ASX 200 rallied 26 points to 6358.5 as enthusiasm waned after poor GDP numbers showed the extent of the local slowdown. US Futures were up 24. Banks were the bedrock of the gains today on the rate cut and US banks improving. CBA up 1.2% and WBC up 1.4%. Miners were better in the iron ore space led by BHP up 0.6% and RIO up 1%. Energy stocks bounced too as oil rose with WPL up 0.3% and OSH +0.3%. REITs under pressure today as bond yield s fell again. Tech shares showed a clean pair of heels as APT rose 7.1% on a US update and REA put on 1.65% as optimism on housing grows. CSL slipped down 0.9% and AMCDC fell 0.3% on its debut after the Bemis merger. In corporate news. EQT left VOC standing at the altar for the third time with the stock falling 17.7% on the bid being withdrawn. Australian dollar still nudging 70c at 69.89c and Asian markets followed US markets higher with Japan up 1.81% and China up 0.73%
- ASX 200 up 26 to 6358.5
- High 6388 Low 6349. Average volumes.
- Banks lead the charge followed by iron ore miners.
- GDP weakness steals some thunder.
- REITs under pressure. Dairy infant formula sees bargain hunters.
- Energy slips together with healthcare.
- AUD stronger to 69.98c
- Aussie Gold strong at $1895
- Bitcoin stumbles to US$7794
- US futures up 24.
- Asian markets higher with Japan up 1.81% and China up 0.73%
- APT +7.08% announced it has 3,300 retail partners and 1.5m customers in the US.
- EML +3.85% BNPL back in focus.
- DCN -67.51% production problems and cost blow out.
- ANO +13.75% technical buying. Low volume still.
- SPT +8.22% EFT Pay partnership.
- PPS +6.06% Cashwerkz Partnership
- BUB +6.90% infant formula bounce.
- COE +4.95% gas sales agreement with AGL.
- BVS +4.73% bouncing after sell-off.
- CVN +3.85% drilling optimism.
- VOC -17.69% once, twice three times a loser.
- EXL -7.49% capital raising weighs.
- RRL -4.27% underground risk following DCN sell off.
- GOR -3.65% NST -2.70% EVN -5.60% gold producers sold down.
- CSR -2.27% change of director’s interest.
- LYC +4.20% rare earth battle set to kick off.
- Speculative stock of the Day: Neurotech (NTI) +64.29% ASX query on price and volume following update on launch of Mente Clinic, a virtual clinic that allows members to interact with Mente patients and monito progress.
- Biggest Risers: APT, BUB, Z1P, BIN, COE, BVS and CNI
- Biggest Falls: VOC, HT1, EVN, REG, RRL, SAR and WGX
- Charter Hall Long WALE REIT (CLW) – To acquire two office properties and as previously announced, a 50% interest in another for a total consideration of $206m. An institutional placement at an issue price of 474c will be used to partly fund the purchases, a SPP will also be used to help raise funds. FY19 operating EPS guidance expected to be at the upper end of previous estimates, around 26.9cps. FY20 operating EPS growth guidance to be no less than 3.75%.
- McGrath (MEA) +1.85% To acquire the business & assets of Sydney’s Sotheby’s International Realty for around $1.6m in cash. The acquisition isn’t expected to have a material impact on short-term earnings.
- Cooper Energy (COE) +4.95% Has signed a new gas supply deal with AGL Energy (AGL) from its Sole & Casino Henry gas operations.
- Wesfarmers (WES) +0.57% Appointed Sharon Warburton to its Board effective August 1 this year. She is currently a Non-Executive Director and Co-Deputy Chairman of Fortescue Metals Group and a Non-Executive Director of Gold Road Resources, NEXTDC and WorleyParsons.
- Vocus (VOC) –17.69% EQT Infrastructure has pulled its takeover offer, discussions have ceased after a period of due diligence. VOC CEO Kevin Russell in a statement this morning thanked EQT for its interest, indicating the company can now focus on its turnaround strategy. The company reiterated its FY19 guidance, underlying EBITDA expected to be between $350 – 370M. Despite the withdrawal, Deutsche Bank believes takeover interest continues and now incorporates a 15% takeover premium into the valuation.
- CBA PMI Services Final for May down 0.8 points to 51.5 points.
- Ai Group Performance of Services Index for May up 6 points to 52.5 points, the move marked the first expansion in five months.
- Australian GDP grew at 0.4% in the March quarter, leaving the annual growth rate at 1.8%, the slowest annual pace since 2009. Household consumption growth slowed in the quarter to 0.4% dragging annual growth down to 1.8% below the RBA’s revised forecast. Government consumption also slowed to 0.8% in the quarter down from 1.8% leaving the annual rate of growth down to 5.1%.
- Net exports contributed 0.2% to GDP growth driven by an increase in exports.
- Compensation of employees increased by 1.2%.
- The terms of trade rose 3.1%.
- 2-Year bond yields drop 3bps to 1.08%
- 5-Year yields down 3bps to 1.15%
- 10-Year yields fall 1bps to 1.48%
- Trade wars are taking their toll on inflows in China as investment funds are leaving at record rates. US$12bn left the stock market in the last two months.
- Chinese President Xi says Chinese economy can manage risks and the economy is noticeably improving. Bank of America Merrill Lynch analysts cut their forecast for 2020 growth today due to the trade war with GDP now expected to be around 6% from 6.2%. They expect the PBoC to cut rates twice in 2019.The World Bank has also cut growth forecasts to 6.1% from 6.2%. G20 is shaping up as a crucial meeting for Xi and Trump.
EUROPEAN AND US HEADLINES
- Italy is reviving its ‘alternative’ currency policy. Maybe we will get to see ‘Italexit’ as well as ‘Brexit’.
- Sometimes its hard to be a short sellers as last night’s rally showed, with some serious pain across the sellers.
- Trump’s last day in the UK as he snubs Labour leader Jeremy Corbyn and looks to a trade deal with the UK and carving in the NHS.
- One prominent consumer activist has said that the Boeing 737 Max should never fly again citing the size of the engines in comparison to the fuselage as a serious design fault regardless of the software upgrade.
- No Breakfast at Tiffany’s as trade wars bite with US sales to Chinese tourists dropping 25%.
A sheepish Vladimir Putin has confessed he totally forgot to vote in the US midterms.
Referring to himself as ‘property royalty’, Donald Trump offered to give the Queen a free lesson in wealth accumulation, as the two walked through the 13 acre Windsor Castle estate
“I own eight buildings in New York and a golf course in Scotland,” the US President said, asking the Queen if she’d ever been to Scotland before.
“And you should see my apartment. It’s huge. Really big,” he said, adding that since he became President it had been staffed by a permanent security team out the front.
The Queen later broke with royal protocol, referring to Trump as a ‘massive twat’.