ASX 200 slips only 6 points to 5950 in a late surge as banks sell off slightly with patches of green in Woolworths, REITs and builders. RBA keeps rates on hold again. Asian markets mixed with China down 0.42% and Japan up 0.68%. AUD 75.29c and US Futures down 15 points.

Something to think about. The Big Four banks have underperformed the ASX 200 every May for 17 years. Dividends are paid in May and prices have fallen in six out of the last ten years.

STOCKS AND SECTORS

  • Miners flatlined from the opening with BHP -0.50%, RIO +0.18% and Fortescue Metals (FMG) -0.38%. Alumina (AWC) -3.58% one of the worst in the base metal sector with Oz Minerals (OZL) -1.42% falling through support.
  • Gold stocks again fell as bullion saw losses overnight. Evolution Mining (EVN) -3.51%, Resolute Mining (RSG) -5.24%, Dacian Gold (DCN) -8.82% had a shocker though Westgold (WGX) +2.15% stages a late recovery.
  • Energy stocks mainly better with Santos (STO) +3.19%, Woodside (WPL) +0.22% but Whitehaven (WHC) +2.56% had a better day.
  • Industrials mixed as infrastructure stocks gave back some of the recent gains, Transurban (TCL) -0.40%, Qantas (QAN) +0.23% and Sydney Airport (SYD) +0.28%. Gaming stocks eased led by Tatts Group (TTS)-1.13% and Tabcorp (TAH)+0.84%.
  • Utilities eased too APA Group (APA) -0.74%, Ausnet Services (AST) -1.41% and Spark Infrastructure (SKI) -1.56%. Agricultural stocks caught a little in the Murray Goulburn (MGC) -14.01% downdraft as Graincorp (GNC) -3.22%, Costa Group (CGC) -2.89% and A2Milk (A2M) -%. Good result though for Treasury Wine (TWE) +3.04%.
  • Consumer stocks were mixed Wesfarmers (WES) -0.69% eased at the expense of Woolworths (WOW) +1.18% and discretionary retailers recovered some poise after negative forecast for the post Amazonian Harvey Norman (HVN) +1.17%, JB Hi-Fi (JBH) +1.88% with yesterday’s crash stock RCG Corp (RCG) +15.70% on a bounce.
  • Banks and financials were the big losers today as ANZ-2.12% results gave bulls a reason to pause and take some profits. The Big Bank Basket fell to $188.07 with ANZ the most badly mauled. Insurers also felt the pain with QBE Insurance (QBE) -1.15% and Macquarie Group (MQG) -1.48%. Flexigroup (FXL) -4.68% one of the biggest casualties.
  • Telcos under pressure again with Telstra (TLS) -unchanged, TPG Telecom (TPM) -2.02% and Vocus Group (VOC) -2.33%. IT stocks a mixed bag REA Group (REA) +0.88% on speculation on upcoming rises in July of around 15%.
  • Speculative stock of the day: Global Geoscience (GSC) +33.33% after releasing exceptional leach results from its low-cost acid leach flowsheet to produce 98% lithium and 99% boron. PFS is due to be completed by late 2017.

CORPORATE NEWS

  • ANZ -2.12% profits jumped 23% to $3.41bn slightly below the anticipated $3.49bn. The number was a little disappointing but the dividend was unchanged at 80c.Bad loans fell 22% and bank jobs fell by 2850 to 46.046.
  • Woolworths (WOW) +1.18% has announced food sales increased by 5.1% to $9.28bn beating like for like forecasts though CEO Brad Banducci flagged rising costs in the second half. Big W is still a work in progress on a multi-year strategy.
  • Sydney Airport (SYD) +0.28% informed eth government today that the company would pass on the opportunity to develop the second Sydney Airport at Badgerys Creek. It seems that the federal government will press ahead with building this ‘vital’ infrastructure.
  • Murray Goulburn (MGC) -14.01% has once again lived up to pessimists’ expectations with the review of assets and operations complete, it is closing three processing plants and write off $150 in debts owed by farmers. Around 350 workers will lose their jobs in an effort to deliver benefits of around $40-$50m annualised.
  • Primary Health Care (PRY)+1.79% has appointed Malcolm Parmenter as managing director after Peter Greg stepped down following an inquiry into his time at Leighton Holdings.
  • Nick Scali (NCK) +0.14% after a profit upgrade to a range of $36m-$37m an increase of around 40%. Same store sales very good and more stores to be opened in 2017/18.

BOND CORNER

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ECONOMIC NEWS

The RBA has left rates unchanged as expected today with a cut and paste from the April meeting in terms of the commentary.

Key points:

  • Labour markets have tightened further in many countries and forecasts for global growth have been revised up.
  • The Bank’s forecasts for the Australian economy are little changed.
  • Growth is expected to increase gradually over the next couple of years to a little above 3%.
  • Growth in consumption is expected to remain moderate and broadly in line with incomes. Non-mining investment remains low as a share of GDP and a stronger pick-up would be welcome.
  • Indicators of the labour market remain mixed. Wage growth remains slow and this is likely to remain the case for a while yet.
  • The outlook continues to be supported by the low level of interest rates.
  • Inflation picked up to above 2 per cent in the March quarter in line with the Bank’s expectations.
  • Conditions in the housing market continue to vary considerably around the country. Growth in housing debt has outpaced the slow growth in household incomes.
  • The recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness.

Click here for full details.

ASIAN NEWS

  • An independent survey of China’s manufacturing sector indicates business activity grew at the slowest pace since September last month. The Caixin-Markit manufacturing purchasing managers’ index dropped to 50.3 in April, a seven-month low, compared to a reading of 51.2 in March.
  • Melco’s Lawrence Ho says he’s ‘extremely bullish’ on Macau’s prospects, and sees the industry reaching US$45 billion within five years.

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Macau’s April casino receipts rose 16.3% to 20.2 billion patacas (US$2.52 billion), beating the median analysts’ estimate of a 15% rise.

EUROPE AND US

  • Apple results tomorrow morning. The company has $330bn in cash stashed. This is bigger than the combined foreign reserves of the UK government and Bank of England.

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Greece is the word. The country has agreed with its creditors on a bailout reform package. Much is made of the economic benefits of a lower tax rate. Greece is a case in point. Hardly anyone pays tax and the economy is booming, right? Pensions will be cut by another 18%.

 

And finally……………..

A man is participating in a golf tournament. He was left to golf with just his caddy.
On his tee-off, the golfer’s ball lands in a patch of buttercups.

The caddy tells the golfer he can take the ball onto the course, and he won’t take a one stroke penalty.

However, the golfer refuses and takes the ball out of the buttercups and takes the stroke penalty.
Suddenly, Mother Nature appears.

“What you just did was amazing. I am so proud that you enjoy nature and all of its beauty. For your reward, I will give you a lifetime supply of butter.”

“Thanks,” says the man. “But where were you last week when my ball landed in the pussywillows?”

 

Clarence

XXXX

mt_tryforfree

NT Markets

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