Missed a day sorry was doing ABC TV…..

ASX 200 falls 64.5 points to 5786 on Trump woes as support fails Banks, REITs and industrials fell across the board with miners the only bright spot. Asian markets modestly lower with Japan down 0.53% and China down 0.32%. AUD steady at 74.20c and US futures down 100 points.

STOCKS AND SECTORS

  • Miners were the only green in a sea of red today. BHP +0.21%, RIO +2.22% and Fortescue Metals (FMG) +4.15%. Base metals were mixed as South32 (S32) -1.84% though Oz Minerals (OZL) +3.28%, Sandfire (SFR) +0.68% and Mineral Resources (MIN) +6.45%.
  • Gold stocks also shining bright with Evolution Mining (EVN) +3.51% after a presentation and St Barbara (SBM) +4.55% amongst the best.
  • Energy stocks came in for some heavy selling pressure as Santos (STO) -2.49% and Origin Energy (ORG) -1.40% took a hit. Coal stocks slightly better with Whitehaven (WHC) +5.60% and Yancoal (YAL) +3.70%.
  • Industrials weak across the board as sellers moved in. Aurizon Holdings (AZJ) -1.98%, Sydney Airport (SYD) -1.36%, Boral (BLD) -1.19% and CSR -2.95%. Consumer stocks remain under pressure despite Harvey Norman (HVN) -1.79% updating the market. Other retailers also fell as consumer confidence slipped away a little. JB Hi-Fi (JBH) -2.23%, Lovisa Holdings (LOV) -1.48%, Flight Centre (FLT) -1.00% and Baby Bunting (BBN) -2.89%
  • Healthcare stocks in the red though Fisher and Paykel (FPH) +2,36% rose after a favourable court ruling in the US against Resmed (RMD) -0.65%.
  • Banks and financials once again the focal point of selling with the Big Bank Basket sliding again to $173.12. Westpac (WBC) -2.34% go ex-dividend tomorrow and will weigh. Insurers fell too with Insurance Australia (IAG) -1.10% and QBE Insurance (QBE) -0.75%. Health insurers fell into a hole as two brokers downgraded NIB Holdings (NHF) -8.73% after a 25% run recently and changes to visas. impacting healthcare costs. REITs also had a tough day at the office with Westfield (WFD) -1.41% and Scentre Group (SCG) -2.11%. GPT -1.90% and Stockland (SGP) -1.48% also casualties of the sell-off.
  • Speculative stock of the day: Elixir Petroleum (EXR) +25.00% after a ASX speeding ticket and the company response drawing attention to the recent quarterly report and the planned upcoming conventional exploration program in Colorado.

 

CORPORATE NEWS

  • Oroton Group (ORL) -19.63% two strikes and you are out. The company issues its second warning today with earnings now expected to fall by $10m to between $2m-$3m due to a fall in sales at GAP stores and outlet shops. Group sales in the year to date were down 11% and trading was expected to remain challenging for the rest of the year.
  • G8 Education (GEM) in a trading halt today following news that a HK based investment company that had subscribed for a placement at 388c back in February needed more time to come up with the $150m second tranche payment.
  • Dulux Group (DLX) -0.88% reported 14.2% rise in net profit after tax to $72.7m while sales revenue was 3.5% higher at $881m. The company lifted its interim dividend to 13c share from 11.5c.
  • Wesfarmers (WES) -1.30% has abandoned plans to float its Officeworks business as the IPO market appears challenging at present.
  • Sirtex (SRX) are in a trading halt today as it needs time to review and assess the implications of a clinical study. The study is believed to contain material information and will be released at a conference in Chicago. Tomorrow. The shares will return Friday.
  • Quintis (QIN) have now been suspended pending a review of its business and an update in earnings outlook. The new CEO is continuing to conduct a strategic review of the company. It is also considering a response to the recent research publications.
  • Clydesdale Bank (CYB) -2.79% reported a 15% increase in profits to GBP123m missing expectations.
  • Paladin Energy (PDN) -29.52% plenty of news today with results and the reaction to the alternative funding proposal which the company believes is the best solutions for the 75% owned Langer Heinrich Mine under dispute with the CNNC Overseas Uranium Holdings which is pursuing ownership of the mine. In the results, production was down 7% and the company recorded a loss of US$22.2m.
  • Vita Group (VTG) -30.23% has been informed by its partner Telstra (TLS) that there will be a 10% reduction in remuneration from July. It will also reduce it further by 10% next year and 10% the year after. VTG hopes that increased volume will help offset these losses. Not a chance. The company will update the market with further details when it has discussed the changes with TLS.
  • Slater and Gordon (SGH) unchanged after rumours that the company’s top class actions lawyers including team leader Ben Phi are quitting the firm.

BOND CORNER

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ECONOMIC NEWS

  • Wages growth came in at 0.5% for the quarter and 1.90% for the year as expected. The Private sector rose 0.5% and the Public sector rose 0.6%, seasonally adjusted. Western Australia recorded the lowest through the year wage growth of 1.2% and Tasmania the highest of 2.3%.

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  • Westpac Consumer Confidence fell to 97.9 from 98.1 as the survey showed. The “time to buy a major household item” sub-index jumped from 108.6 (‘pre-budget’) to 124.9 (‘post’) following a print of 119.3 in April.

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  • Standard & Poor’s has reaffirmed the country’s AAA rating today although it has questioned the promise to fix the budget. The negative outlook remains.

ASIAN NEWS

  • Figures tomorrow are expected to show that Japan has had five quarters straight of expansion. Forecasts are for a 1.7% increase in the last quarter.

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  • Chinese leader Li Keqiang has told the IMF that regulatory overkill would be a mistake at this delicate juncture. The state media says, “financial stability” is now deemed a greater priority than efforts to control debt. The PBOC looks like it will soften its attack on the credit markets, moving back to pro-growth policies and efforts to prevent a liquidity shock before the Communist Party’s 19th Congress in November.

EUROPE AND US

  • An impeachable offense. At least that is what the US media is calling the latest problem for President Trump after he tried to shut down an inquiry into James Flynn. The news from the US is unsettling markets as it will bog down POTUS with issues other than tax reform and spending plans.
  • It was a challenging year for US hedge fund managers. The top 25 managers earned US$11bn despite only half of them making only single digit returns in 2016.Nice work if you can get it.
  • The UK government has finally exited its stake in Lloyds Bank with the last 0.25% sold today. The government is expected to have made GBP500m on its holding. At the height of the GFC, Lloyds was effectively nationalised with the UK government owning 43% at one stage.

And finally…..

“I don’t know about that new pro,” said Cameron at the golf club. “He may be a little strange.”

“Why do you think that?” asked Francis.

“He just tried to correct my stance again,” said Cameron.

“So?” said Francis. “He’s just trying to help your game.”

“Yeah, I know, but I was standing at the urinal at the time.”

Clarence

XXXX

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NT Markets

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