Been traveling…did you miss me?? Melbourne only I’m afraid……
ASX 200 drops another 45 points to 5181 as the psychological 5200 level gives way. National Bank ex dividend and Mayne Pharma set the tone. AUD rises slightly on RBA SOMP with Asian markets weaker, led by Japan down 1.57% and China down 0.16%. AUD 76.85c and US futures up 6.
For the week the index is down another 2% from 5283 as Trump trauma and pre-election wobbles continue. AGMs downgrades not helping the cause either.
Next week will be interesting. Understatement!
STOCKS AND SECTORS
- Banks took their cue from the National Bank (NAB) -5.99% ex dividend dragging ANZ -1.50% and Commonwealth Bank (CBA) -0.87% although UK Clydesdale Bank (CYB) +7.09% managed gains on the back of a firmer pound. Insurers were weak too with Challenger Limited (CGF) -2.13%, IAG -2.06% and Bendigo and Adelaide (BEN) -1.40%. Big bank basket finished the week at $153.20 down from $158.50 although an 80c dividend in NAB should be taken into account.
- REITs mixed with Scentre Group (SCG) +1.88% though Goodman Group (GMG) -1.32%.
- In resources we saw selling ahead of the weekend with BHP -1.72%, Syrah Resources (SYR) -5.25%, Pilbara Minerals (PLS) -6.73%% and Independence Group (IGO) -4.92% Gold stocks hit too with Resolute Mining (RSG) -6.05%, Beadell Resources (BDR) -5.32% and Oceanagold Corp (OGC) -4.16%
- Industrials mainly weaker with Flight Centre (FLT) -8.04%, Lovisa Holdings (LOV) -5.65%, Qantas (QAN) -2.34%, Brambles (BXB) -0.80% and Trade Me Group (TME) -4.10%.
- Healthcare took another knock following the Mayne Pharma (MYX) -15.54% report on Bloomberg and continued selling in Ramsay Health Care (RHC) -1.57%, Resmed (RMD) -1.59% and Estia Health (EHE) -2.08%
- IT was again sold off Technology One (TNE) -3.95%, Freelancer (FLN) -2.78%, Nextdc (NXT) -1.50% and MYOB (MYO) -1.66%. Telcos were mainly unchanged with Vocus (VOC) +0.19% on defensive buying. Telstra (TLS) unchanged.
- Speculative stock of the day: Neurotech (NTI) +42.50% after listing today. The developer of medical solutions in the neuroscience space raised $7m in the IPO to have a market cap of $17.4m. The first key product is Mente Autism an EEG device using neurofeedback to help kids with ASD.
- Flight Centre (FLT) -8.04% issued a new profit warning as airfares continue to fall. The company has forecast the first half profit could fall 30%. FLT said it expected now underlying pre-tax profit between $105m and $120m for the six months to end of December, down from $145.9 million. The company believes the second half will be better and a full year of between $320m-$355m.
- Slater and Gordon (SGH) 2.78+% has received a massive protest vote at the ASGM on executive bonuses with 43% voting against the remuneration package. Considering the board and management have written off a billion dollars in an expensive UK adventure it is hardly surprising. The company provided no numbers for first quarter results.
- Mayne Pharma (MYX) -15.54% fell heavily on reports on Blomberg that the US Department of Justice was finalising plans for a probe into alleged generic drug price fixing in the US. The company was erroneously reported as not cooperating with the DOJ but later released a statement saying it was cooperating and the likely impact was minimal.
- Apollo Tourism (ATL) +32.50% listed at a very healthy premium as the company which owns 3000 vehicles in its fleet raised $50m.
- Orica (ORI) +8.33% after announcing a significant turnaround with net profits running at $342.8m from a $1.3bn loss a year earlier. The CEO suggested the company had reached an inflection point and saw some signs of stabilisation in the mining services space. Demand on the east coast of Australia has firmed but the west was still soft.
- SCA Property (SCP) -1.85% has upped its earnings forecast and taken a near 5% stake in Charter Hall Retail REIT. Forecast now for earnings per unit of 14.4c from 14.0c previously. Its distribution guidance has increased to 13.0c from 12.6c.
- Genworth (GMA) -7.62% after reporting a NPAT of $46.7m with the high LVR market down and the business in lower LVRs pressuring the business. The company also warned of higher delinquencies in Queensland and WA. Net earned premium is also expected to drop 5% to $470m.
RBA statement on monetary policy released today. AUD climbed to 76.83c.
- Conditions in the established housing market have eased relative to a year ago, although some indicators suggest that conditions may have strengthened over recent months.
- Housing prices are rising at a brisk rate in some locations, although overall housing credit growth and housing turnover remain lower than they were last year.
- Indicators of Australian labour market conditions have been mixed. The decline in the unemployment rate over the past year has been larger than expected.
- Overall, the risks to global inflation appear to have become more balanced. The pick-up in oil and other commodity prices from their troughs around the beginning of 2016 is expected to contribute to global inflationary pressures.
- Inflation is expected to remain low for some time, before gradually returning to more normal levels.
China’s yuan dropped to a record low against a trade-weighted currency basket amid speculation policy makers are using dollar weakness to boost the competitiveness of the nation’s exporters.
- A Bloomberg replica of the CFETS RMB Index, which measures the yuan against 13 exchange rates, fell to 93.78 Friday.
- Singapore Airl4ines reiterates outlook continues to be weak with profits falling 70%. Cathay reported an 82% drop in first-half profit amid growing competition from Chinese carriers and decline in premium travel demand. Cut throat competition appears to be the issue for all air lines at the moment.
EUROPE AND THE US
- Expect more fallout from the historic High Court decision on a parliamentary vote for Brexit.
- The Bank of England expects inflation to hit 2.7% next year, up from the current rate of 1%. It has also raised its forecast for economic growth to 1.4% from 0.8% but cut the 2018 outlook from 1.5% from 1.8%.
- Francois Hollande is officially now the most unpopular president in French history. His approval rating is just 4%.
- The Mexican government is working hard on plan B in case of a Trump victory. The Peso has fallen 11% this year with rates moving 1.5% higher to help boost the currency. Asked what their cunning plan was both the central bank and the finance ministry refused to elaborate but you can bet it is cunning. Probably involved jacking up rates again.
QUEEN OFFERS TO RESTORE BRITISH RULE OVER UNITED STATES
LONDON — In an unexpected televised address on Saturday, Queen Elizabeth II offered to restore British rule over the United States of America.
Addressing the American people from her office in Buckingham Palace, the Queen said that she was making the offer “in recognition of the desperate situation you now find yourselves in.”
“This two-hundred-and-forty-year experiment in self-rule began with the best of intentions, but I think we can all agree that it didn’t end well,” she said.
The Queen urged Americans to write in her name on Election Day, after which the transition to British rule could begin “with a minimum of bother.”
Elizabeth acknowledged that, in the wake of Brexit, Americans might justifiably be alarmed about being governed by the British parliamentary system, but she reassured them, “Parliament would play no role in this deal. This would be an old-school monarchy. Just me, and then, assuming you’d rather not have Charles, we could go straight to William and those children of his who have mesmerized you so.”
Using the closing moments of her speech to tout her credentials, the Queen made it clear that she has never used e-mail and has only had sex with one person “very occasionally.”
Have a great weekend and if you are in the US vote early and vote often!!!