Happy Birthday Will

ASX 200 loses 4 points to 5217 (-0.08%) after early gains evaporated as bad economic numbers hit home. Dow futures up slightly by 62 points. Miners one of the few bright spots today with BHP bouncing on better commodity prices by 2.7% and RIO following suit up 1.0%. Gold miners too back in demand on the run again in bullion with NCM up 3.9% and NST up 4.9%. Energy stocks also did well as oil rallied from negative to positive this week but still at very low levels. WPL up 2.0% and STO up 6.8%. Elsewhere the banks slipped yet again as results loom. Plenty of speculation circling on dividend cuts. The Big Bank Basket fell to $105.84 and CBA led the falls, down 0.7%. NAB down 1.1% and other financial slumped too, MQG down 1.0% and IAG down 0.3%. Healthcare suffered a head cold as the RHC $1.2bn capital raise caused some sector reweighting seeing CSL down 2.0% and RHC down 5.9%. Retailers fell after dismal economic numbers with WOW down 0.4% and COL down 0.7%. SYD fell % after Auckland numbers, and AZJ also had a bad day down %. In corporate news, RHC completed its mammoth $1.2bn placement, STO released a pleasing set of quarterly numbers, LYC rose 16.8% after a deal to trail a RE plant in the US. In economic news, the manufacturing and services PMI dropped like a rock with manufacturing down 4.1 to 45.6, but services whacked 19.6 points to 18.9. The 10-year yield rose to 0.86% and the AUD up a tad to 63.50c. Asian markets made slight gains with Japan up 1.36% and China up 0.08%

• ASX 200 closes down 4 points to 5217. Gains gone as caution grows.
• High 5282 Low 5182. Range narrows again.
• Dow Futures up 62
• Miners, golds and energy stocks bright spots.
• Banks turn down as healthcare suffers from RHC raise.
• Economic numbers starting to reveal the scale of the slow down.
• 10-year bond yields rally to 0.86%
• AUD firms to 63.50c.
• Aussie gold rallies to $2707
• Bitcoin firms to US$7131
• Asian markets rose slightly with Japan up 1.36% and China rose 0.08%.

STOCKS                                               

• LYC +16.85% US deal on RE plant trial. UBS says Buy.
• STO +6.77% quarterly and no capital raise.
• LOV +7.02% hopes for retail to open.
• IGO +4.49% NCZ +13.33% on taking stake.
• SLR +7.10% GOR +3.43% and RRL +7.84%. Golds on the move.
• API -10.67% disappointing results.
• AVH -6.38% punters not happy with US move.
• CUV-6.58% Prescribed in China.
• CSL -2.04% slips on RHC rebalancing.
• FLT -4.89% change in substantial holding.
• MVF -11.88% rethink on IVF restart.
• WAF +15.09% quarterly.
• OEC +8.66% new contract with Northman.
• AIA -1.47% traffic is down 95% this month.
• QAN -0.60% delays 3Q results.
• WTC -0.12% Bell Potter remains bearish
• Speculative stock of the day: Jupiter Energy (JPR) +172.72% quarterly report. Application to the Kazakh Ministry of Energy for licence seems to have stalled and the Akkar East oilfield may stay shut in.
• Biggest Rises: LYC, PRU, RRL, SLR, LOV, STO and RSG.
• Biggest Falls: API, CEN, CUV, AVH, CDA, RHC and MYX.

TODAY

• Infomedia (IFM) – to raise $70m via an institutional placement at 150c/share and $30m through a share purchase plan (SPP). Reaffirms FY20 outlook. Traded in line with expectations to March 31 and experienced growth across parts, services and data insights.
• Santos (STO) +6.77% reports Q1 production (mmboe) 17.9 vs quarter-ago 18.7. Revenue $883m vs quarter-ago $1.03bn. 1Q average realised oil price down 13% to US$63.80/bl. Production guidance from the base business (excluding ConocoPhillips acquisition) is maintained at 73-80 mmboe. Sales volumes guidance for FY20 (mmboe) 101-109 vs prior 99-107. Targeting 2020 free cash flow breakeven oil price of $25 per barrel. For the remainder of 2020, around 70% of forecast production volumes are either fixed-price domestic gas contracts or oil hedged at an average floor price of $39/barrel. The projected impact of COVID-19, sales volumes from the base business are expected to be at the lower end of the guidance range.
• Evolution Mining (EVN) +1.60% Reaffirms FY20 guidance. Gold production was down 3% to 165,502 ounces vs quarter ago. All-in-Sustaining Cost declined 7% to A$991/oz. Notes it hasn’t seen a material impact to its operations from COVID-19.
• AMP (AMP) -0.77% AMP Capital total AUM down 5.3% to $192.4bn vs quarter-ago. Net external cash flows increased to $1.3bn, reflecting strong inflows into fixed income products managed by China Life AMP Asset Management. Australian wealth management AUM was down 13.5% to $116.3bn vs quarter ago, primarily reflecting COVID-19-related market movements.
• Macquarie (MQG) -0.96%, Wesfarmers (WES) +0.11% Speculated to be among several parties interested in Virgin Australia recapitalization.
• Galaxy Resources (GXY) +5.56% Reports Q1 production volume of 14.3K/dmt at the low end of the company’s guidance range of 14-20K/dmt. Reaffirmed full-year production guidance of 90,000 to 105,000/dmt, with the June quarter expected to yield between 25,000 and 30,000/dmt. Sales for the period amounted to 32,512 dmt of lithium concentrate shipped from Western Australia in March. Unit cash cost of lithium concentrate produced for the quarter was US$592/dmt. The increase, compared to the previous quarter, was due to lower production volumes as production only re-commenced in mid-February. Fell to US$399/dmt on average as production lifted. Notes the full impact of COVID-19 on sales remains uncertain and fluid.
• Ramsay Health Care (RHC) -5.86% Completes $1.2bn institutional placement.
• Mirvac (MGR) -0.48% and Charter Hall (CHC) +0.28% Are thought to be among interested buyers for a $700m Aldi distribution centre portfolio.
• Thorn Group (TGA) +60.49% To permanently close its 62 Radio Rentals stores & selected warehouses on the back of the coronavirus-driven downturn in the rental sector.
• Australian Pharmaceutical Industries (API) -10.67% Total revenue was $2.0bn, 2.8% up on the PCP -Underlying earnings before interest and tax (EBIT) was $41.7m, down 6.1% on the pcp. Underlying net profit after tax (NPAT) of $26.3m, down 1.9% on the pcp. Reported EBIT of $39.3 million, down 11.5% on the pcp. Reported NPAT of $22.5m, down 9.9% on the pcp. The business is already prepared for lower growth environment. The company is focused on cash management and assets positioned to sustain through COVID-19 pandemic. API’s Board has resolved not to pay an interim dividend for the financial year ending 31 August 2020. No guidance for the second half because of the volatility due to the ongoing COVID-19 pandemic.

ECONOMIC NEWS

• CBA flash services index – Company shutdowns and restrictions led to severe declines in both business activity and new orders in the during April. Rates of contraction were much sharper than those seen in March. Companies lowered their employment for the third month running, and at a considerable pace. Input costs decreased for the first time in the four-year survey history, mainly due to lower wages and fuel prices.
• Manufacturing output decreased for the eighth successive month in April, and to the greatest extent since the survey began in May 2016.
• CBA economist Gareth Aird had this to say, “the services sector has been hit a lot harder than the manufacturing sector. And the pace of job shedding is concerning though not surprising given the large number of Australian businesses that remain shut. The extent to which the PMIs rebound will be dictated in large part by the duration of the enforced shutdown”.
• Goods exports to China rebounded in March, according to preliminary data released by the ABS. Iron ore exports to China fell as industrial activity in the country ground to a halt under broad lockdowns. The value of total merchandise exports rose 29% to $8bn last month, which ABS said reflects a significant rise in shipments from the resources sector.
• The Reserve Bank of New Zealand said that total monthly credit card billings in New Zealand fell 9.1% to $3.7bn in March.

CV19 NEWS 

• Australia’s chief Health Officer said we will keep our borders closed fro at least three to four months.
• The World Health Organization said 83 coronavirus vaccines are in development globally, with six of them in human trials stage.

• Royal Caribbean Cruises is in talks to raise new financing to weather the shutdown.
• Singapore is “very likely” to see a sharper contraction in its GDP as the pandemic spreads further than expected.
• North Korea sees panic buying of food.

BONDS

ASIAN NEWS

• Singapore is bracing for a sharper economic contraction this year than an earlier forecast of a slump of as much as 4%. Seems a second wave is starting to bite. Lessons there for us.

EUROPEAN AND US NEWS

• European and UK markets set to open mostly unchanged. EU still searching for unity and solidarity. Every man for himself at Summit.
• Not sure what Iran has got to do with storage and demand, but Trump is threatening to fire at any Iranian gunboats that threaten US interests. Nice distraction.
• ECB has loosened its rules about accepting fallen angel bonds.
• Trump tells Georgia not to rush the gun and reopen.
• Will Shakespeare’s birthday. To be or not to be.

And finally….

Thanks Hans one of my faves…

A woman was at her hairdresser’s getting her hair styled for a trip to Rome with her husband. She mentioned the trip to the hairdresser, who responded:

” Rome ? Why would anyone want to go there? It has Coronavirus plus is crowded and dirty …You’re crazy to go to Rome … So, how are you getting there?”

“We’re taking BA,” was the reply. “We got a great rate!”

“BA?” exclaimed the hairdresser.. ” That’s a terrible airline. Their planes are old, their flight attendants are ugly, and they’re always late. So, where are you staying in Rome ?”

“We’ll be at this exclusive little place over on Rome ‘s Tiber River called Teste.”

“Don’t go any further. I know that place. Everybody thinks it’s gonna be something special and exclusive, but it’s really a dump.”

“We’re going to go to see the Vatican and maybe get to see the Pope.”

“That’s rich,” laughed the hairdresser. “You and a million other people trying to see him. He’ll look the size of an ant. ”

Boy, good luck on this lousy trip of yours. You’re going to need it…”

A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome

“It was wonderful,” explained the woman, “not only were we on time in one of BA’s brand new planes, but it was overbooked, and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot.

And the hotel was great! They’d just finished a 5 million remodelling job, and now it’s a jewel, the finest hotel in the city. They too, were overbooked, so they apologized and gave us their owner’s suite at no extra charge!”

“Well,” muttered the hairdresser, “that’s all well and good, but I bet you didn’t get to see the Pope.”

“Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder, and explained that the Pope likes to meet some of the visitors, and if I’d be so kind as to step into his private room and wait, the Pope would personally greet me.

Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me”

‘Oh, really! What’d he say?’

He said: “Who the F**k did your hair?”

Clarence

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