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Clarence hitting the TV today…bit rusty after three weeks away!!!

Highlights:

  • ASX 200 down another 92 points to 5666 as banks and material stocks join in the rout on lower oil prices. Started badly and closed on its lows. Worst day of the year so far. Worst day since US elections last year.
  • Dow Futures -15 points at our close. AUD 75.32c
  • Financials lead the market down after QBE disappoints as usual. The Big Bank Basket is now $167.13.
  • Insurers dragged down by QBE -10.28% update with Suncorp (SUN) -1.92% and IAG -%.
  • REITs again sold off as Dexus (DXS) announces acquisition and capital raising.
  • QBE and RFG both disappoint. CSL +0.68% and Cochlear (COH) +3.24% amongst the rare bright spots.
  • Chief scientist Alan Finkel, says wind and solar are ‘cheaper’ to build than coal fired power stations. AGL chief agrees. After running the slide rule over coal projects Andy Vesey cannot make them stack up on coal.
  • Energy stocks suffer as oil price plunges to multi month low. Woodside Petroleum (WPL) -2.11%, Santos (STO) -2.01% and Oil Search (OSH) -2.86%. The government move on domestic gas not helping either.
  • Chinese backed Tianqi Lithium Corp has plans now to double capacity in WA bring output to 48k tonnes of lithium hydroxide. Global demand for lithium hydroxide was forecast to rise from 31k tonnes a year in 2015 to 64k tonnes in 2020 and 129k tonnes in 2025.
  • New IPO Kelly Partners Print (KPG) +36.00% had a strong debut on good volume.

TODAY

  • QBE Insurance (QBE) -10.28% The company has updated the market with the insurance margin expected to be 8.5% to 9.5%. The three largest operating divisions are on track. The emerging markets business is seeing increasingly higher claims during the first five months due to increased frequency of claims in Asia and weather-related events. The combined operating ratio will increase by around 1%. Investment returns have been at the top end of expectations in the 2.5%-3% range as interest rates increase around the globe.
  • Retail Food Group (RFG) -10.41%The company has updated the market with NPAT growth of 15% expected and underlying EPS growth of around 8%. Market was expecting 20% growth and problems at Michel’s Patisserie continue.
  • Rio Tinto (RIO) -2.88% director John Varley has resigned from the mining giant’s board after being charged with conspiracy to commit fraud by the UK Serious Fraud Office.
  • Western Areas (WSA) –7.21% Has issued an EOFY update. Production up and costs down. Lithium JV showing promise but delay in a shipment to have a negative impact.
  • Quintis (QIN) shareholders were hoping to see the shares return today but the company has asked for an extension to the suspension until July5th.
  • AGL Energy (AGL) +1.12% The Company has announced Graeme Hunt will succeed Jerry Maycock as chairman of the board effective from September’s AGM.
  • Dexus (DXS) – Trading Halt -The company is acquiring two Sydney office buildings and is in due diligence to acquire a core portfolio of industrial properties in Melbourne.  The consideration is $739.3m for all the acquisitions. The company is undertaking a equity raising of $500m fully underwritten placement and a SPP to raise another $50m. Guidance of FFO growth of around 2%-2.5%.
  • APA Group (APA) -0.42% has announced it will build a new gas pipeline in WA to supply power to the Gruyere Gold Project. APA will design, build and operate the 198k pipeline and it will cost around $180m to connect.
  • Yowie Group (YOW) -4.69% has downgraded projections with annual revenue growth of 55% against a previous estimate of 70% and 2018 revenue growth of between 55%-70%. The change is due to the timing of the Canadian Launch and front-end programming issues with Discovery World.
  • Monadelphous (MND) -2.88% has won a $600m contract with Woodside Petroleum (WPL) -2.11% over five years in WA. The contract has a two-year extension option and covers gas asset maintenance and offshore implementation.
  • Mercantile Investment, a vehicle for Ron Brierly, has bought into Yellow Brick Road (YBR) +23.81%. Brierly picked up 4% at under 10c.

ECONOMIC NEWS

  • The Westpac Leading Indicator was the highlight today. The six-month annualised growth rate in the index fell heavily in May, sliding to 0.62% from 1.01% in April. Despite the slippage, Westpac still believes that the RBA is unlikely to move official interest rates anytime soon.

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ASIAN NEWS

  • China has finally got access to MSCI Emerging Markets Index with 169 Chinese ‘A’ shares set to be included for the first time. This is a game changer as China emerges as a global financial market place. It will not happen overnight but it will happen.
  • Saudi has a new crown Prince as the King has named his 31-year-old son Mohammed bin Salman as crown prince, now first-in-line to the throne and removing the country’s counterterrorism head from the succession planning.

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EUROPE AND US MORNING Headlines

  • More confusion in the UK with the minority government of Theresa May in doubt as the DUP threatens to walk away from a deal. Queens speech today should steady the nerves.
  • European Union Trade Commissioner Cecilia Malmstrom said she’s “extremely worried” about a U.S. threat to curb steel imports for national-security reasons. Total U.S. steel imports last year amounted to 26 million metric tons, of which 3.2 million tons were shipped from the EU by companies such as Thyssenkrupp AG and Celsa Group.
  • Uber founder Travis Kalanick resigns as CEO. More to come.
  • Uber has agreed to allow its drivers to collect tips through its smartphone app and has reduced the cancellation windows in an effort to improve its relationship with its drivers.
  • It has taken five years of investigation but now the ex-head of UK bank, Barclays is facing 22 years in jail on fraud charges. The very Serious Fraud Office has charged him and three other directors over unlawful financial assistance over its dealings with Qatari investors during the GFC.
  • Expect plenty of tweets from President Trump this evening as Republican candidate Karen Handel has won a special election in Georgia despite the Democrats pumping in US$23m into the state for its campaign.

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More to come. Plenty more.

 

And finally……………..

“Why are you using two caddies?” says one golf buddy to another.

“My Wife feels that I don’t spend enough time with the kids”

 

 

A vicar, also an avid golfer, was once taking part in a local tournament. As he was preparing to tee off, the organiser of the tournament approached him and pointed to the dark, threatening storm clouds, which were gathering around.

“Father,” the organiser said, “I trust you’ll see to it that the weather won’t turn bad on us?”

The vicarshook his head. “Sorry,” he replied. “I’m in sales, not management!”

Clarence

XXX

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NT Markets

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