So Glenn tell us about the rate cut?
ASX 200 accelerated to the downside post the rate cut closing down 47 points at 5540. Banks and energy stocks weaken, dragging industrials in their wake. Asian markets mildly weaker as Japanese stimulus awaits. Japan down 0.88% and China down 0.07%. AUD slips to test 75c briefly but bounces to 75.52c. US futures up 22.
The long debated rate cut came to pass. Weakness before the cut and more weakness after with across the board profit taking. Results were mixed with a good set of numbers from Credit Corp (CCP) +13.06% but Seven Media (SWM) -18.36% warned of more pain ahead and took a direct hit.
After a solid July it was inevitable we would see profit taking and consolidation at some stage. Maybe the market was just looking for an excuse. August can be a volatile month and we have run hard. 5611 is the ceiling. Lock it in Eddie.
STOCKS AND SECTORS
- Energy led the market down on crude falling below $40.Woodside (WPL) -2.22%, Origin Energy (ORG) -3.86% and even Whitehaven (WHC) -3.84%.
- Banks and financials were sold off although the big four managed to escape the worst of it. The big four basket is holding firm around $161. Regional banks not faring so well with Bendigo and Adelaide Bank (BEN) -3.15% and Bank of Queensland (BOQ) -1.61%. Insurers led by QBE Insurance (QBE) -1.71% and IAG -0.66%. REITS weak too Mirvac (MGR) -1.79%.
- Media stocks were hit hard following the Seven West Media (SWM) -18.36% result. A negative outlook statement was enough to knock the whole sector. Nine Entertainment (NEC) -14.29% and TEN -0.88%. Southern Cross (SXL) -3.16% also took a hit although Macquarie Media (MRN) +6.52% bucked the trend.
- Consumer stocks pretty much ignored the rate cut and continued into further into the red as the afternoon progressed. Bapcor (BAP) -2.09%, Webjet (WEB) 2.43-% and The Reject Shop (TRS) -4.58% some of the worse affected.
- Healthcare also slipped with OBJ Limited (OBJ) -4.26%, Mayne Pharma (MYX) -2.21% and Pulse Health (PHG) -4.84%.
- Material stocks eased with BHP -2.19% and RIO -0.58%. Gold stocks also gave back recent gains led by Resolute Mining (RSG) -5.17%, Northern Star (NST) -3.77% and Dacian Gold (DCN) -5.06%.
- Bright spots today in oil sensitive transport stocks QANTAS (QAN) +1.26% and Virgin Australia (VAH) +4.17%
- Speculative stock of the day: MGT Resources (MGS) +46.67% following news that Cloud Adventurer and Marvel Network have signed variation agreements extending the convertible notes from August 2016 to September 2016.
- Credit Corp (CCP) +13.06% NPAT up 20% in $45.9m. Consumer lending segment NPAT of $6.1m. Positive outlook across all businesses with FY2017 NPAT growth guidance of 13-18%. Company said lifted its FY16 profit by 25% meeting guidance despite a drop in full time student numbers. FY profit up to $90.1m on revenue of $1.01bn.
- Seven West Media (SWM) -18.36% full year profit of $207m, final dividend of 4c with revenues dropping 2.5% to $1.72bn. The outlook remains flat with advertising revenues growing at single digits. the outlook for the advertising market remains “short” according to the company.
- Navitas (NVT) +0.17% lifted its FY16 profit by 25% meeting guidance despite a drop in full time student numbers. FY profit up to $90.1m on revenue of $1.01bn. The company said global demand for high-quality education and training was expected to continue across the group’s operations over the coming year.
- Resolute Mining (RSG) -5.17% after a record profit result of $213m. Revenue was up 21% with ROE at 129%. Debt was reduced by $91m during FY16. Cash of $102m.
- Qube Holdings (QUB) +0.78% has moved to 100% of the proposed Moorebank Internodal Terminal site for the 33% it did not already own. Qube paid $98.9m to Aurizon Holdings (AZJ) -1.15%.
- Martin Jet Pack (MJP) -22.22% announced a business update with the delivery timetable slipping as more testing and engineering validation is required to satisfy potential customers.
- Clean TeQ (CLQ) -8.99% after an update on its Scandium project and feasibility study.
- RBA has cut interest rates by 25bps to a record low of 1.5%. Commonwealth Bank the first to react with a 13bps cut to the variable mortgage rate. National Bank by 10bps.
“The Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting”.
- Approvals for the construction of new homes fell 2.9% in June, which was worse than market expectations of a 0.5% rise.
- Over the 12 months to June, building approvals were down 5.9%. Approvals for private sector houses fell 2.3% in the month, and the ‘other dwellings’ category, which includes apartment blocks and townhouses, was down 2.4%
- Australia’s trade balance remains in the red with a deficit of $3.1 billion in June, following a deficit of $2.2 billion in May. Economists had expected a deficit of $2 billion in June. Exports fell 1.0% in the month, while imports were up 2.0%
In NZ the RBNZ sees no reason to change its inflation targets. The ‘Policy Targets Agreement’ is reviewed by Treasury before the 2017 renewal by the finance minister and governor.
Still waiting for more news on Japanese stimulus measures and details on the 28 trillion yen package boosting high speed rail and port facilities
- Hong Kong trading closed due to a typhoon.
- Wandou App spurs online market set to reach 2.34 trillion yen by 2019. Five million Chinese spent US$13.7 billion in Japan last year. Amazon recently added Chinese language to its Japanese website, lowered the cost of shipping to China and enabled shoppers in China to pay with local currency in response to demand for goods ranging from health and personal care products to cosmetics.
EUROPE AND THE US
- Microsoft has sold US$20bn of corporate debt in the fifth largest sale ever to fund its purchase of LinkedIn.
- Tesla has agreed to buy another of the billionaire’s investments, the solar power company SolarCity, in a potentially controversial US$2.6bn. SolarCity, which is the US’s biggest supplier of solar energy, is 23% owned by Musk.
- South Korea has suspended sales of 80 Volkswagen models and fined them 17.8bn Korean won ($16m, £12m) for emission test rigging, in addition to a 14bn won fine from last year, the ministry of environment said.
- One of the big UK property funds, Aberdeen, that froze redemptions in the wake of the Brexit vote has gone back to normal conditions on exit of 1.25% levy to withdraw after raising it to 19% at the height of the post vote volatility.
I woke up this morning at 8 and could sense something was wrong.
I got downstairs and found the wife face down on the kitchen floor, not breathing! I panicked. I didn’t know what to do.
Then I remembered – the local cafe serves breakfast until 11.30.
A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings.
The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next-door neighbor. Before she says a word, Bob says, “I’ll give you $800 to drop that towel.”
After thinking for a moment, the woman drops her towel and stands naked in front of Bob. After a few seconds, Bob hands her $800 and leaves.
The woman wraps back up in the towel and goes back upstairs.
When she gets to the bathroom, her husband asks, “Who was that?” “It was Bob the next door neighbor,” she replies.
“Great,” the husband says, “did he say anything about the $800 he owes me?”