ASX 200 lost 8 points to 5313 (-0.8%) after a strong start gave way to reality. Dow futures down 1 . WBC greeted the day with a $2.2bn write down but no capital raise at least for now. The stock rose 1.8% and NAB returned from its half down 2.8%. CSL was the big loser today down 0.6% as sellers gained the upper hand perhaps taking some profits and cycling into the bombed-out banks. The Big Bank Basket dropped to $104.55. Other financials also showed small losses led by MQG down 1.3%. Elsewhere industrials sagged after early enthusiasm faded on the Treasury Secretary’s remarks mid-morning. REITS under a little pressure with GMG down 2.0% and VCX down 1.8%. BXB skipped lower by 2.4% and WES rose 0.3% after a trading update. In resources, WTI remains a commodity that no one wants or can store and we saw more falls in crude dragging STO down 1.8% and WPL down 1.8%. BHP fell slightly but RIO slipped 1.4% and NCM came a cropper down 2.25% as bullion fell and the AUD strengthened. In tech land, the All Tech Index was up 1.0% and we saw modest gains in XRO up 0.4%. In corporate news, LLC joined the recap party with a $1bn plus capital raise, MVF lost 16.3% after going ex-entitlement, and SHV fell 4.1% after a crop report. On the economic front, the ANZ/Roy Morgan consumer confidence numbers showed a slight improvement, and NSW has moved to reopen the state by a smidge. 10-year yields steady around 0.92%, AUD steady too, and Asian markets mixed with Japan up 0.13% and China down 0.01%.
- ASX 200 down 8 to 5313
- High 5374 Low 5273.
- Dow Futures down 1
- CSL drops as profit takers step in.
- Banks mixed as WBC writes off more.
- NAB returns after capital raise.
- Industrials sag. Oil tanks again.
- 10-year bond yields rally to 0.91%
- AUD steady at 64.57c.
- Aussie gold slips to $2622
- Bitcoin firms to US$7692
- Asian markets mixed as Japan up 0.13% and China down 0.01%.
- MSB -15.84% enthusiasm in US wanes.
- GGG +9.52% exploitable minerals approval.
- CTD +9.41% short squeeze.
- AVH +8.24% buyers return.
- IEL +5.97% lockdown retreat could open the way.
- AX1 +11.48% broker upgrades on CV19 update.
- LOV +5.71% normality to return?
- KMD -5.41% still under pressure.
- MMS -6.18% car leasing still a way off.
- PRU -6.36% quarterly report.
- SHV -4.06% Beeks delivers crop report.
- MVF -16.30% ex entitlement.
- ALU -0.54% MS overweight.
- ECX -10.07% lease sector under pressure.
- VRT -10.17% follows MNF lower.
- KCN -8.79% Thai court update.
- DEG +12.50% capital raising.
- PLS – production rises.
- WZR +8.33% loans up 23% QoQ.
- BTH +12.61% quarterly and investor briefing.
- PBH +1.35% quarterly update.
- LEG +8.33% quarterly update.
- OML +10.39% change of director’s interest.
- Speculative stock of the day: Nothing in any volume.
- Biggest Rises: AX1, CTD, AVH, COE, PRN, JIN and LIC.
- Biggest Falls: MSB, PRU, MMS, CDA, KMD, GNC, and CQR.
- Select Harvests (SHV) –4.06% 2020 crop market update. 97% of orchards have been harvested with 90% of the crop harvested in near perfect conditions. The remainder of the harvest has been disrupted by rain events, but quality hasn’t been affected. The forecast larger US crop and the challenges relating to market access has seen a softening in pricing. Some of the pricing weakness has been partially offset by the weakened Australian Dollar. 2020 crop is over 70% committed for sale at prices at the previously provided range of $8.00 – A$8.50/kg.
- Westpac (WBC) +1.77% Impairment charges in its First Half result are expected to be $2,238 million (pre-tax). Includes approximately $0.6 billion from individually assessed provisions and net write-offs. $1.6 billion in charges related to COVID-19 impacts. CET1 capital ratio expected to fall by 11 basis points.
- Lendlease Group (LLC) – confirms $950m placement and $200m SPP at $9.80/share. Withdraws forward-looking statements included in its half-year results. Will determine at a later date whether a final dividend for FY20 will be paid.
- St Barbara (SBM) -3.89% 3Q gold production 91,547oz at an AISC of $1,405/oz. Gold sold 99koz. Realised gold price of $2,123/oz . Expects full-year output at the lower end of the 370k-400k guidance range. Exploration expenditure is revised and forecast to be $30-37m vs previously guided $31-41m.
- Saracen Minerals (SAR) -0.44% Reports March quarter production of 158,132oz at an AISC of $1133/oz. COVID-19 had minimal impact on production, however there is no certainty the June quarter will not be impacted; FY2020 guidance of +500,000oz retained. Recorded gold sales for the quarter of 165,798oz at an average price of $2,228/oz, generating revenue of $369m. Quarterly unaudited NPAT of $65m -$70m. Plans to prioritise the milling of higher-grade portions of the stockpiles at Carosue Dam and Thunderbox to bring forward production ounces and cash flow into FY20.
- Northern Star Resources (NST) -2.14% Q3 gold production 237.1koz at an AISC of $1,590/oz vs consensus 234.5koz. Gold sold in the quarter totalled 239koz. Some COVID-19 measures hurt production and led to increases in unit costs, but paved the way for an expected improvement in the June quarter. Reported underlying free cash flow of $89m. The full-year dividend is expected to be paid as normal. Executive Chair Bill Beament said the result “was in line with expectations following the measures rapidly implemented in response to COVID-19.”
- Washington H. Soul Pattison (SOL) –0.40% Is reportedly looking to sell Round Oak Minerals, which has copper and gold projects in northwest Queensland and zinc and copper projects in WA. Is believed to be worth at least $100m.
- Wesfarmers (WES) +0.29% Over the last two months, Bunnings and Officeworks have experienced significant demand growth. Kmart and Target Q3 sales in line with H1 levels, supported by strong growth in online sales. However, in recent weeks, in-store sales momentum has moderated in Kmart and declined in Target. Given the high degree of fixed occupancy costs, WES notes a sustained decline in sales momentum will have a material impact on the profitability of Kmart and Target. While Kmart remains profitable, Target’s earnings have decreased significantly and the group has accelerated its plans to improve performance. The group also extended its available committed debt facilities by approximately $2.0bn to approximately $5.3bn. Kmart Group is responsible for 30% of total revenue.
- MNF Group (MNF) – FY20 EBITDA guidance in the range of $36-39m reaffirmed. Direct business is experiencing higher than normal usage volumes, given the surge in demand for voice services from small business, enterprise, and government customers. The Express Virtual Meetings service, (formerly known as CCI), is experiencing the strongest demand in this segment with conferencing minutes in March up 186% from the prior month.
- Treasury secretary says economic shocks are bigger than the Great Depression. Not sure there was anything great about it. A 10% unemployment rate is expected by June.
- ANZ-Roy Morgan Consumer Confidence firmed for the fourth consecutive week, although the gain of 1% was much smaller than previous weeks. The index still remains well below average and is likely to be challenged by negative economic data in the coming month.
- Pessimistic forecasts from Bloomberg Economics which anticipate three consecutive quarters of declining gross domestic product, with Australia’s economy contracting by 9% from 4Q 2019 before a gradual recovery begins in 4Q 2020. It does not expect a recovery to the pre-outbreak level of activity until 2H 2022.
- The base case estimate remains a 6% contraction, unchanged from our previous projection.
- Here are the local recovery scenarios according to Bloomberg.
- China’s top scientists have said the novel coronavirus will not be eradicated, joining a growing consensus around the world that the pathogen will likely return in waves like the flu.
- Singapore now has the capacity to test 8,000 people a day.
- Luckin offices have been raided by the Chinese regulators as the scandal continues to grow. The company has admitted to lying about US$310m in sales.
- President Trump says he knows how Kim is but won’t tell.
- HSBC results out. It said its credit losses could swell to between US$7bn to US$11bn this year. It took a US$3bn charge in the first quarter. Pre-tax profits came in at US$3.02bn v US$6.25bn a year earlier. CET1 Ratio 14.6% v 14.7% in 4Q.
EUROPEAN AND US NEWS
- The Saudi wealth fund has taken a US$500m stake in the world’s biggest live event company, Live Nation.
- BP results out. 10.5c dividend for the quarter. US$32bn of liquidity available. Upstream production Q2 expected to be lower.
- The Fed meeting kicks off.
- The United States Oil Fund ETF (the largest oil ETF) has sold all its WTI June contracts and has widened the spread of contracts it now prices from some as far out as June 2021. The ETF has changed its investment policy five times in the last two weeks.
- US Meat company has warned of food supply chain issues as abattoirs and processing plants close.
And finally…thanks Al…
I think, I’m going to lose my driver’s license… and all just because of a stupid police officer…The conversation went like this, when I got pulled over in my car:
Officer: “License and registration, please, I think you are drunk!”
Me: “I assure you, I did not drink anything.”
Officer: “Ok, let’s do a little test! Imagine driving in the dark on a highway at night, when you see two lights in the distance. What is this?”
Me: “A car.”
Officer: “Of course! But which one? A Mercedes, an Audi or a Ford?”
Me: “I have no idea!”
Officer: “So, you’re drunk.”
Me: “But I didn’t drink anything.”
Officer: “Okay, one more test — Imagine, you drive in the dark on a highway at night, and there is one light coming at you. What is it?
Me: “A motorcycle.”
Officer: “Of course! But which one? A Honda, a Kawasaki or a Harley?”
Me: “I have no idea!”
Officer: “As I suspected, you’re drunk!”
Then I started to get annoyed and asked a counter question.
Me: “So…, counter question — You’re driving in the dark on a highway at night and see a woman on the roadside. She wears a mini skirt, fishnet stockings, high heeled shoes and only a bra as a top. What is this?”
Officer: “A prostitute of course.”
Me: “Yes, but which one? Your daughter, your wife or your mother?”
Things went downhill from there and now I have a court date to attend…
Policeman pulls over a driver…
“Do you know why you were pulled over, sir?”
Driver says …..”No, officer, I’m just as baffled as you are.”