ASX drops 36 to 6456 as trade worries wane and markets stabilise. US futures up 74 points. Banks stage a late rally to spare a soggier end to the week. Other financials did not fare so well as insurers badly hit as yields continue to drop. CBA actually rose by 0.04% after being down most of the day. IAG down 2.2% and QBE down 2.1% though. Defensive staples were also easier led by WOW down 2.7% on broker downgrades and tech stocks seem to be unwinding recent ‘irrational’ valuations. APT fell 4.4% and WTC down 2.9%. Energy stocks suffered as oil collapsed and WPL fell 3.5% and STO down 3.2%. Miners modestly higher with BHP up 0.35%. TLS found some buyers rising 0.6% with healthcare finding buyers late with CSL up 0.1%. US is closed Monday for Memorial Day and UK is also out as D-Day looms for PM May. European elections this weekend. Asian markets mixed as Japan slips a little down 0.2% and China revives with a 0.4% rise. AUD steady at 68.70c.

Todays Highlights

• ASX 200 falls 36 to 6456
• High 6486 Low 6437. Down but not out.
• ASX 200 up 1.4% since election
• Banks weaken slightly but energy gets smashed.
• Miners find buyers as gold helps.
• Tech stocks see profit taking.
• Healthcare steady.
• AUD steady at 68.70c on rate cut hopes.
• Aussie Gold up slightly to $1855.
• Bitcoin slips to $7622.
• US futures up 74.
• Asian markets mixed with Japan down 0.07% and China up 0.43%

STOCKS

• ALL +2.71% broker upgrades on results.
• DDR +4.03% bouncing back.
• MYR +3.08% Wilsons tip.
• EML +6.25% another conference tip.
• GOR +2.80% gold price. Gruyere looms.
• APT -4.39% Z1P -5.91% profit taking.
• AKP -8.10% low volume on disappointing news.
• NEC +0.76%% dumps pollsters after election failure.
• TIP -10.00% new IPO not a great start.
• LCK +25.00% commercialisation update on gas project.
• ANO +20.41% unexpected increase in sales orders.
• GXY -6.55 % PLS -5.66% and ORE -4.01% spooked by lithium price predictions.
• BRU +26.53% rumours that Twiggy is buying.
• PET +4.55% bulls are running after contract win.
• WZR +18.75% back in the winner’s circle.
• NET +2.33% going well too.
• WES -0.19% lithium gloom.
• SYD +1.33% confirm guidance.
• KGN -3.08% ACCC fallout.
• SPT -4.68% SPP weighs.
• Speculative stock of the Day: Nothing special today. Not on volume anyway.
• Biggest Risers: CEN, ISX, EMLK, DDR, MP1, RMS and ANN
• Biggest Falls: GXY, Z1P, PLS, CVN, BPT , CTD and MIN.

TODAY

• Estia Health (EHE) –3.01% Trading update; full-year EBITDA guidance now expected to be between $92m and $94m, while it is an increase of 2-4% on FY18, it is lower than previously anticipated. Total costs in FY19 associated with the Royal Commission are estimated to be approximately $2.3m.
• Sydney Airport (SYD) –1.33% Has reaffirmed guidance at its AGM, full-year distribution is expected to be 39c per share and capex is anticipated to be between $390-440m. An interim distribution of 19.5c per share was declared.
• Syrah Resources (SYR) +0.43% Provides outlook at its AGM for its Balama graphite operation; C1 cash operating costs trending towards $400/t during 2019, production target of around 250kt.
• Healthscope (HSO) – Scheme of arrangement with Brookfield approved by Federal Court.
• AusNet Services (AST) -0.28% Appoints Tony Narvaez as MD, effective November 1. Narvaez is currently CEO of Endeavour Energy.
• Whispr has secued funding and will list June 19^th.
• Woolworths (WOW) -2.71% renewed pressure from shareholders for the supermarket group to cut ties with its pubs and pokies business.

ECONOMIC NEWS

• Westpac Bank (WBC) has become the first major bank to forecast 3 rate cuts now. June, August and November is the call taking the rate down to a mere 0.75%.

BOND MARKETS

• 2-Year bond yields down 4bps to 1.10%
• 5-Year yields down 4bps to 1.18%
• 10-Year yields down 4bps to 1.53%

15-year bonds now yield 1.8% no wonder equities are where they are.

ASIAN NEWS

• Luckin Coffee (think Chinee Starbucks) has plunged 39% since soaring 53% on listing. It is now down 7.5% on its IPO but Lyft is down 20%.
• The Chinese yuan has fallen 7.5% against the USD in the last year giving some relief for the economy.
• Chinese Investment in the US has dropped dramatically.

• Consumer inflation in Japan edged up in April. Still, below the 2% target, the BOJ has had forever.

EUROPEAN AND US NEWS

• Facebook has removed 2.2m fake accounts in 1Q.
• Finally,it looks like Theresa May is set to name the date as her resignation day. June 10^th is shaping up as Boris and co joustle for the poisoned chalice. Apparently she wants to be around for D-Day celebrations. 75 years. She also wants to be there to greet Trump for his visit. Could take forever.

• Goldman Sachs says buy commodities after the worst week of 2019. Sees a 6.1% return in three months for Commodity index.

• Here’s how the trade war is playing out in US prices.

• US PMI down to the lowest number in a decade. Not a great sign as the trade war starts to play out.
• SpaceX has successfully deployed 60 Starlink satellites into orbit
• Trump has proposed punishment for currency manipulators. That means you China and you Germany.
• Memorial Day weekend in the US. The UK has Monday off too. Expect lots of tweets.

And finally…………….

Some have counselled me to go to a long-term care home. I was not sure about this. So I decided to ask my long time doctor. So, I awaited my next visit and I asked him, “How do you determine whether or not an older person should be put in a Long-Term Care Home?” “Well,” he said, “we fill up a bathtub, then we offer a teaspoon, a teacup and a bucket to the person to empty the bathtub.” “Oh, I understand,” I said. “A normal person would use the bucket because it is bigger than the spoon or the teacup.” “No,” he said. “A normal person would pull the plug.” “Do you want a bed near the window?“

Clarence

XXX