ASX 200 holds up the white flag as large cap miners and banks dive. The index recovers slightly to close down 58 points at 5892. Financials bore the brunt with the Vocus downgrade adding to the woes. Asian markets mixed again as China slips 0.36% and Japan rises 0.70%. AUD slightly weaker at 74.89c and US Futures down 14 points.

STOCKS AND SECTORS

  • Banks and financials the big losers today as Bell Potter said ‘sell the banks’. The slightly underwhelming ANZ -2.79% results yesterday are pointing to more disappointment on the others due to report. National Australia Bank (NAB) -2.71% will kick off Thursday with Macquarie Group (MQG) -1.25% due Friday. The Big Bank Basket fell to $184.11. Wealth managers fell with Platinum Asset Management (PTM) -1.15% and Magellan Financial (MFG) -0.51%.
  • Big miners too sold off aggressively with BHP -2.31%, RIO -0.95% and Fortescue Metals (FMG) -0.95%. Base metal stocks also out of favour again with Independence Group (IGO) -3.45%, Oz Minerals (OZL) -2.16% and South 32 (S32) -1.09%.
  • Energy stocks tried to buck the weakness with Origin Energy (ORG) +2.31% and Oil Search (OSH) +1.97%. Gold stocks generally better as Evolution Mining (EVN) +0.45%, Oceanagold Corp (OGC) +4.96% and Northern Star (NST) +1.89%.
  • Packaging stocks were hot hard today, unusual for what is a usually dull sector. Orora (ORA) -3.97%, Amcor (AMC) -3.25% and Pact Group (PGH) -10.57%. Building stocks mixed with CSR -1.37%, Boral (BLD) +1.111.23% and James Hardie (JHX) -%.
  • Retailers gave back some of the recent gains with Harvey Norman (HVN) -0.93%, Super Retail (SUL) -0.42% and Baby Bunting (BBN) -4.44%. Woolworths (WOW) -2.71% gave back recent gains as did Bellamy’s Australia (BAL) -4.80% and Australian Agriculture (AAC) -2.33%. G8 Education (GEM) -8.04% after one broker downgraded the company on increasing competition and delays to the government changes to child care. The ASX issued a speeding ticket and the company said nothing more than broker downgrade.
  • Healthcare seemed as good place to hide with Ramsay Health Care (RHC) +0.99%, Primary Health Care (PRY) +4.09% and Sonic Healthcare (SHL) +1.12%.
  • Telecoms a grave yard again with the surprise downgrade from Vocus Group (VOC) -27.16% and Speedcast (SDA) -2.29%. Telstra (TLS) +0.23% barely changed and TPG Telecom (TPM) +0.86%.
  • Bingo (BIN) -2.22% started life today as a listed company having raised $440m in the float as the Tartak family sold down their holdings.
  • Morphic Ethical Equities (MEC) -3.18% also started life today after its $47m raise at 110c and a free 110c option.
  • Speculative stock of the day: Riva Resources (RVA) +35.29% after a drill report on the Tabac cobalt-gold project. Potential mineralisation of 110m width staring from 148m in the latest drill results for cobalt bearing rock.

CORPORATE NEWS

  • Vocus Group (VOC) -27.16% after unveiling a second profit downgrade since February. Credibility gone with the board and management now under pressure. The company has cut forecasts for underlying earnings from $205-$215m to $160m – $165m. The downgrade was released at 7pm Tuesday night hoping that no one would notice just to add to the bad look. Vocus said revenue was now likely to be around $1.8bn, compared with an earlier forecast of $1.9bn. The new CFO has also taken a tougher line on revenue and contracts. Obviously not worried about his stock options.
  • Downer EDI (DOW) -1.51% will not raise its 115c offer for Spotless Group (SPO) -1.37%, declaring its current $1.2bn takeover bid to be “final.” Spotless’s board claims Downer’s offer is “opportunistic”.
  • Fairfax (FXJ) -0.93% after the New Zealand Commerce Commission denied permission for the country’s two largest newspaper networks to merge as it would likely lessen competition for advertising and readers. The media company will also cut 115 full time roles in order to save $30m.
  • BHP Billiton (BHP) -2.31% after Moody’s dealt the campaign from the US hedge fund Elliott Advisers a set back with the ratings agency calling it a ‘credit negative’ event. Moody’s had BHP at an A3 rating previously with a “stable” outlook, but upgraded the outlook to “positive” today. The agency said the upgrade may be reversed if the plan to boost buy backs was adopted.
  • Ingenia (INA) has launched a $74m capital raising to purchase another four existing communities and to build a fifth greenfields site. The money will be raised at 260c a 5.1% discount to the closing price Tuesday.

BOND CORNER

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ECONOMIC NEWS

  • Senator Xenophon has called for a decrease in TV broadcasting fees coupled with a turnover tax for the US tech stocks like Facebook and Google. The budget next week is expected to include additional cuts to licence fees, a trimming of the anti-siphoning list and tighter restrictions on gambling advertising during sports matches.

ASIAN MARKETS

  • Chinese investors are turning defensive with liquor companies the big winners in a shift towards low beta defensive plays.

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EUROPE AND US

  • Apple reported a surprise fall in iPhone sales for its second quarter. Some suggestions that customers are hanging aback waiting for the 10th anniversary edition in September. Apple boosted its capital return program by $50bn, increased its share repurchase authorization by $35bn and raised its quarterly dividend by 10.5%. Apple sold 76m iPhones in its fiscal second quarter ended April 1, down from 51.19m a year earlier.
  • JPMorgan Chase plans to move hundreds of London-based bankers to expanded offices in Dublin, Frankfurt and Luxembourg as part of its plans for post Brexit life.
  • Alitalia has entered administration with the government approving a EUR600m bridging loan to keep the flagship carrier flying.
  • Jean-Claude Juncker seems determined to ‘punish’ the UK for its intention to leave the EU. Brexit seems to be on par with cancelling a Fitness First membership and nearly as costly. Juncker is calling for a GBP 50bn leaving fee.

And finally……

A father told his 3 sons when he sent them to the university. “I feel
it’s my duty to provide you with the best possible education.

You do not owe me anything for that. However, I want you to appreciate it.

As a gesture of appreciation, please each put $1,000 into my coffin when I die.”

And so it happened. His sons became a doctor, a lawyer and a financial
planner, each very successful financially.

When their father’s time had come and they saw their father in the
coffin, they remembered his wish.

First, it was the doctor who put ten $100 bills onto the chest of the deceased.

Then, came the financial planner, who also placed $1,000 there.

Finally, it was the heartbroken lawyer’s turn.

He dipped into his pocket, took out his cheque book, wrote a cheque for $3,000,

put it into his father’s coffin, and took the $2,000 cash.

He later went on to become a politician.

Clarence

XXXX

mt_tryforfree

NT Markets

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