Vive la France. ASX screams out of the blocks only to slip away to close up 18 points at 5872 after touching 5894 early. French enthusiasm waning with North Korean worries still and holiday tomorrow. Banks and financials strong. Resources and especially base metals hurt again. Asian markets mixed with Japan up 1.25% but China weak again down 1.32%. AUD 75.56c and US Futures up 161 points.
STOCKS AND SECTORS
BHP Billiton (BHP), Rio Tinto (RIO), Telstra (TLS) and Wesfarmers (WES) are the only stocks in the ASX 20 trading below their long-run price-earnings multiples according to Goldman Sachs. The big four banks “mildly expensive” compared with an historical basis and many industrial stocks in the broader ASX 200 trading at multiples of more than 20% over their long-run averages over the past 10 years.
- In the mining sector, we saw big losses again BHP -0.42%, RIO -0.70% and Fortescue Metals (FMG) -2.57%. Iluka Resources (ILU) +3.74% continued to attract buyers after the recent upgrade but other base metal companies were struggling. Oz Minerals (OZL) -4.31%, Independence Group (IGO) -2.12% and Sandfire (SFR) -1.70%.
- Gold miners mixed but generally worse off. Regis Resources (RRL) +3.04% and Resolute Mining (RSG) +1.25% a couple of winners with Evolution Mining (EVN) -2.07% and OceanaGold Corp (OGC) -3.46%.
- Banks a green patch today with the Big Bank Basket up to $186.19 with insurers too doing well, QBE Insurance (QBE) +0.88% and IAG +0.33%. Wealth managers also putting in a positive day as Macquarie Group (MQG) +1.56% and Challenger Limited (CGF) +1.50%. REITs soft led by Westfield (WFD) -% and Scentre Group (SCG) -%.
- Industrials sported some gains with Brambles (BXB) +0.92% picking up where we left off last week, Qube Holdings (QUB) +1.55% and Macquarie Atlas Road (MQA) +1.35% a beneficiary of the French election result. Media stocks continue to disappoint with no reason to be there, Fairfax Media (FXJ) -0.49%, Nine Entertainment (NEC) -1.22% and Southern Cross (SXL) +0.38%
- Healthcare stocks ignored the fall in Sirtex (SRX) -12.94% with Resmed (RMD) +1.20% and Ramsay Healthcare (RHC) +0.60%.
- IT and telcos showing some green, Computershare (CPU) +1.32%, MYOB Group (MYO) +0.85%, Aconex (ACX) +2.34% and Vocus Group (VOC) +3.03%. Telstra (TLS) -0.47% and TPG Telecom (TPM)+0.51%.
- Speculative stock of the day: Mobile Embrace (MBE) +32.65% after reaffirming guidance for EBITDA of between $5m-$6m. The company is well funded with a strong balance sheet and revenues of around $52m.
- Spotless Group (SPO)-0.45% has rejected the bid from Downer EDI (DOW) unchanged saying it does not represent ‘adequate value’. The group did say that the talks with another potential suitor had collapsed over the weekend.
- Sirtex (SRX) -12.94% results today from a recent trial on SARAH with results showing ‘no difference in survival’. The liver cancer treatment did not extend the lives of patients. The only goods point was in quality of life outcomes. The company has tried to spin it the best way it can but it was not good news.
- Village Roadshow (VRL) -6.48% has issued its second profit warning for 2017 due to the continued issues with Dreamworld and the weather. Cyclones are not good for business who would have thought. The company said its EBITDA would be between $55m and $65m in the full 2016-17 year, down from the $88m it achieved last financial year. Attendance at the Gold Coast theme parks is down 9.4% in the nine months to March.
- Westpac Bank (WBC) +% has raised rates again on interest only loans by as much as 0.3%. The rises will only affect new borrowers as the banks continue to tighten interest only lending to 30% down from 40%.
- UBS has called the top of the local property market. Again. “Looking ahead price growth has likely now peaked, and we see a moderation ahead amid record supply and poor housing affordability”. No price crash though as the RBA has not raised rates. Just the banks themselves though.
- Chinese stocks continue to fall away with the ChiNext small cap index heading for its lowest close since September 2015. Market sentiment has been hit by recent tightening on supervision.
EUROPE AND US
- The match of the century Macron v Le Pen. Looks like the EU project is safe with Macron now odds on to win the next and final round of the Presidential election. Polls show Macron at 62% with Le Pen at 38%.
- Ex POTUS Obama is speaking for the first time in Chicago where his presidential library will be built.
Two beggars are sitting side by side on a street in Mexico City. One
has a cross in front of him, the other a Star of David. Many people go
by and look at both beggars, but they only put money into the hat of
the beggar sitting behind the cross.
A priest comes by, stops and watches as dozens of people give money to
the beggar behind the cross, but give none to the other beggar.
Finally the priest goes over to the neglected beggar and says: “My
poor fellow, you don’t understand. This is a Catholic country. People
aren’t going to give you money if you sit there with a Star of David
in front of you; especially when you’re sitting beside a beggar who
has a cross. In fact, they would probably give more to him just out
The beggar behind the ‘Star of David’ listens to the priest patiently,
then turns to the other beggar and says, “Atit, look who’s trying to
teach the Goldstein brothers about marketing!”
Lest we forget