ASX 200 kicked 106 points higher to 5942 (1.8%) after slightly better than expected GDP numbers. Dow futures up 150 points. Banks doing well today as recession looms but not really a surprise. The Big Bank Basket rose to $121.68. CBA up 3.2% and WBC up 4.4% as the clouds clear and it’s gonna be a bright, bright sun shiny day. Other financial joined in the fun as FOMO appears strong as value investors join the party, MQG up 2.5% and even QBE up 5.2%. Bond proxy stocks firmed with TCL up 2.3% and SYD up 3.5%, REITs too positive with NSR up 2.1% and GMG up 0.7%. Healthcare in the casualty ward as buyers moved elsewhere, miners doing well as GS upgrades Iron ore forecasts. BHP up 2.6% and RIO up 0.5% though some profit taking in FMG down slightly. Energy stocks better with OPEC Plus looming, WPL up 2.6% and STO up 4.2%. Gold shares got taken with the trash today, NCM down 2.3%, NST down 5.5% and EVN down 5.8%. Tech shares firmed on the irrational exuberance led by new fintech sensation Z1P up 22.1% with the BNPL sector rallying hard in its wake. OPY up 51.8%, FXL up 6.0% and EML up 3.9%. The All Tech Index rose 2.1%. In corporate news, some acquisitions rattling around, SWM rose 28.6% after hosing down an ASX query, PRU down 12.3% moved on tiddler ERX up 35.5%. IFN got a takeover approach from recent substantial shareholder UAC at 80c and AYS rallied 16.7% on OVO acquisition and update. The 10-year bond had a big day rallying up to 0.95% as the AUD soared to 69.36c. Asian markets firm, Japan up 0.9% China up 0.4% and Hong Kong up 1.15%.

Today’s Highlights

• ASX 200 up 106 to 5942. GDP kick.
• High 5944 Low 5854. 6000 beckons?
• Recession looms but we knew that.
• Big Bank Basket $121.68 flat lines.
• Dow Futures up 150
• 10-year bond yields firms to 0.90%
• AUD rallies to 69.36c on weaker US dollar.
• Aussie gold slips to $2487 as AUD rises.
• Bitcoin falls to US$9463
• Asian markets higher as Japan up 1.4% and China up 0.2% on PMIs. Hong Kong up 0.6%

STOCKS

• IFN +36.44% takeover at 80c. More to come?
• Z1P +22.12% acquisition reaction continues.
• URW +10.36% bargain hunting as reopening on the agenda.
• FXL +6.02% BNPL zipping higher
• OPY +51.76% huge move, not cheap.
• BLD +1.70% SWV buys 10% over 10 weeks.
• SKC +8.37% CV19 Update.
• PRU -12.31% SLR -8.44% RRL -6.57% and SAR -6.23% bullion falls and AUD gains.
• SWM +28.57% bargain hunters. ASX query.
• JBH +2.78% Macbank goes to outperform.
• AYS +16.67% acquisition.
• AIZ +1.52% passenger numbers down 98.9% in April.
• OSH +5.23% suspended on PNG stock exchange.
• TWE +3.58% CS downgrade.
• KGN -0.09% winds up Matt Blatt.
• ASB -1.42% CEO steps down.
• ECX +14.11% fintech rally.
• IGL +9.82% advertising back.
• EOS +3.70% promising signs again.
• FNP +3.48% bottoming perhaps?
• BXB -2.50% less palatable today.
• Speculative Stock of the Day: Musgrave Minerals (MGV) +73.33% 112m @112.9g/t at Starlight. 6m @ 143.0g/t Au from 42m, 48m @ 4.4g/t Au from 30m. The high-grade Starlight link-lode mineralisation is confirmed over a strike length of more than 115m and remains open at depth.
• Biggest Rises: IFN, Z1P, PLS, URW, SKC, ABC, LNK and S32
• Biggest Falls: PRU, SLR, WGX, RRL, GOR, SAR and EVN. All golds.

TODAY

• Arena REIT (ARF) +4.17% Completes $60m institutional placement at $2.28/security. Due to the strong level of support the size of the Institutional Placement was increased from $50m to $60m.
• Aurizon (AZJ) +1.03% Executes $1.3bn debt refinancing. The Group now has more than $1.1bn of available liquidity. While the pandemic has had some impact to coal demand in Asia and on the Indian sub-continent, it has not been material to date to volumes and the company’s earnings. Reiterates its underlying EBIT guidance of $880-930m for FY20.
• amaysim Australia (AYS) +16.67% To acquire 77,000 mobile subscribers from OVO Mobile for $15.8m. Over 74,000 of the acquired subscribers are recurring, bringing amaysim’s recurring mobile subscriber base to over 820,000 and a total subscriber base of 1.17m. The acquisition is expected to be earnings accretive in FY21, with an increased earnings contribution in FY22 and beyond.
• Austal (ASB) -1.42% CEO David Singleton to be succeeded by COO Patrick Gregg. Gregg will take over the role on January 1, following a six-month transition.
• Infigen (IFN) +36.44% Has received a takeover off from UAC Energy at $0.80/share, valuing the company at $777m, which is at a 43.4% premium to IFN’s one-month volume-weighted average price (VWAP).

ECONOMIC NEWS

• First-quarter GDP fell 0.3%, ahead of expectations of a 0.4% decline. On an annual basis, GDP was up 1.4%.

• Household spending tumbled 1.1%, shaving 0.6 percentage point off GDP, driven by a 2.4% drop in services expenditure. Restrictions particularity impacted spending on travel, hotels, cafes and restaurants
• Government spending jumped 1.8%, adding 0.3 percentage point. Payments to provide support during the pandemic are expected to rise in the current quarter.
• The savings ratio advanced to 5.5% from a downwardly revised 3.5% in the fourth quarter.
• Dwelling construction fell 1.7%, reflecting continued weakness in approvals.
• Non-mining business investment fell 1.7%, while mining investment rose 3.6% as miners invest in new technologies and automation.

The Commonwealth Bank Services PMI lifted to an upwardly revised 26.9 in May, from a preliminary reading of 25.5 and an all-time low of 19.5 in April.

The AiG Performance of Construction Index remained in contraction although lifted to 24.9 in May from 21.6 in April, social isolation measures weighed on the sector.

Goldman Sachs has lifted its 2020 and 2021 iron ore price forecasts by 7% on strong Chinese steel production and problems.

COVD-19 NEWS (remember this?)

• President Donald Trump said the Republican Party has been “forced to seek” a new city for its national convention, planned for Charlotte, North Carolina, in August.
• A South African court ruled that revised lockdown regulations implemented by the government as part of a phased reopening of the economy are unconstitutional and invalid.
• The U.K. will publish details Wednesday of its plan to impose a 14-day quarantine on all overseas arrivals. Only taken 39,000 people to have died to bring this in. Extraordinary.
• Brazil reported a record 1,262 new deaths on Tuesday, bringing the number of fatalities to 31,199.

BONDS

ASIAN NEWS

• Caixin services PMI was 55.0 in May, compared to consensus 47.3 and 44.4 in the prior month.
• Carrie Lam on route to Beijing for security talks.

EUROPEAN NEWS

• Trump has launched an inquiry on digital taxation threatened to be imposed by some EU countries. US will take action to protect big tech. Unless they fact check. Every one wants a slice of the digital tax pile.
• Protesters are out in force again but so far peaceful in defiance of Trump. Fears that crowds are not socially isolating. You think?
• Zoom boom. Record quarter.
• New spacemen ring Nasdaq bell.
• Brexit discussions on fish back in the news. Feels just like old times.
• Boris faces Question Time and it won’t be fun. First time since the Cummings and goings.

And finally…

“If there’s one thing that really pisses me off… I call that a good day.”

“I knelt to pick a buttercup. Why people leave buttocks lying around I’ll never know…” Think about it say it..

“Swimming is good for you, especially if you’re drowning. Not only do you get a cardiovascular workout, but you also don’t die.”

“The easiest time to add insult to injury is when you’re signing somebody’s cast.”

“My therapist says I have a preoccupation with vengeance. We’ll see about that.

Clarence

XXX