ASX 200 closed up 3 points to 5878 after a high of 5922, as a bank rally, all but vanishes. Builders and staples hang on with retailers feeling the pain. Asian markets mixed as Japan rises 0.32% and China down 0.73%. AUD 73.47c and US Futures down 9.

STOCKS AND SECTORS

  • Miners had a mixed day. BHP +0.38%, RIO -0.70% and Fortescue Metals (FMG) -5.07%. Higher energy prices helped BHP. Base metal stocks mainly firmer Oz Minerals (OZL) +2.01%, Sandfire (SFR) +0.52% and Independence Group (IGO) +1.95%. Against the trend, South 32 (S32) -0.38% slipped slightly. Gold stocks modestly higher, Newcrest (NCM) +0.50%, Evolution Mining (EVN) +1.79%, Resolute Mining (RSG) +1.28% and Gold Road (GOR) +0.76%
  • Energy stocks failed to really fire on the higher oil price, Santos (STO) -0.27%, Woodside (WPL) +0.18% and Origin Energy (ORG) +0.89% although Oil Search (OSH) -1.22%.
  • Banks and financials started so well but the selling resumed as the government dug in and Anna Bligh from the ABA went on the offensive on the new levy. The Big Bank Basket rose modestly to $176.29 having been around $178.55 early. The big four have bounced 2.2% since the lows of Wednesday. Macquarie Group (MQG) +1.81% on the news of the Endeavour purchase. Wealth managers again under pressure as fees and performance falls. Platinum Asset (PTM) -1.75% together with BT Investment (BTT) -5.85% on weaker numbers.
  • Industrials fell to a little profit taking with Brambles (BXB) -0.57%, Transurban (TCL) -0.65%, Macquarie Atlas Roads (MQA) -1.06%. Retail is a place to avoid as the Amazon factor continue to weigh on the outlook with analysts trying to outdo each other with bearish forecasts.
  • Healthcare continued to move higher on budget news with pathology providers Sonic Healthcare (SHL) +1.08%, Ramsay Health Care (RHC) +1.70% and Primary Health Care (PRY) +1.83%.
  • Telcos pressured as Telstra (TLS) -1.35% and Vocus Group (VOC) -0.79%. Vita Group (VTG) -30.49% had a bad day despite reaffirming guidance but changes to the Telstra agreement and store structure hit the stock hard. IT back in the green, Wisetech (WTC) +5.38%, MYOB (MYO) +0.82%, Reckon (RKN) +2.35% and Class 1 (CL1) +3.38%.
  • Speculative stock of the day: Alliance Aviation (AQZ) +21.01% after announcing it had reached a deal with Virgin Australia to launch new services from Brisbane to Bundaberg, Gladstone, Moranbah and Port Macquarie. The company also signed a wet lease agreement from Brisbane to Mt Isa amongst three routes for the next 12 months.

CORPORATE NEWS

  • Graincorp (GNC) +8.33% reported an interim net profit of $90m, up from $20.4m a year ago as EBITDA rose to $236m, up from $134m a year ago. Underlying interim profit was $100m, up from $32m a year ago. Record wheat production a big driver with 35.13 m tonnes last year.
  • Xero (XRO) +5.98% after announcing its net loss to $NZ69.1m ($64m) from $NZ82.5m a year earlier. The company said it now has 1,035,000 subscribers, after adding 318,000 over the past year.
  • Myer (MYR) -3.45% after sales fell 3.3% as the company closed three stores. However, the company did reaffirm its guidance for the year. The company is hoping to deliver net profit growth as it continues to realign the business away from discounting and steer it towards brands and in store offerings.
  • Macquarie Group (MQG) +1.81% announced today that its infrastructure division had bought the NSW government’s Endeavour Energy for $7.62bn. Macquarie, together with its partners, purchased a 50.4% interest on a 99-year lease.
  • Quintis (QIN) -23.33% after the company’s broker Canaccord has suspended coverage on the stock due to lack of clarity on the business.
  • BT Investment Management (BTT) -5.85% announced a half year result up 0.9% to $79m. HY income down 12.4% to $246.4m. Performance Fees revenue fell 62.6% to $27.9m. Operating expenses fell 20% from the prior corresponding period to $134.5m. The fund is still seeing good inflows though with FUM up 10.1% to $86.3bn.
  • K2 Asset Management (KAM) -unchanged- has cut fees and introduced new performance hurdles. FUM have fallen from $1bn in 2010 to $557m at the end of April. K2 charged performance fees on an absolute return basis, that is, any positive return would produce a performance fee subject to a high-water mark.

BOND CORNER

bonds 11.5

ECONOMIC NEWS

  • Nothing significant locally today as budget takes centre stage.
  • In NZ, the RBNZ left rates unchanged this morning but did make a dovish statement as the bank believes the recent rise in inflation is not permanent. A big call according to analysts who note the CPI has been above its forecast for the last three quarters. Many believe the bank will need to raise rates soon.

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ASIAN MARKETS

  • Noble Group, the HK commodity trader have fallen to their lowest level in 14 years. The company has warned of a possible first quarter loss of US$130m because it took the wrong bets on the coal price and liquidity. The shares have sunk 38% in 2017 even as Noble undertook a share consolidation to avoid becoming a penny dreadful.

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  • The clampdown from Chinese authorities has taken its toll on overseas deals with cross border investment falling 67% in the last four months. Chinese regulators are making it very difficult to move money overseas.

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  • Short seller Gotham City Research has questioned Apple supplier AAC Technologies about its reported profit margins and the related entities. The Hong Kong listed stock fell nearly 12%

EUROPE AND US

  • Bank of England rates decision tonight.
  • Pret a Manger, the UK sandwich chain, is exploring a float in New York. A potential valuation of GBP1.4bn has been touted. The company recorded a 15% rise in sales to GBP776m in the year to December 29 with its US sales exceeding $200m for the first time. The business was bought by private equity group Bridgepoint in 2008 for GBP500m.
  • Deutsche Telekom said adjusted earnings before interest, taxes depreciation and amortization rose 7.5% to EUR5.55 billion aided by growth at T-Mobile US. The company also wrote down the value of its BT Group Plc stake by another EUR700m after lowering it by EUR2.2bn earlier this year.

And finally….

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NT Markets

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