ASX 200 rallied to close up 35.5 points to 5875 in heavy volume in a 72-point range day as banks rebounded. Infrastructure and building stocks doing well on increased government spending. Miners recover as iron ore steadies. Asian markets better across the board with Japan up 0.29% and China up 0.38%. Korea the only Asian market easier down 0.59%. AUD 73.69 and US Futures down 35.

STOCKS AND SECTORS

  • Miners carried the market higher with BHP +1.51%, RIO +2.06% and Fortescue Metals (FMG) +5.12% together with base metal stocks Western Areas (WSA) +5.45%, Oz Minerals (OZL) +1.41% together with Independence Group (IGO) +1.32%.
  • Energy shares higher yet again. Woodside (WPL) +0.71%, Santos (STO) unchanged and Origin Energy (ORG) +0.90%. Coal stocks though fell led by Whitehaven (WHC) -1.89%.
  • Banks and financials dropped then bounced as the levy proposal from the government hit the shares hard. The Big Bank Basket fell to $175.99 well off its low of $174. CEO after CEO told the ASX they were looking at the measures and the issue of passing the impost on the customers. ANZ +0.79% the best performer but then again it has been the worst performer since the results last week. Regional banks were the big beneficiaries with Bank of Queensland (BOQ) +3.63%, Suncorp (SUN)+2.75% and Bendigo and Adelaide Bank (BEN) +3.90%. Insurers and wealth managers did well with IAG +2.04%, QBE Insurance (QBE) +3.62% and Platinum Asset Management (PTM) +2.93%.
  • Industrials doing well against a backdrop of infrastructure spending. Brambles (BXB) +1.63%, Cleanaway Waste (CWY) +5.36%, Seven Group Holdings (SVW) +3.02%. Consumer stocks found some friends with JB Hi-Fi (JBH) +1.38%, Super Retail (SUL) +1.17%, Breville Group (BRG) +1.12%. Builders and construction a winner from the budget with Downer EDI (DOW) +2.78% and Lendlease (LLC) +1.95%.
  • Healthcare gained too on budget news with Sonic Healthcare (SHL) +1.26%, Ramsay Health Care (RHC) +1.20% and Japara Healthcare (JHC) +2.28%.
  • IT and Telcos better too, Telstra (TLS) +0.22%, TPG Telecom (TPM) +1.19% and Vocus Group (VOC) +2.43%. Tech stocks Xero (XRO) +1.38%, Wisetech Global (WTC) +0.31% and Technology One (TNE) +1.41%.
  • Speculative stock of the day: Tesserent (TNT) +14.67% after a company update focussing on the core business of managed security services and improving its cash position by a sale of Family Zone Cyber Safety.

CORPORATE NEWS

  • REA Group (REA) +1.20% after raising earnings by 20% to $86m. Revenue was up 16% driven the residential business. The results were especially good given the lower listing volumes and declining building commencements in Australia, Malaysia and Hong Kong.
  • CSR -11.80% after results today showed Net profit rose 25% to $177.9m, but was lower than the $185.9m estimates, while the dividend of 13c didn’t quite match expectations of 13.5c. Adding to the negativity was comments from CEO about the housing cycle peaking
  • CIMIC (CIM) +4.81% up again today after being awarded a $117m contract in solar farms to engineer, procure and construct (EPC)
  • Fortescue Metals (FMG) +5.12% successfully completed a US$1.5bn bond offering for US investors. The offering, which refinances $US976 million in the 2019 senior secured credit facility and $US478 million in 2022 senior unsecured notes, is expected to settle on or about May 12th.
  • Boral (BLD) +4.15% up for the 13th time in 14 days as the company announced it had completed the acquisition of Headwaters in the US for US$2.6bn.
  • South32 (S32) -2.56% after an update on its metallurgical coal operations in the Illawarra. It now expects production to be around 10% below prior guidance. The company also has suspended production from Appin Area 7 due to elevated gas levels.
  • Quintis (QIN) -43.93% never ceases to surprise as the company admitted the board had not been told that a supply contract with Galderma had been cancelled in December. Galderma is a Swiss based skin care company and the second large client to cancel contracts with Quintis. Looks like the US hedge funds was pretty spot on with this one.

BOND CORNER

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ECONOMIC NEWS

These numbers tend to get lost in all the budget talk.

  • The Government says there’ll be a forecast deficit of $29.4bn in 2017-18.
  • It’s still projecting a return to a $7.4bn surplus in 2020-21.
  • Debt ceiling has been raised to $600bn. Forecasts are for it to reach $606 in four years.

ASIAN MARKETS

  • Chinese CPI rose 1.2% over the year through April, up from a 0.9% gain in March above expectations of a 1.1% rise. Producer prices (PPI) jumped 6.4%, but that was lower than last month’s 7.6%rise and below forecasts of a 6.7% rise.
  • Shanghai steel futures are up for three days straight. The most-active rebar on the Shanghai Futures Exchange was up 1.5% at 3,047 yuan ($US441) a tonne. Looks like there are steel mills facing suspension or heavy fines if they fail to meet emission standards in Northern China.
  • Moon-Jae was sworn in as President of South Korea.

EUROPE AND US

  • Trump has fired with extreme prejudice the head of the FBI, James Comey.
  • Two investment giants are revealing more details as the merger draws close. Standard Life and Aberdeen are preparing the market for 800 job losses. The deal to merge the two is worth GBP11bn. The merger was leaked in March to create a fund with GBP660m under management.

And finally

HR was interviewing a blonde for an assistant position, and wanted to find out a little about her personality.
“If you could have a conversation with anyone, alive or dead, who would it be?”
“I’d have to say the living one.”

 

Every Friday after work, a mathematician goes down to the Ice Cream Parlor, sits in the second-to-last seat, turns to the last seat, which is empty, and asks a girl, who isn’t there, if he can buy her an ice cream cone.
The owner, who is used to the weird, local university types, always shrugs but keeps quiet. But when Valentine’s Day arrives, and the mathematician makes a particularly heart wrenching plea into empty space, curiosity gets the better of him, and he says, “I apologise for my stupid questions, but surely you know there is never a woman sitting in that last stool, man. Why do you persist in talking to empty space?”
The mathematician replies, “Well, according to quantum physics, empty space is never truly empty. Virtual particles come into existence and vanish all the time. You never know when the proper wave function will collapse and a girl might suddenly appear there.”
The owner raises his eyebrows. “Really? Interesting. But couldn’t you just ask one of the girls who comes here every Friday if you could buy HER a cone? You never know… she might say yes.”
The mathematician laughs. “Yeah, right. How likely is THAT to happen?”

Clarence

XXX

mt_tryforfree

NT Markets

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