ASX slips 16 points to 5857 as RRBA keeps rates on hold. Miners and coal stocks in the green whilst Telcos and financials slide. Asian markets mixed with China closed and Japan down 0.97%. AUD slips on rate decision and commentary to 75.75c and US Futures down 39.
STOCKS AND SECTORS
- Miners slightly better with surprises in the base metals as RIO -0.18% suggested copper supplies would be tighter than previously forecast. South32 (S32) +2.51% the stand out but Oz Minerals (OZL) +2.70% also did well. BHP -0.33% with Western Areas (WSA) -1.77% still being shorted. Iron ore major Fortescue Metals (FMG) -1.61% looks close to testing the 600c level. Syrah Resources (SYR) -3.94% turning down again as Galaxy Resources (GXY) -4.60%.
- Gold stocks better in line with a higher bullion price and a lower AUD. Evolution Mining (EVN) +3.76%, St Barbara (SBM) +5.42% and Resolute Mining (RSG) +5.41%.
- Energy stocks mixed with Santos (STO) -1.07% continuing to struggle amidst rumours on LNG closures. Coal stocks though, all fired up with Whitehaven Coal (WHC) +5.48% following a surge in coking coal prices due to Cyclone Debbie. New Hope Corp (NHC) +3.93% also joined in the fun.
- Industrials eased as Aurizon (AZJ) -1.16%, Qube Holdings (QUB) -0.78% and Wesfarmers (WES) -0.71%. Consumer stocks Harvey Norman (HVN) -1.77%, Helloworld (HLO) -4.03%, Webjet (WEB) -1.55% and Flight Centre (FLT) -1.34%.
- Banks and Financials a soft spot today. The Big Bank Basket slid to $185.77 with insurers also in the red. Henderson Group (HGG) -2.30% and other wealth managers slipped too, Macquarie Group (MQG) -0.95%.
- Healthcare eased back, Ramsay Healthcare (RHC) -0.91%, Sonic Healthcare (SHL) -1.13% and Primary Health Care (PRY) -1.42%. Viralytics (VLA) -3.94% had a tough day at the office though Mesoblast (MSB) +5.58% as it continues to make positive announcements.
- IT and Telcos easier again. Telstra (TLS) -0.64%, Vocus Group (VOC) -1.65% and TPG Telecom (TPM) -2.61% though Chorus Limited (CNU) +3.11% bucked the trend. IT stocks again down led by iSentia (ISD) -1.36%, Catapult Group (CAT) -5.33% and Aconex (ACX) -0.26%.
- Speculative stock of the day: GetSwift (GSW) +48.98% after it joined forces with CBA to “improve delivery logistics”. GetSwift says it has an exclusive partnership with CBA to offer the bank’s retail merchants its real-time delivery platform.
- Bellamy’s (BAL) +6.18% has a new high shareholder with a Hong Kong Fund manager Janchor Partners buying Bellamy’s shares since January 24. It has built up a 5.4% stake. Janchor Partners has previously been a holder of Surfstitch (SRF) and Medibank Private (MPL) unchanged.
- Vita Group (VTG) -21.12% has responded to media speculation that Telstra (TLS) -% will take back up to 16 stores currently operated by the master sales agreement the company has over 100 of the 350 stores that Telstra operates. The company has fired back saying that any changes require mutual consent.
RBA Board meeting today. No change in interest rates at 1.50% with the key points of the minutes:
- Conditions in the global economy have improved over recent months. Both global trade and industrial production have picked up.
- Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Core inflation remains low.
- The Australian economy is continuing its transition following the end of the mining investment boom. Recent data are consistent with ongoing moderate growth.
- Inflation remains quite low. Headline inflation is expected to pick up over the course of 2017 to be above 2%.
- Lenders have recently announced increases in mortgage rates, particularly those paid by investors. Financial institutions remain in a good position to lend.
- By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions. A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.
- The trade surplus was again higher than expected, hitting $3.5bn in February from a surplus of $1.5 billion in January. Economists had expected a surplus of $1.7bn in the month. Imports fell 5% in the month, while exports rose 1.0%.
- Nothing significant today
EUROPE AND US
- S&P cut South Africa’s credit rating to junk status. S&P, which cut its rating by one notch to BB+ the highest non-investment grade rating and also assigned a negative outlook. The dismissal of the finance minister is being seen as a catalyst for the change.
- Margin debt levels are at a record high, reaching $US528 billion in February, nearly 40% above 2007 levels.
- NYSE margin debt has peaked just before the last two recessions and stock market crashes. However, with low interest rates, things may be different this time. It is also true that we have seen a number of times the margin debt has peaked post the GFC and we have not had a crash at all.
- US immigration administrators are starting to clamp down on foreign workers gaining entry to the US via a H-1B Visa. The Economic Policy Institute estimated there were about 460,000 people working on H-1B visas in 2013 and the system appears open to abuse as US workers are replaced by cheaper overseas workers who are easily exploited given their reliance on the employer.
“Warning: May contain nuts.” — On a package of peanuts.
“Do not eat.” — On a slip of paper in a stereo box, referring to the styrofoam packing.
“Access hole only — not intended for use in lifting box.” — On the sides of a shipping carton, just above cut-out openings which one would assume were handholds.
“Warning: May cause drowsiness.” — On a bottle of Nytol, a brand of sleeping pills.
“Warning: Misuse may cause injury or death.” — Stamped on the metal barrel of a .22 calibre rifle.
“Do not use orally after using rectally.” — In the instructions for an electric thermometer.
“Turn off motor before using this product.” — On the packaging for a chain saw file, used to sharpen the cutting teeth on the chain.
“Not to be used as a personal flotation device.” — On a 6×10 inch inflatable picture frame.
“Do not put in mouth.” — On a box of bottle rockets.
“Please remove before driving.” — On the back of a cardboard windshield (for keeping the car from getting too hot when parked).
“Remove plastic before eating.” — On the wrapper of a Fruit Roll-Up snack.
“Not dishwasher safe.” — On a remote control for a TV.
“For lifting purposes only.” — On the box for a car jack.
“Do not put lit candles on phone.” — On the instructions for a cordless phone.