ASX 200 slipped from early highs but still put in a solid performance, up 35 points to 5534. Woolworths (WOW) up over 8% was the highlight, with banks up around 0.8% and gold and materials stocks weaker still. Asian markets little changed with Japan down 0.04% and China flat. AUD steady at 74.79c and US futures up 2.
A strong start to the week as Woolworths set the tone with a deck clearing exercise turning sentiment around. Industrials took off followed by healthcare and consumer stocks. Banks did their bit too but consumer stocks the highlight on rate cut hopes. After a strong start the market did slip back but afternoon buying saw us push back up towards highs of 5548. The rotation from resources to banks and industrials continues as the USD rise is hurting commodities.
Central Banks have our back. No need to worry. TINA!!!!
STOCKS AND SECTORS
- Banks and financials were better with the big four basket up to $160. Wealth managers firmer too- led by AMP +1.91% and Magellan Financial (MFG) +2.20%. OzForex (OFX) -4.03% a disappointing performance. Insurers and REITS also positive, led by Iron Mountain Inc (INM) +2.07%.
- Consumer stocks were firm, led by Woolworths (WOW) +8.24% following the company update. Domino’s Pizza (DMP) +3.46%, Corporate Travel (CTD) +4.94%, Mantra Group (MTR) +2.74% and Metcash (MTS) +4.90% all stronger.
- Healthcare stocks also did well, led by CSL +1.55%, Sonic Healthcare (SHL) +1.81% and Reva Medical (RVA) +3.80%.
- Material stocks slipped away as the rotation out of resources continues. Newcrest (NCM) -2.62%, BHP -0.31%, RIO -0.43% and Western Areas (WSA) -4.01%. Base metal stocks fell heavily with Magnis Resources (MNS) -14.94% and Pilbara Minerals (PLS) -10.09%. Energy stocks down but Whitehaven (WHC) +1.72% bucked the trend whilst New Hope (NHC) -4.33% slipped in the coal sector.
- IT stocks better with Aconex (ACX) +2.90%, Xero (XRO) +4.00%, Hansen Technology (HSN) +4.21% and Objective Corp (OCL) +3.12%.
- Speculative stock of the Day: Vital Metals (VML) +50.00% following commencement of its West African gold drilling campaign. Key grades so far 5m @60g/t from 75m and 31m @3.19g/t from 34m
- Woolworths (WOW) +8.24% announced the long awaited strategic review and restructuring costs of $959m ($571m non-cash) or $766 million after tax to be recognised in 2015/16. The company also forecast EBIT before significant items would come in between $2.55-2.57 bn for the year. Shorts being squeezed hard today. Biggest one-day rise in 19 years.
- Newcrest (NCM) -2.62% June quarterly report showed net debt reduced 27% to $2.1bn. Gold production increased 0.7% to 2.4oz at an AISC of $762oz for FY16. Copper production decreased 7.4% to 21KT for the quarter. Three years of meeting or exceeding group production guidance.
- Smartgroup (SIQ) 1H NPAT expected to be up approximately 44% to $18m, with revenue up 35% and EBITDA up 42%. Acquisition of Selectus for $119m plus subsequent consideration of up to $50m. The transaction is expected to be EPS accretive of 6-7% before synergies.
- Kate McKenzie has resigned from Telstra (TLS) +0.34%. Ms McKenzie was the COO since 2103 and has been responsible for the division during the recent outages.
- Dongfang Modern (DFM) -10.79% responded to a ASX query regarding the collapsing share price. No news not the answer the market was looking for.
- Motorcycle Holdings (MTO) +13.10% following a trading update showing a 10-15% beat on the prospectus forecast of $6.9m for FY16. The chair Bob Thorn also announced his retirement immediately.
- Independence Group (IGO) -2.58% updated the market with a quarterly presentation and a delineation of a new high-grade Havana South ore shoot at the Tropicana Gold Mine.
- Metcash (MTS) +4.90% after the release of the annual report.
- Super Retail Group (SUL) +3.74% announced a new chief HR officer, Ms Jane Kelly.
- Data#3 (DTL) +12.55% after an earnings update with NPAT now expected to be between $13-13.5m up around 25%.
- Yowie (YOW) -12.36% after a disappointing quarterly report. Sales volume is 2.5 times greater than the same quarter last year. June was the sixth consecutive month of sales over $1m
- NSW has retained its position as the best performing economy, the ‘State of the States’ Commsec survey found, with economic activity running 13.5% above its average level of the past decade. This is slightly ahead of Victoria which is holding at 12.4%above its average, with the ACT standing at 11% above average.
- All that glitters is not Nintendo gold it seems, as the company reported on Friday night that the financial impact from the Pokémon Go (ne) craze was limited. The company announced that it does not expect to revise its annual forecast despite the success. The stock dropped 17.72% today and closed down nearly limit down.
- 32 of 41 analysts forecast that Kuroda and the BOJ board will expand their record program at the two-day meeting this week, according to a Bloomberg survey conducted July 15-22.
- China has banned original news reporting on the internet as it continues to tighten its influence online and for media outlets.
EUROPE AND THE US
Europe markets showing small gains on the opening
- One month on from the Brexit vote and the sky has not fallen as yet. The FTSE 100 index is up about 5% since the vote. Even the domestically-focused FTSE 250 is down by less than 2%.
- In a further boost to post Brexit UK, France’s Veolia is investing GBP750m over five years to create 600 jobs in new waste fired power stations.
- Philips reported second-quarter profit that rose more than expected on cost savings and said earnings will improve in the second half of the year. Adjusted EBITDA rose 8.6% to €544m beating the €519m average estimate of analysts. The company kept its full-year outlook.
- Wednesday sees the CEO of Deutsche Bank update the market in the quarterly update. The short bets on the German bank have fallen recently as hedge funds have taken their profits from the near 50% fall this year.
- Verizon Communications Inc. will announce plans to buy Yahoo’s core assets for a bit more than $4.8bn before the market opens in the US.
- In US Politics Trump is looking more a possibility especially given the chaos in the Democratic party with its chairman Wasserman Schultz quitting on the eve of the convention.
- Trump has suggested the US could pull out of the WTO.
- Current US Presidential election odds:
A very old woman realizes that she’s seen and done everything and the time has come to depart from this world. After considering various methods of doing away with herself, she decides to shoot herself through the heart. Not wanting to make a mistake, she phones her doctor and asks him the exact location of the heart. He tells her that the heart is located two inches below the left nipple. The old woman hangs up the phone, takes careful aim and shoots herself in the left knee.