ASX 200 surprisingly shrugs off tariff ramp up and closes up 15 to 6311. US futures sag on news from trade talks down 88 points. The market was thin and nervous as news broke that the tariffs will be brought in, but talks will continue. Defensive stocks fared better, and banks held up given dividends next week. ANZ down 0.5% was the exception. Miners were skittish on the news with BHP falling 0.5% but others fared better as FMG gained 1.1%. REITs and infrastructure stocks in demand again on defensive buying. TCL up 1% as it conducted a Eurobond issue. Telcos continued to bounce on optimism that TPM can win in the courts. TPM rose 5% and TLS scratched out a 0.9% gain. Volume was light under the circumstances and the market shrugged off the RBA’s SOMP which led to a slightly lower dollar under 70c. Asian markets were mixed with China up 2.63% and Japan down 0.27%

Todays Highlights

• ASX 200 up 16 to 6311.
• High 6317 Low 6284.
• ASX 200 down 25 points for the week.
• Trade tariffs come in from midnight US time. Talks continuing.
• SOMP from RBA. Goalposts shifted slightly.
• Banks remain solid and the swing sector.
• Miners better despite uncertainty.
• Defensive consumer and bond proxies better.
• AUD steady at 69.95c
• Aussie Gold steady at $1837.
• Bitcoin up again to $6265.
• US futures down 108 on trade talk woe.
• Asian markets mixed with Japan down 0.27% but surprisingly China up 2.63%

STOCKS

• 360+10.86% new float. Good debut.
• PPH +5.83% broker upgrades following recent results.
• TPM +4.96% Courts will be busy.
• CVN +4.76% drilling kicks off.
• SIQ 3.20 broker upgrade.
• CUV -5.73% overbought and overvalued.
• BUB -4.39% profit taking.
• FXL -3.39% gloss wears off.
• ABC -3.72% broker downgrades following result.
• SM1 -4.06% issues with land title for production facility.
• LVT -5.38% Investor presentation.
• LVH +7.53% webinar cheers.
• SFG +2.22% Bynoe Harbour update.
• CWN -1.42% despite Wynn talk.
• DDR +4.40% stock focus this morning.
• NUF -4.74% despite rain in Victoria.
• ORE -2.22% profit taking.
• SPO +9.32% strong bounce on recommendation.
• Speculative stock of the Day: Genetic Technologies (GTG) +57.14% on a new product announcement. Two new ground breaking genetic risk testing markers for Colorectal Cancer and Breast cancer.
• Biggest Risers: 360, SPO, PPH, TPM, CVN, DDR and GOR.
• Biggest Falls: CUV, NUF, BUB, SM1, ABC, FXL and SVW.

TODAY

• Adelaide Brighton(ABC) -3.72% has issued a profit warning as declines in retail construction in NSW and VIC have accelerated. Profits will fall at ABC by 15% due to softening residential demand for materials and higher raw material costs. Residential building approvals fell by 27% in March on the same period last year, while Australia’s two biggest housing markets, NSW and Victoria, also fell 27% in March.
• REA Group (REA) +0.91% have seen a 7% increase in Q3 revenues, with a rise in income from its Australian real estate classified business despite a fall in the number of listings. The rising revenues still fell short of the consensus estimate of $202.0m, coming in at $198.6m. Q3 adjusted EBITDA of $110.7m beat estimates of $109.0m. The company expects Q4 to see a lower rate of revenue growth than Q3, paired with lower expense growth. Market conditions are expected to remain challenging in the short term.
• Infratil(IFT) – gave confirmation this morning that they (and another party) are in talks with Vodafone regarding a potential acquisition of Vodafone New Zealand. The company has gone in to a trading halt pending a further announcement.
• Qantas(QAN) -2.70% Macquarie and Credit Suisse cut their target prices 8% and 3.2% respectively in response to Tuesday’s trading update, seeing risks are skewed to the downside. Macquarie also downgraded its recommendation to NEUTRAL from Outperform.

ECONOMIC NEWS

• Why wait for the RBA. Two banks are cutting fixed mortgage rates with Macquarie and ANZ cutting the cost of residential loans by up to 60bps.
• Meanwhile NAB has scrapped a raft of charges for business. 50 all up amongst them monthly service fees and stop cheque fees. What are cheques? No more SMS alert fees either. It currently has a suite of 400 fees for business and is planning to remove hundreds more over the next two years.

RBA Statement of Monetary Policy

• Growth is expected to be 2.75% in 2019 and 2020.
• Trimmed mean inflation is expected to be around 1.75% over 2019 and then increase gradually to 2% in 2020
• Inflation forecasts have been revised lower
• Domestic price pressure weaker than previously thought.
• Consumption growth has been revised lower.
• Recent data suggest that retail spending was weak in the March quarter, with retail sales volumes declining in most states. The near-term outlook for consumption growth has been revised lower because weaker housing market conditions and income growth are likely to continue to drag on spending.
• Unemployment 5% out to 2020 then falling in 2021.
• Weak growth in household income poses a key risk to the outlook for household consumption.
• It concluded that the ongoing subdued rate of inflation suggests that a lower rate of unemployment is achievable while also having inflation consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.

BOND MARKETS

• 2-Year bond yields unchanged at 1.30%
• 5-Year yields unchanged at 1.34%
• 10-Year yields up 1bps to 1.72%

ASIAN NEWS

• Tariffs at ten paces it is. Still talking but not looking great. Remember that China effectively funds the US deficit.
• Wages in Japan dropped by the most in almost four years in March. Hard to see any inflation in that economy. Ever.

EUROPEAN AND US NEWS

• Vinyl floor coverings will be weak. Top ten imports from China affected by tariffs. And what is Metal furniture?

• Vale posts a US$1.6bn Q1 loss following dam tragedies.
• Full English. In the World game, Chelsea have made the Europa Cup final following the amazing games this week with Spurs and Liverpool overcoming the odds to make the Champions League final. The beautiful game remains just amazing.
• Uber priced its shares at US$45 a piece, near the bottom of its indicated US$44-to-US$50 range.
• Not a bad consolation prize as Chevron has walked away with a US$ 1bn break fee for missing out on the Anadarko prize. Chevron will still raise its share buyback to US$5bn pa.
• Peugeot could be lining up Jaguar as a bed mate as the French car maker continues to struggle.
• The German black hole is even bigger than Merkel had realised.
• It’s a cut throat world, as Wilkinson Sword has bought Harry’s, a shaver start-up for US$1.4bn.

And finally …

A woman asked the pharmacist, “Do you sell Viagra?”

“Yes we do,” he answered.

She asked, “Does it work?”

“Yes it does,” he answered.

She said, “Can you get it over the counter?”

“I can, if I take two,” he replied.

I love this one…

Thanks Hans…

Clarence

XXX