Friday (I’m in Love) May 31st – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 fights back from early losses to close up 5 to 6397 on month end rebalancing. US futures down 212 but off lows as Trump puts Mexico on notice over immigration. Miners saw buyers return with FMG up 0.88% and BHP up 0.16%. CSL up 0.94% after enjoying a more severe flu season. Defensives rallied as bond yields fell again. TCL up 1.75% and SYD up 1.23%. GMG up 0.9% and the REITs recovered too. Gold stocks in vogue, though SBM fell 5.88% cutting its production numbers as production problems bite and the capital raising overhangs stock. In corporate news, LNK revealed more issues with Brexit in the UK and fell 23.07%. CWN was sold off after James Packer reduced his holding and sold 20% to Lawrence Ho and Melco. CWN fell 3.02%. LYC had some more good news with the Malaysian PM seemingly backing the LAMP facility getting a renewed licence and rose 11.31%. The Australian dollar slipped slightly lower to 69.18c and Asian markets were mixed again with Japan suffering on car maker woes falling 1.33% and China shrugging off PMI and trade wars to be up 0.7%.

Todays Highlights

ASX 200 recovers from early losses to close down 5 to 6386.
High 6399 Low 6362. Month end rebalancing helps.
For the week, ASX 200 fell 60 points from 6456. May has seen gains of 72 points.
Gold miners rally with other defensives as risk builds.
Miners back in focus though energy stocks fall on crude prices.
Banks mixed as CBA shines.
CSL rallies as flu season takes it toll.
AUD slips slightly to 69.18c
Aussie Gold strong at $1869
Bitcoin stumbles to US$8187.
US futures down 180.
Asian markets mixed with Japan up 0.4% and China up 0.7%

STOCKS

LYC +11.31% LAMP shines
SHV +9.80% positive earnings update.
BLD +4.42% investor day cheers.
AMC +3.13% gets anti-trust approval for Bemis merger.
RMS +6.82% EVN +5.45% and NST +4.86% on higher Australian gold prices.
CGC +5.33% a bounce but will it last?
APX -6.64% Duke of York performance up then down again.
SBM -5.88% more production issues.
NEA -4.51% profit taking.
PME -3.15% profit taking.
WZR -3.23% management options granted.
PET -5.06% ups production but rare earths exposure weighs.
WOR -2.44% oil price weighs.
ECX +29.48% positive earnings update.Best month on record for vehicle leasing.
AYS +5.80% revitalises Optus agreement.
SYR +4.74% shorts covering again.
Speculative stock of the Day: Lake Resources (LKE) +53.85% after announcing high flow rates of cinductive brine at the Cauchari lithium brine project in Argentina. Potential for strong results to continue.
Biggest Risers: LYC, SHV, OMH, RMS, EVN, CGC and NST
Biggest Falls: LNK, APZ, SBM, NEA, BKL and AVH.

TODAY

Eclipx Group (ECX) +29.48% reports 1H19 statutory NPAT loss of 120.3m, a big drop from the $25.0m profit recorded last year. A big determinant of this result was $118.4m in non-cash impairments. EBITDA came in at $31.3m, down from $57.8m a year ago.
Link Administration (LNK) -23.07% trading and earnings update. The company expects FY19 operating EBITDA to be in the range of $350-360m (up from $335.3m in FY18), with operating profit expected to be $195-205m (down from $206.7m in FY18). The European operations of the company have seen the effects of the Brexit uncertainty and related drop in business sentiment and activity.
Boral (BLD) +4.42% has given an update at their investor day presentation, stating that H2 is tracking broadly in the range of expectations given in prior guidance. The company conceded it would need a strong June, however, this is nothing new.
Crown Resorts (CWN) -3.02% James Packer has sold down his holding in CWN by 20% to Lawrence Ho’s Melco company. Melco now owns 20% with Packer retaining a 26.6% stake in a $1.8bn sale which was handled without brokers or investment banks. Just a handshake perhaps. Melco will face regulatory approvals, and if forthcoming will look to increase its stake in the company that is currently building a new Sydney casino. The share sale was conducted at 1300c, significantly lower than the on/off takeover at 1475c from Wynn Resorts which was aborted earlier this year.
Vocus (VOC) –0.43% The ACCC has hired star council barrister Michael (baby faced) Hodge from the Hayne Commission to defend its decision to block TPM/Vodafone merger in court. The court case is a way off. ACCC wants November, VOC wants August.

ECONOMIC NEWS

Small and regional banks are cutting loan rates as they take the fight to the big four in a very competitive market. The new one-year fixed rate is 2.99% from Greater Bank, a NSW-based mutual. First time under 3%.

BOND MARKETS

2-Year bond yields fall 2bps to 1.11%
5-Year yields fall 4bps to 1.16%
10-Year yields fall 6bps to 1.47%

ASIAN NEWS

Asian MSCI Index down 6% for the month.
The Chinese manufacturing PMI came in at 49.4 (estimates 49.7) and services 54.3, with both below what economists were forecasting.
Some components in PMI number fell heavily.

In Japan: Industrial production in Japan rebounded 0.6% month-over-month in April 2019 following a 0.6% decline in March and compared to market expectations of a 0.2% advance.

Japanese car makers saw falls today as they may be in Trump’s sights. Many make their cars in Mexico. Not good.
China has put Soybean imports from the US on hold. It has a ‘cunning plan’ too to restrict rare earths to the US too.
North Korea is now run by a Bond villian it seems as Chairman Kim has executed his negotiator from the Trump talks.

EUROPEAN AND US HEADLINES

Uber sets records. For a US$1bn loss. In a quarter.
POTUS has announced a 5% tariff on all Mexican goods imported into the US from June 10^th and will ratchet it up to 25% in October if Mexico does not stop the flow of illegal immigrants into the US. He did say the Mexicans would pay for the wall after all. This is just a tariff wall rather than concrete and barbed wire. Mexican peso slumps.
Trump has threatened the UK with curbs on intelligence sharing if it backs Huawei. Now four eyes. Threathens the EU on sidestepping Iranian sanctions.
Donald Trump has backed Boris as preferred conservative party leader and next PM.
European futures to open around 0.5% lower.
German bond yields hit 700-year lows as deflation looms. There we said it. Super Mario goes in October. Looks like his successor will have a tough job reviving the EU economy.
German retail sales jump 4% YoY.
HSBC is cutting hundreds of jobs.
Facebook shareholders have tried and failed to replace Mark Zuckerberg as chairman. Hardly a surprise as the Zuck owns 57.7%.
Tesla has opened its order books in China for the new model 3 and has cut prices too with slow demand to blame.
In ScoMo words, ‘How good is Ben Stokes?’