So did you miss me? Well I’m back!!!
- ASX 200 down 48 points at 5757 in lacklustre trade. Banks fall contributes 16 points of the losses as ratings agency Moody’s downgrades, although no funding cost implications expected. Big Bank Basket falls to $170.49.
- Dow Futures +24 points at our close. AUD 75.96c
- REITs come under pressure on rising interest rates whilst gold miners suffer as fund restructuring and sell down take their toll.
- Australian government moves to limit gas exports not helpful for gas exporters like Santos (STO) -1.97% and Origin Energy (ORG) -2.78% slipping after the lunch time announcement.
- More signs of life in the retail sector with JB Hi Fi (JBH) +2.03% and Flight Centre (FLT) +1.22%.
- Tabcorp and Tatts Group return from trading halt positively as merger approved helping gaming sector higher.
- Amcor (AMC) +0.78% have a North American analyst tour in progress as first day brings good news.
- Nickel stock Western Areas (WSA) +9.47% and copper /gold producer Independence Group (IGO) +4.1% rally strongly.
- Isentia (ISD) +% on takeover speculation in the media.
- In speculative stocks, Compumedics (CMP) +43.24% wins a major MEG brain imaging contract.
- The big four banks credit ratings have been downgraded by Moody’s because of greater risk in the household sector. Moody’s downgraded the long-term ratings from Aa2 to Aa3, now in line with S&P. According to the IMF, 60% of our banking companies loan book is in residential property against 40% for second placed Norway. And double the US. Half of Australia’s mortgage credit is held by households who have borrowed more than six times their annual income, according to research by JCP Investment Partners, an equities fund.
- APA Group (APA) -0.82% Blue Energy (BUL) +16.07% and APA have agreed to negotiate a gas transportation agreement to deliver Blue Energy’s gas to southern market buyers.
- Caltex (CTX)-1.28% updated their refiner margins for May 2017, saying they are below last months but above margins from this time last year.
- Tabcorp (TAH) +0.43% and Tatts Group (TTS) +3.60% have been given the green light by the Australian Competition Tribunal today. The only condition is the merged entity must sell its Odyssey Gaming Services business.
- Oroton Group (ORL) +4.35% is up for sale officially as the appointment of a strategic adviser last month is bearing fruit. The company stated that it had received a number of approaches from numerous parties. The company has issued a trading update today with the market ‘very competitive’ and now difficult to forecast but the EBITDA falling to between $2m and $3m is unchanged. ORL have fallen 54% this year.
- Sydney Airport (SYD) +0.27% traffic number for May came out today, domestic growth was +2.7% MoM, international growth was +8.1% MoM leading to total growth +4.5% MoM.
- Qantas (QAN) -0.18% despite one broker, Macquarie, expecting buy backs to continue in both FY18 and FY19. The broker suggests the airline is still trading below its peers on a 4.4 times one year forward earnings basis. Macquarie has upped its price target to 650c from 590c.
- Air New Zealand (AIZ) +1.31% has been contracted to service the US Navy’s gas turbine engines for NZ$42m.
- Slater and Gordon (SGH) –1.02% The company’s shareholders have served a class action claiming that the company had misleading information in its financial statements for 2013, 2014 and 2015.
- Downer (DOW) -1.31% have waived all defeating conditions in previous offers for Spotless Group (SPO) unchanged. Spotless has said to their shareholders the offer is still too low and to reject it.
- Dexus (DXS) -2.22% 62 of the company’s 102 properties have been revalued and resulted in a $240m or 2.1% increase in book value.
- AWE +1.05% has recommended that its shareholders do not take up the call option offer from Dawney and Co.
- In the mid cap space, Big Un (BIG) +8.86% announced it had agreed to acquire Hospitality Vertical from the Intermedia Group. The acquisition will give BIG the largest presence in B2B hospitality marketing.
- RBNZ has kept rates unchanged at 1.75%.
- The Australian house price index was up 2.2% from the previous quarter and house prices are up 10.2% compared to the previous year. Sydney was the strongest market with prices rising by 14.4% in the year to March 2017, while Darwin was the weakest as prices slipped 5.9%.
- RBA meeting minutes highlighted:
- Increased household debt levels (part of the reason for the bank downgrade by Moody’s).
- Weak wage growth is likely to continue.
- The need for job and housing market monitoring.
- An expected GDP growth of 3% in coming years.
- The ANZ/Roy Morgan Survey found consumer confidence numbers decreased to 112.4 from 112.9.
- The NSW Government has unveiled a $12bn surplus over the next four years on the back of privatisations and a bumper stamp duty take.
- Li Ka-Shing plans to step down as CK Hutchison Chairman by 2018.
- Good news for Australian beef producers with a recent ban on cattle slaughtering in India expected to push up prices. India was the biggest exporter of beef globally in 2014 with 20% of trade. Not good news for steak lovers though.
- China’s economic growth is expected to fall below the government’s 6% target in 2018 and 2019, according to Fitch in its regular Global Economic Outlook report.
- Globally, Fitch forecasts GDP growth of 2.9% in 2017, up 0.4% from last year, and rising to 3.1% in 2018 before easing to 3% in 2019. US economy is the key growth driver.
- Argentina has issued a 100-year bond with a 7.9% yield. Massively oversubscribed with US$9.75bn in demand for US$2.75bn.
EUROPE AND US MORNING Headlines
- Brexit talks start in earnest. The UK will leave the single market and customs union according to opening statements from both sides. Looks like a hard Brexit is on the cards.
E Bay Scam Alert
Be careful what you purchase on eBay.
A friend spent $50 on a penis enlarger.
Bastards sent a magnifying glass.
Instructions said don’t use in the sunlight.
Just a quickie from adventure
Clarence in full flight…maybe escaping the Dukes!!!