ASX 200 trod water after a strong opening was derailed by CPI numbers. The ASX 200 closed up 2 to 5540 as banks and industrials slipped. Resources and Fortescue Metals the stand outs. Asian markets were dominated by Japanese stimulus news with Japan up 1.99% at the expense of China down 2.3% AUD rose then fell back to 74.83 with US futures up 42.
STOCKS AND SECTORS
- Resources were the bright spot today following the Fortescue Metal (FMG) +7.04% result. Iron ore rises helped BHP +3.12% and RIO +1.89% with gold stocks also rising after some days of losses. Newcrest (NCM) +3.10%, Perseus Mining (PRU) +6.25%, Evolution Mining (EVN) +1.88% and Beadell Resources (BDR) +7.32%.
- Banks flip flopped after the CPI number giving up early gains to be modestly lower. The big four basket closed at $160.
- Mining services continued their Lazarus rise following the results from Caterpillar in the US. Bradken (BKN) +29.41% announced as restructuring and powered ahead followed by Seven Group (SVW) +2.79% and Maca Limited (MLD) +2.02%.
- Utilities fell away as risk on replaced defensives. Asaleo Care (AHY) -5.76% continued to plunge as did Graincorp (GNC) -5.67% following a botched attempt to sell a 19.9% stake by US group ADM.
- Consumer stocks eased as rate cut hopes receded. Automotive Holdings (AHG) -2.56%, Wesfamers (WES) -0.21% and Woolworths (WOW) -0.34%.
- IT stocks in demand as iSentia (ISD) +3.57% reaffirmed guidance, Freelancer (FLN) +7.32% and NextDc (NXT) +2.97%.
- Healthcare stocks eased again led by CSL -1.35% and Acrux (ACR) -10.24% after disappointing sales numbers from Axiron.
- Speculative stock of the day: Syndicated Metals (SMD) +88.89% after acquiring a WA Gold project in the Laverton District for a small cash consideration and a share issuance.
- Fortescue Metals (FMG) +7.04% released its June production report. Highlights include 43.4mt shipped-US$1.6bn in cash- US$14.31/wmt C1 Cost- Guidance FY16 C1 Cost of US$15.43/wmt
- Independence Group (IGO) in a trading halt to raise $250m in an institutional placement and $30m in a SPP. The funds will be used to strengthen the balance sheet and fund the capital expenditure required to complete the Nova project. Nova is currently 93% complete and on budget.
- IOOF (IFL) +1.59% had positive net flows of $500m in FUMA in the 4Q16 to give total FUMA of $104.1bn. Total platform net flows were $312m. Net positive flows into IOOF’s Advice business of $339m for the quarter included continuing strong inflows from Ord Minnett and Shadforth.
- ANZ -0.12% The High Court has delivered the final blow to a six-year legal battle over bank fees, upholding a decision that ANZ Bank was entitled to charge late payment fees of up to $35.The court dismissed with costs an appeal from ANZ Bank customers.
- Programmed Maintenance (PRG) +14.37% rallied hard following an update from the MD. The integration of Skilled is progressing well and is showing savings of $30m pa. The company has maintained forecasts of between $100m-$110m for the 2017 year.
- Bradken (BKN) +29.41% after announcing a restructure of the executive team and a strategic review breaking the business into three separate units. Mobile Plant, Mining/Fixed plant and Engineered products.
- It’s complicated.
- Quarterly headline inflation was 0.4% in line with expectations but the annual measure is at 1%, below the 1.1% consensus forecast. The previous quarterly reading was -0.2%, and annually it was 1.3%.
- Underlying inflation, and the RBA’s preferred trimmed measure is at 0. %, slightly above economists’ average forecast of 0.4%. That has left the annual reading steady at 1.7% and above the 1.5% forecast. Last quarter it was 0.2%.
- Significant price rises this quarter are in medical and hospital services (+4.2%), automotive fuel (+5.9%) and tobacco (+2.1%).
- Falls in domestic holiday travel and accommodation (–3.7%), motor vehicles (–1.3%) and telecommunication equipment and services (–1.5%).
- The increase of 4.2%for medical and hospital services was driven by the annual increase in Private Health Insurance (PHI) premiums, which rise on 1 April every year.
Looks like the RBA has a 50:50 chance now of cutting rates next week.
- Japanese Prime Minister Shinzo Abe is expected to announce plans for more than 28 trillion yen (US$265 billion) in economic stimulus in an effort to prop up the economy, Kyodo News reported.
- The plan will include 13 trillion yen in “fiscal measures,” according to media reports without specifying what that meant.
- Japan 2-year yield falls to record -0.37%, 5-year yield also at record -0.38%.
- The PBoC sold 180 billion yuan (US$27 billion) of seven-day reverse-repurchase agreements, which inject funds into the banking system. That’s the biggest single-day offering of the contracts since June 29. Factors including tax payments and currency-market stabilisation made medium-sized and small lenders short of funds.
EUROPE AND THE US
Positive start expected to European markets
- Chemical giant BASF’s adjusted operating profit dropped 16% in the second quarter, hurt by a slump in oil and gas unit and by weak demand for its agricultural pesticides. The world’s largest chemical company by sales reported earnings before interest and tax (EBIT), adjusted for one-off items, of 1.7 billion euros, compared with the average forecast for 1.71 billion in a Reuters poll of analysts.
- Deutsche Bank Net income decreased to 18m euros (US$20 million) from 796m euros a year earlier. The forecasts ranged from a profit of 524m euros to a loss of 1.8bn euros.
- Aberdeen Asset Management said the sale of SAB to Stella Artois-owner AB InBev “remains unacceptable”, despite the bidder this morning lifting its all-cash offer for the company by GBP1 to GBP45 per share. This throws the biggest deal in UK corporate history into doubt as Aberdeen is a top ten shareholder. The AB InBev bidder has been forced to raise the offer to appease SAB Investors.
- Bayer AG, the German chemicals company seeking to acquire Monsanto Co., reported a 5.7% increase in second-quarter profit. EBITDA climbed to EUR3.05bn beating estimates of EUR3bn.
A fifteen year old Amish boy and his father were in a mall.
They were amazed by almost everything they saw, but especially by two shiny, silver walls that could move apart and then slide back together again.
The boy asked, “What is this Father?” The father (never having seen an elevator) responded, “Son, I have never seen anything like this in my life, I don”t know what it is.” While the boy and his father were watching with amazement, a fat old lady in a wheel chair moved up to the moving walls and pressed a button.
The walls opened, and the lady rolled between them into a small room. The walls closed, and the boy and his father watched the small numbers above the walls light up sequentially. They continued to watch until it reached the last number, and then the numbers began to light in the reverse order.
Finally the walls opened up again and a gorgeous 24-year-old blond stepped out. The father, not taking his eyes off the young woman, said quietly to his son… “Go get your Mother.”