the Indian looks up. “Covered wagon,” he says, “about two miles away. Have two horses, one brown, one white. Man, woman, child, household effects in wagon.” “Incredible!” says the cowboy to his friend. “This Indian knows how far away they are, how many horses, what colour they are, who is in the wagon, and what is in the wagon. Amazing!”  The Indian looks up and says, “Ran over me about a half hour ago.”

 

Clarence

XXX

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NT Markets

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