ASX 200 zipped ahead by 16 points to 5835 (0.27%) as Trump worries were replaced by solid buying again. Dow Futures down 54 points. After a timid start following the Trump Rose garden, the bulls regathered and pushed the market higher again led by Z1P up 38.7% after announcing a US acquisition and a convertible note issue. The announcement dragged others in the fintech space higher with SPT up 29.3% FXL up 15.6% and EML up 2.69%. Real banks were lacklustre as the ramp up last week continues to fizzle, WBC fell 0.9% and ANZ flatlined after selling its UDC Finance business. The Big Bank Basket rose slightly to $117.13. Miners flip flopped with BHP down 0.8% and FMG falling 0.4% whilst S32 rose 3.6%. Gold miners were mixed as the rampaging AUD stated above 68c. Tech stocks were firm in places, APT up 3.7% on Z1P news, WTC too rose 4.7% and the All Tech Index up 1.3%. Bond proxies TCL were better as was WOW up 1.6% and 0.8% respectively. In corporate news, BLD rose 6.3% on some takeover target rumours, CLH remain suspended as they try to secure funding, AMI rose 23.9% after a production report. In economic news, The RBA left rates unchanged but talked on a better outlook than previously considered, the ANZ Weekly Consumer Confidence lifted 6% to 98.3 points, its ninth consecutive week of improvement. The current account surplus widened sharply to $8.4bn in Q1. Corporate profits also rose 1.1% unexpectedly in Q1. Business inventories came in below expectations. The 10-year bond yield rose to 0.90% and the AUD at 68.10c. Asian markets higher as Japan up 1.4% and China up 0.2% on PMIs. Hong Kong up 0.6%.

Today’s Highlights

• ASX 200 up 16 to 5835. Good volume again.
• High 5859 Low 5800. Narrow range.
• POTUS plan hurts sentiment. Protests grow.
• RBA keeps rates unchanged.
• Big Bank Basket $117.13 flat lines.
• Dow Futures down 54.
• 10-year bond yields firms to 0.90%
• AUD rallies to 68.04c on weaker dollar.
• Aussie gold slips to $2555 as AUD rises.
• Bitcoin rallies slightly to US$10,107
• Asian markets higher as Japan up 1.4% and China up 0.2% on PMIs. Hong Kong up 0.6%.

STOCKS

• Z1P +38.67% US Deal and convertible note issuance.
• BLD +6.33% dog is barking on takeover talks.
• AYS +12.50% press speculation.
• URW +8.29% time to play catch up as malls open.
• EOS +6.06% target in sight.
• ORE +2.03% completes cap raise and acquisition in train.
• PRN +13.36% DCG +17.96% mining services trying to rally.
• DEG -5.75% drill results bring profit takers.
• PME -3.27% broker downgrades.
• PAN -7.14% resumes after cap raise.
• SPT +29.29% gains on Z1P news.
• EVN -1.27% Cracow sale confirmed.
• VAH – remains suspended. Process update.
• FXL +15.65% BNPL off to the races.
• WOW +0.77% rewards staff with gift card bonuses.
• Speculative Stock of the Day: Novonix (NVX) +31.71% after a Livewire Markets article.
• Biggest Rises: Z1P, PRN, DHG, URW, WAF, BLD, MOE and EOS.
• Biggest Falls: DEG, BGL, AVH, OCA, ASB, PME and ZEL

TODAY

• Zip Co. (Z1P) +38.67% To acquire the remaining shares in QuadPay. The acquisition values QuadPay at ~US$269m and is accretive for Zip on both a total transactions volume and revenue basis. QuadPay stockholders will be entitled to a maximum of 119m fully paid ordinary shares of Z1P, equivalent to 23.3% of the issued share capital. Z1P has entered into an agreement with CVI Investments to raise up to US$200m through the issue of convertible notes and the exercise of warrants. Click here to read the full release.
• Origin Energy (ORG) –0.66% Is thought to be preparing a bid for Amaysim Australia’s Click Energy. Amaysim’s energy business reported underlying EBITDA of $18.7m in the six months to December 31. The 4.2m customers the real attraction. AYS confirmed that it engaged Luminis Partners some time ago to assist the board with considering options to unlock shareholder value, in respect of the energy business.
• CBA data on credit/debit cards revealed momentum in spending lifted in May but appeared to plateau in the last few days of the month. Spending sits 3% higher than a year ago for the week ended 29 May.
• Arena REIT (ARF) – Launches $50m institutional placement at 228c/ss and SPP to raise up to $10m. Reaffirms FY20 distribution guidance of 13.9-14.0 cents per security.
• Brickworks (BKW) +1.92% Trading activity in Australia has remained relatively resilient, with sales revenue down (10%) in the 4 months to May. Building Products Australia generated a positive EBIT result for that period. In the US, sales revenue was up 26%, driven by acquisitions completed over the past year. Riots across the US have now emerged as another potential disruption and BKW doesn’t expect trading conditions to normalise until civil order is re-established and all pandemic related restrictions are eased.
• ANZ (ANZ) -0.17% To sell its asset finance business in NZ, UDC Finance to Shinsei Bank for NZ$762m. The purchase price reflects a price-to-book ratio of 1.2x net tangible assets of $NZ637m and provides $439 million of level 2 group CET1 capital. The sale will also release more than NZ$2bn of funding provided by ANZ New Zealand, further strengthening its balance sheet position.
• Evolution Mining (EVN) -1.27% Confirmed speculation that it is considering selling its Cracow gold mine in Queensland as it looks to improve its asset quality over time.
• Collection House (CLH) – H1 underlying NPAT $15.6m vs year-ago $8.5m. Revenue $86.5m vs year-ago $66m. Impairment loss on PDL assets $89.9m. Expects underlying earnings in H2 to be down on the previous corresponding period. The group has observed weaker cash collections on a year on year basis since March, although those declines have now started to normalise. While the recapitalisation process is ongoing, CLH believes that a resumption of trading in its securities would be premature. Expects the voluntary suspension to remain in place until at least September 30.

ECONOMIC NEWS

• RBA leaves rates on hold, as expected. The board said it 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. Added that the depth of the downturn could be less than earlier expected. Citing lower infections and the easing of restrictions earlier than was previously thought likely. There are signs that hours worked stabilized in early May, after the earlier very sharp decline. There has also been a pick-up in some forms of consumer spending. Click here for the full release.
• ANZ Roy Morgan Weekly Consumer Confidence for May 31 lifted 6% to 98.3 points. Confidence in economic conditions gained substantially, with ‘current economic conditions’ up 15.7% and ‘future economic conditions’ up 7.5%. The lifting of restrictions and pandemic control buoyed sentiment.

• The current account surplus widened to $8.40bn in Q1, beating market expectations of $6.3bn.
• Corporate profits unexpectedly rose 1.1% quarter-on-quarter to $95.03bn, beating market expectations of a flat reading.
• Business inventories fell 1.2% quarter-on-quarter in the three months to March, compared with market estimates of a 0.7% fall.
• ANZ has downgraded its forecast for first quarter GDP from 0.1% to 0.2% following today’s partials. RBA says the economic downturn arising from the COVID-19 pandemic may not be as bad as first feared. NAB still believes the economy will contract by 0.1% in the first quarter ahead of a big fall in the second quarter. Commonwealth Bank has held its forecast for first quarter GDP steady.

COVD-19 NEWS

• Interestingly Bloomberg is no longer carrying ‘Virus’ updates but ‘Protests’ updates. US still has 1,000 people a day dying from CV19.

BONDS

ASIAN NEWS

• Chinese buyers cancelling pork but buys beans.
• Emirates Airline cutting thousands of jobs.
• HK CEO accuses Trump of ‘double standards.

EUROPEAN NEWS

• Boris vows not to extend Brexit deadline.
• US in turmoil on protests. Trump vows law and order with troops as last resort.
• ECB’s Lagarde expected to announce new coronavirus measures and downplay hopes of swift rebound.
• Facebook employees are revolting over the Zuck’s stance on Trump.
• Amazon has secured a record-breaking low rate for corporate borrowing in US corporate debt markets.

And finally…

Wife: “How would you describe me?”
Husband: “ABCDEFGHIJK.”
Wife: “What does that mean?”
Husband: “Adorable, beautiful, cute, delightful, elegant, fashionable, gorgeous, and hot.”
Wife: “Aw, thank you, but what about IJK?”
Husband: “I’m just kidding!”

 

A lady goes to the doctor and complains that her husband is losing interest in sex. The doctor gives her a pill, but warns her that it’s still experimental. He tells her to slip it into his mashed potatoes at dinner, so that night, she does just that. About a week later, she’s back at the doctor, where she says, “Doc, the pill worked great! I put it in the potatoes like you said! It wasn’t five minutes later that he jumped up, raked all the food and dishes onto the floor, grabbed me, ripped all my clothes off, and ravaged me right there on the table!” The doctor says, “I’m sorry, we didn’t realize the pill was that strong! The foundation will be glad to pay for any damages.” “Nah,” she says, “that’s okay. We’re never going back to that restaurant anyway.”

 

Bob was in trouble. He forgot his wedding anniversary. His wife was really angry. She told him “Tomorrow morning, I expect to find a gift in the driveway that goes from 0 to 200 in 6 seconds AND IT BETTER BE THERE!” The next morning he got up early and left for work. When his wife woke up, she looked out the window and sure enough there was a box gift-wrapped in the middle of the driveway. Confused, the wife put on her robe and ran out to the driveway, brought the box back in the house. She opened it and found a brand new bathroom scale. Bob has been missing since Friday.

Clarence

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