ASX 200 up another 87 points to 5407 (1.6%) as buyers return on a reopening economy. RBA keeps rate unchanged as expected. Dow futures up 235 points. A solid second day of rises once again led by the sigh of relief from the banking sector. Down but not out. The Big Bank Basket rose to $110.49, WBC rose 2.7% and CBA up 1.6%. MQG rallied another 3.1% as results loom and Shemara kicks off the Macquarie Conference ‘virtually’ with 60 companies presenting and is all smiles and optimistic. The fifth bank rose 3.1% and insurers had a better day with QBE up 1.3% and SUN up 2.9%. Healthcare slipped with CSL coming under a little pressure with RMD down 3.1% and FPH down 1.6%. Miners were in the green, BHP up 2.7% and RIO up 1.8% even golds were better led by NCM up 3.6% and NST up 2.6%. Energy too was enjoying the gains in the WTI futures, WPL up 4.4% and STO up 5.0%. Industrials saw buyers too, TLS up 0.3% and WES up 0.7% with WOW and ALL up 0.2% and 2.6% respectively. The tech sector was in demand as punters digested the Tencent purchase of a 5% stake in APT up 5.8% and ALU up 3.8% and WTC too rallying 2.7%. The All Tech Index rose 2.7%. In corporate news, plenty of companies presenting at the Macquarie fest, PNV rose 11.2% after a positive sales update. KMD rose 10.6% after announcing its online sales are booming and ECX fell 6.0% after an update on its debt position. In economic news, plenty out but the RBA and Josh Frydenberg took centre stage. The Treasurer warned on the costs of CV19 at $4bn a week and the RBA kept rates on hold. The 10-year yield was better at 0.86% and the AUD at 64.45c.
- ASX 200 up 87 to 5407 .Solid day.
- High 5407 Low 5330. Narrow (ish) range.
- RBA leaves rates on hold. Will stay that way for some time.
- Banks rally. Big Bank Basket at $110.49
- Miners and energy stocks rally too.
- Tech in demand with All Tech up 2.7%.
- 10-year bond yields slip to 0.86%
- AUD rallies at 64.54c.
- Aussie gold slips to $2636
- Bitcoin rises to US$9039 ahead of halving.
- Asian markets mainly closed with China and Japan on holidays whilst HK fell %.
- PNV +11.17% Macquarie Conference virtual presentation.
- Z1P +10.64% dragged up by APT and Tencent move.
- CKF +11.63% finger lickin’ good. Dine in about to reopen.
- KMD +10.56% online surge.
- PBH +9.73% strange as no sports operating yet.
- TYR +8.30% CV19 update.
- LOV +6.72% bargain hunters.
- NEA +7.07% tech stocks in demand.
- OBL -7.62% change in substantial holding.
- ING -3.55% change in substantial holding.
- ECX -5.97% update on corporate debt.
- DEG -4.11% Appendix 2a.
- ZNO +20.33% business update. Sales numbers increase.
- MMM +11.11% capital raising well supported.
- JRV +12.82% media article on US interest.
- KAR +9.90% oil price bounce.
- SYD -1.73% Kiwis only.
- APT +5.76% kicks again though UBS still bearish.
- Speculative stock of the day: Archer Materials (AXE) +116.22%. The company announced a very promising JV agreement with IBM for its Quantum Computing chip. Very interesting although no money has been paid by either party.
- Biggest Rises: CKF, PNV, Z1P, KMD, PBH, DTL and AX1.
- Biggest Falls: OBL, CQE, PRN, ING, URW and RMD.
- Brickworks (BWK) +3.05% In March, building product orders and sales strengthened, with many customers wishing to ensure access to stock, and a surge in DIY demand. However, given the uncertainty on the back of COVID-19, the business is preparing for a downturn in activity over the coming months, including plant shutdowns if required from April to control stock and preserve cash.
- Qantas (QAN) +1.69% Notes the Group has sufficient liquidity to respond to a range of recovery scenarios, including one where the current trading conditions persist until at least December 2021. Secures further $550m in funding against three of its wholly-owned Boeing 787-9 aircraft. Net debt is now within the middle of the target range, at $5.8bn. Currently has $2.7bn in unencumbered aircraft assets and can raise funds against these if required. Expects to reach a net cash burn rate of $40m per week by the end of June 2020. Operating around 5% of its pre-crisis domestic passenger network and around 1% of its international network on an Available Seat Kilometre basis. Qantas Freight has seen high volumes and achieved strong revenue for March and April.
- National Storage REIT (NSR) – launches $300m institutional placement and $30m SPP at $1.57/share. Funds to be used to strengthen the balance sheet, replenish investment capacity and provide additional funding flexibility for continued growth over the next one to two years. Updates FY EPS guidance 8.2c-8.7c vs prior 8.5c-9c. DPS in line with distribution policy of 90-100% of underlying earnings.
- AGL Energy (AGL)+0.12% FY20 underlying PAT guidance range of $780-860m maintained, despite recent increase in customer bad debt expense and other unanticipated operating costs arising from COVID-19 lockdown. “Upper half” of range now less likely, given potential for worsening of COVID-19 lockdown impacts on bad debt expense, other costs and wholesale energy prices. Notes Market and economic headwinds are increasing heading into FY21.
- Dexus Property Group (DXS) +3.20% office portfolio occupancy remaining high at 97.2%. Industrial portfolio occupancy remaining strong at 96.0%. Weighted Average Lease Expiry (WALE) by income 4.4 years for both portfolios. CEO comments, “property portfolio is in strong shape and we’ve entered this crisis in a robust position with high portfolio occupancy, limited new supply in our key CBD office markets and a strong balance sheet.” Office portfolio, occupancy by income 97.2% vs 97.4% at the end of December.
- Polynovo (PNV) +11.17% Record sales in the US for March. Notes Australia and New Zealand both had a strong Q3. Positive results from German and Swiss surgeons who worked on many paediatric and adult patients. UK team expanded with three salespeople and one marketer. Evaluations pledged in 12 NHSs and two have started surgeries already with excellent results and other NHSs ready post-COVID19 restart.
- Collins Foods (CKF) +11.63% In the last five weeks, KFC Australia recorded a 0.9% fall in same-store sales vs year ago. Excluding the net effect of Food Courts, the remainder of the network (predominately drive-thru restaurants) traded positively, with 4.0% year on year growth. Increased drive-thru and home delivery offset any negative impact from the current Government restrictions banning dine-in transactions. KFC Germany sales for the five-week period were (28%) vs year ago. Taco Bell sales have returned to pre-COVID levels over the last few weeks.
- Australian Finance Group (AFG) –2.37%Total residential lodgements up 34% to $5.2bn, in April with growth in all states, fuelled by a spike in refinancing activity. AFG Home Loans lodgements (34%) vs year ago on the back of increased competition from the major banks. AFG Securities lodgements (69%) reflects reduced credit appetite and increased pricing to manage the existing pipeline in this period of COVID-19 disruption.
- James Hardie Industries (JHX) +4.85% Narrows FY20 Adjusted NOPAT guidance to US$350-355m vs prior guided US$350-370m. Notes double-digit volume growth in North America and strong revenue growth in Europe. Adjusted FY21 capex to be in a range of US$80-$95m vs annual average of approximately US$240m. Impairment charges of US$90m are anticipated in Q4. Dividends suspended until further notice.
- News Corp (NWS) +2.97% Appoints Almar Latour as CEO of Dow Jones and Publisher of The Wall Street Journal.
RBA DECISION Full Statement here
- The Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points.
- Globally, financial markets are working more effectively than they were a month ago, although conditions have not completely normalised.
- To assist with the smooth functioning of Australia’s capital markets, the Bank has decided to broaden the range of eligible collateral for these operations to include Australian dollar securities issued by non-bank corporations with an investment grade credit rating.
- The Australian economy is going through a very difficult period and there is considerable uncertainty about the outlook.
- In the baseline scenario considered by the Board, the unemployment rate peaks at around 10% over coming months and is still above 7% at the end of next year.
- In the various scenarios considered by the Board, inflation remains below 2%over the next few years. In the March quarter just passed, CPI inflation rose to 2.2%, but it is expected to turn negative temporarily in the June quarter, due to falls in oil prices, the introduction of free child care and deferrals of various price increases.
- The Bank will maintain its efforts to keep funding costs low in Australia and credit available to households and businesses.
- The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 % target band.
ANZ-Roy Morgan weekly consumer confidence gained 5.3% last week. Overall sentiment is now around the levels seen during the GFC.
ABS Jobs Data
- The Weekly Payroll Jobs and Wages in Australia estimates also showed that between 14 March and 18 April (the five weeks after Australia recorded its 100th confirmed COVID-19 case) total employee jobs decreased by 7.5%, while total wages paid by employers decreased by 8.2%. The new data shows that jobs in Accommodation and food services worked by people aged 20-29 and people over 70 decreased the most (-40.8% and -43.7%).
- The Federal Chamber of Automotive Industries announced that new vehicle sales across Australia had plunged by a record 48.5% in April compared with the same month a year ago. Only 38,926 new vehicles were sold compared with 75,550 in April, 2019.
- The biggest downturn was in Victoria where new vehicle sales crashed by 53%. New vehicle sales were down by 50.5 per cent in NSW, 48.7% in Queensland, 53% in Victoria, 50.5% in South Australia and 36.5% in Western Australia. Toyota remained the No. 1-selling brand. It was followed by Mazda at No. 2 and Kia at No. 3. Holden was the No. 10.
- Credit and debit card spending data from the Commonwealth Bank and ANZ shows that a low point in spending was reached in the fortnight to May 1. Spending was down 10% in that period compared with the same period last year, much better than the mid?April spending numbers, which were down by almost 20% on the same time last year.
- United Airlines Holdings Inc. will cut at least 30% of its managerial and administrative jobs in October.
- Arizona became the latest U.S. state to relax restrictions, allowing service businesses such as salons and barber shops to reopen Friday
- Chinese state media has called Mike Pompeo ‘evil’ and a ‘liar’.
- Indonesia GDP has fallen off a cliff contracting 2.4% in the first quarter Far worse than the 1.3% forecast.
EUROPEAN AND US NEWS
- European futures showing a good start to today’s session.
- Hugo Boss results unflattering. May need to move into pyjama sales.
- Argentina ready to take its 9th sovereign default.
- UK car sales worse since 1946. Down 97% in April.
- Ferrari now worth more than GM or Ford.
- VW has warned on rising costs as suppliers pass on increased charges.
- EU says Amazon and eBay could be liable for faulty goods.
- German courts to rule on sovereign bond purchases.
- Fashion house J Crew goes into bankruptcy.
- Eurozone final manufacturing PMI sank to 33.4 in April, its lowest since the survey began in 1997. German final manufacturing PMI fell to 34.5; French final manufacturing PMI was 31.5; Italian manufacturing PMI dropped to 31.1; and Spanish manufacturing PMI was 30.8.
The recession has hit everybody really hard. My neighbor got a pre-declined credit card offer in the mail.
CEO’s are now playing miniature golf.
Exxon-Mobil laid off 25 Congressmen.
A stripper was killed when her audience showered her with rolls of pennies while she danced.
I saw a Mormon with only one wife.
If the bank returns your check marked “Insufficient Funds,” you call them and ask if they meant you or them.