ASX tumbles through support to close down 75 points at 5466. Across the board selling as growth doubts and RBA cut disappoints. Banks the worse sector. Materials remain positive. Asian markets fell on Japanese stimulus disappointment. Japan down 1.8%, China unchanged. AUD 75.91c and US futures down 19.
“When trouble comes, they come not in single spies but in battalions”
- Disappointment in Japanese stimulus package
- Disappointment on RBA expectations
- Disappointment in banks and outlook on Net Interest Margins (NIM) in focus
- European banks under pressure overnight.
STOCKS AND SECTORS
- Banks led the way down after the rate cut yesterday with margins pressure concerns. Raising deposit rates and not passing on the full rate cut has drawn political fire and highlights the pricing pressures they have. The big four basket sold off to $157. Other financials joined in the down draft with Challenger (CGF) -4.81% especially hard hit on bond exposure concerns. Insurers were also in the dog house with Suncorp (SUN) -1.71% and QBE Insurance (QBE) -1.83%. REITS were also easier as RBA moves may be on hold for a time.
- Gold miners were once again celebrating with green across the sector. The last day of Diggers and Dealers in Kalgoorlie and Saracen Mining (SAR) +5.1% jumped after their presentation. Resolute (RSG) +4.09%, Doray Resources (DRM) +5.59% amongst the big winners. BHP -0.78% and RIO +0.02% held steady ahead of the RIO results due after hours otherwise the market could have been worse.
- Industrials hit across the board as utilities suffered APA Group (APA) -2.51%, Duet Group (DUE) -% and Ausnet Services (AST) -2.25% bearing the brunt of the selling. Gaming stocks were weaker as were defensive healthcare stocks although they fared slightly better than the market. Defensive Telstra (TLS) -0.52% also performed better than the market as its defensive qualities ensured only a minor sell off.
- Energy stocks mildly weaker as they continue to defy gravity Santos (STO) +1.65% actually firmed against a backdrop of falling crude prices after Morgan Stanley moved to an overweight recommendation.
- Speculative stock of the day: Gold Mountain (GMN) +31.58% after raising $2.3m to fast trach expansion of the Crown Ridge gold project in PNG.
- RIO +0.02% after hours result looks like a small beat with a US$0.45c dividend with underlying earnings of US$1.6bn down 47% to a 12 year low but a better than expected result and dividend. In other news, Rio Tinto approved the $US338m.Silvergrass iron ore expansion in Western Australia.
- Noni B (NBL) +% has entered an agreement to buy Pretty Girl Fashion Group from Cons Press for $65 million in cash and $9.7 million in shares. The acquisition will be funded by $30 million in bank debt and new capital raised through a $40 million rights issue, which will kick off after the release of Noni B’s full-year results in a few weeks.
- Seven Group Holdings (SVW) +7.65% Net profit rose to $197.8m in the year ended June 30, up from the $359.1m loss reported in2014-15, on revenues that edged up 2% to $2.84 billion. Kerry Stokes ‘cautiously confident that conditions will stabilise and anticipate that underlying EBIT in FY17 will be in line with the current year’.
- Genworth Mortgage Insurance (GMA) +6.9% has shown a 20% jump in half-year profit and announced a special dividend. The company reported a 16.7%lift in revenue to $369.6 million for the six months ended June 30. The company said it would pay an interim dividend of 14c per share plus a special dividend of 12c, both fully franked.
- Yellow Brick Road (YBR), unchanged, does not end in Oz for some as the company has announced a restructuring of senior management and a shift towards more franchise based business model. The company also announced savings from lower advertising costs now the company has fully developed its brand.
- OzForex (OFX) -3.78% after chairman’s address and disappointment with management changes.
- National Australia Bank Online Retail Sales Index topped $20 billion up 13.5% in the 12 months to June, accounting for around 6.8% of spending at traditional bricks-and-mortar retailers.
- Disappointment in Japan fiscal package drove declines in Asia.
- HSBC announced a $2.5 billion share buyback for this year as pre-tax profit fell 45% to $3.61 billion from a year earlier, common equity Tier 1 capital ratio rose to 12.1%, exceeding forecasts of 11.9% in December.
- In China, regional data for the first six months showing economic growth in 15 of the nation’s 31 provinces picked up from the first quarter.
- Property sales in the first half picked up except in Beijing where the numbers suggest caution.
- Bitcon has had another blow to its credibility as hackers have stolen $65m from a Hong Kong exchange called Bitfinex. The digital currency has fallen 20% this week.
EUROPE AND THE US
- According to The National Institute of Economic and Social Research (Niesr) in the UK it will avoid a recession this year. It expects the economy to contract by 0.2% in the third quarter following the vote to leave the EU, but to grow by 0.1% in the final three months of 2016.
- Yahoo probes possible huge data breach for over 200m accounts.
- RBS ‘considers offer for Williams & Glyn branches’.
- HSBC half-year profits slide 29% to £7.2bn
Monahan stumbled into a saloon, half crocked. “Say,” he said to the bartender, “how tall is a penguin?” “About two and a half feet.” “Thank God!” cried Monahan. “I thought I ran over a nun!”