The ASX 200 fell 55 points to 5936.5 (0.9%) after a swoon and a small rally off lows on jobs numbers. Dow Futures down slightly by 150 points. Soggy across the board but could have been worse as some buyers stepped in post jobs numbers coming in worse than expected at 7.1% unemployment. To be fair the numbers are pretty rubbery at the moment given the hard to classify jobseekers, keepers and bludgers Banks slid again with CBA down 0.8% and NAB down 0.9% with the Big Bank Basket falling to $124.96. QBE stood out in the insurance market for no apparent reason up 3.6% whilst MQG fell 1% and IAG down 1.7%. Healthcare in the casualty ward today as CSL fell 0.4% FPH gave back some recent gains down 2.4% and RHC dropped 1.3%. A second wave of the virus probably not helpful. Miners under pressure as some iron ore production appears to be coming back online leaving FMG down 4.2% and BHP off 0.9% together with RIO down 1.3%. Gold miners going nowhere as NCM fell 1.8%. Energy stocks flat lined with WPL up 0.1% and ALD (the company formerly known as Caltex) falling 2.4% after a profit guidance update. Fin tech was all the rage following SPT signing up Mastercard with the stock soaring by a huge 108.3%. The move saw imitators dragged higher SZL up 12.4% FXL up 1.3% though Z1P down 2.5%. APT though proved the one that missed out rising only 0.2%. The All Tech Index (XTX) fell 0.8% as some tech stocks like TNE down 1.9% and WTC dropped 2.8%. REITS down as retail could be affected by renewed CV outbreaks and bond proxies eased. In corporate news, AFG rose 18.9% after getting ACCC approval for its acquisition, PPH hit an all-time high up 10.0% after an AGM presentation, ASB got another US ship contract up 3.7% and TPW rose 4.0% on a stunning set of online sales numbers cushioning it from CV19. In economic news, it was all about the jobs numbers coming in at 7.1% as the headline rate and big job losses. Worse than anticipated but tricky to forecast at the moment. The AUD fell slightly then picked back up to just shy of 69c again. The 10-year yield fell to 0.87% and Asian markets saw selling pressure with the Japanese markets down 0.5% and China down 0.3%. European futures are pointing to a soggy start too with France and the US fighting over a digital tax.

Today’s Highlights

• ASX 200 fell 55 to 5936.5
• High 5987 Low 5889. SPI expiry boosts volumes.
• Iron ore supply coming back online in Brazil.
• US and the French fight over golden goose.
• Big Bank Basket falls slightly to $124.96
• All Tech Index down 0.8%
• 95 trading days until the US election.
• Dow Futures down 150
• 10-year bond yields steady down to 0.87%
• AUD steady recovers to 68.78c after jobs numbers.
• Aussie gold rises to $2511.
• Bitcoin slips to US$9405.
• Asian market softer with Japan down 0.5% and China down 0.3%

INSIGHTS FROM THE MARCUS TODAY TEAM

MARCUS STRATEGY: The market down today which suits us but there are reasons to doubt our recent cash call with a buy signal on our Heikin-Ashi chart. We discuss that in the Strategy section today and decide not to do anything about it, the market is a bit of a charade at the moment trading on constant Fed support which at some point is going to wear thin…maybe. Don’t fight the Fed! Otherwise, there are some interesting articles in the Strategy piece today. Most of the main messages are the same. Fears of a second wave and debate over whether there will be a V, U, L or W shaped recovery (W becoming the more likely).

HENRY’S TAKE: The market continues to make up its mind. Another push higher or a move down again? What is the catalyst? Fund managers have been reluctant buyers that’s for sure. QANTAS announces no international flights until late October (maybe NZ), so road trip anyone? A look at stocks exposed to domestic travel and still a fan of ALG as theme parks reopen soon and the land bank offers a significant valuation buffer. And is Hertz a canary in an irrational coal mine?

STOCKS

• FMG -4.24% Brazilian iron ore coming back online.
• SPT +108.33% signs Mastercard.
• SZL +12.42% joins in BNPL rally.
• APT +0.19% hit record.
• AFG +18.82% ACCC says yes to acquisition.
• APT +0.19% PPH +9.90% fintech the new gold rush.
• ASB +3.70% wins new $62.7m US Navy contract.
• TPW +3.99% online soft furnishings smash sales.
• ZNO +5.22% post CV19 world helps. China infections help too.
• TYR +5.34% fintech rules.
• IFN +3.98% bidding war maybe?
• WEB -4.79% FLT -3.86% CTD -4.56% travel stocks lose fizz.
• CDA -4.86% profit taking.
• LOV -5.58% second wave hitting some markets.
• NVX -10.36% profit taking hits.
• SPL -6.49% upcoming presentation.
• Speculative Stock of the Day: Berkeley Energia (BKY) +40.28% good solid volume and rise despite ASX speeding ticket. The company cities the increase in interest and price of uranium recently. The company is concentrating on its Salamanca project and trade in Madrid where the company has a listing too is showing a 70% rise with over 115m shares traded in the last three days.
• Biggest Rises: PPH, NIC, TYR, PAR, PRN, AUB and TPW
• Biggest Falls: VOC, LOV, CSR, PNV, SXL, APE and CDA.

TODAY

• Australian Finance Group (AFG) +18.82% ACCC said it will not oppose the proposed acquisition of Connective Group.
• Qantas (QAN) –3.76% Has cancelled all international flights except for services New Zealand until at least late October. QAN added they are able to increase capacity if travel restrictions are eased further. The decision by Qantas was made after Tourism Minister Simon Birmingham announced that Australia’s overseas travel border would likely reopen next year.
• Shaver Shop (SSG) +15.32% H2 like for like (LFL) sales through to mid-June were up 23.2%. Online sales up 164% over the same period. To pay a special dividend equivalent to previously cancelled interim dividend of 2.1c per share. Expects to declare a further final dividend in relation to H2 trading in due course. Expects FY20 revenue between $190-195m. EBITDA to be in the range of $17.25m-18.25m.
• Beston Global Food (BFC) – Speculated to be launching a $12m capital raising at 8.5c/share, made up of a $10m institutional placement and a $2m share purchase plan. Funds expected to be used to increase Beston’s high margin lactoferrin production and its mozzarella production at its South Australian facility.
• Splitit (SPT) +108.33% Partners with Mastercard. CEO comments, “this is a fantastic way to broaden the distribution of our solution, leveraging Mastercard’s incredible global reach, and build out a range of instalment services. It’s a major plank in our strategy to grow through strategic partnerships to make Splitit a household name.”

ECONOMIC NEWS

Unemployment Numbers

• Unemployment increased by 85,700 people to 927,600, and the unemployment rate increased by 0.7% points to 7.1% (from a revised 6.4 per cent in April and 5.2% in March).

• Seasonally adjusted employment decreased by 227,700 people between April and May, according to the Australian Bureau of Statistics (ABS). Consensus was down 75,000.
• Monthly hours worked fell 0.7% in May, to be down 10.2% since March (with the April fall revised up to 9.5%).

• The underutilisation rate, which combines the unemployment and underemployment rates, rose to a new record high of 20.2%.
• “The ABS estimates that a combined group of around 2.3m people – around 1 in 5 employed people – were affected by either job loss between April and May or had less hours than usual for economic reasons in May.
• Volatile markets and the economic fallout from the virus could wipe out as much as US$16 trillion of global wealth this year and hinder growth for the next five years, according to a study by Boston Consulting Group. By comparison, the 2008 financial crisis erased US$10 trillion. Personal financial wealth reached $226 trillion globally last year, a 9.6% gain from 2018 and the strongest annual growth rate since 2005.

COVID-19 NEWS

• Fewer than 5m tourists could end up visiting Japan in 2020 as the government’s goal of welcoming 40m visitors meets the reality of the coronavirus pandemic. The number of visitors to Japan tanked last month to 1,700, according to data from the Japan National Tourism Organization Wednesday.
• The total number of infections in China’s capital is now more than 150. While the daily count of new infections is slowing from previous days.
• South Korea has 59 more cases in the last 24 hours. NZ reports one new case.

BONDS

ASIAN NEWS

• India’s credit rating outlook was cut to negative from stable by Fitch Ratings.
• JD.Com secondary listing trading higher on first day in HK. Up 3.5%.

EUROPEAN NEWS

• European futures pointing to a soggy start.
• BoE expected to announce more bond buying. The names bond. The 10-year bond. Current BoE QE program set to expire in July.
• Figures due today in the UK are forecast to show the budget deficit jumped about GBP50bn (US$63 billion) in May as the government continued its extraordinary interventions to support the economy through the coronavirus pandemic. That would take the total for Sunak’s first full three months to well in excess of GBP125bn.
• The Trump administration is looking to block the new book by John Bolton, former NSA advisor.
• Cases in the US have started to accelerate in some states.
• The row over who will tax digital companies continues to rumble around as Steve Mnuchin tells Europe to keep its hands off the digital golden goose. France gets aggressive.

And finally………..

A soldier survived mustard gas in battle, and then pepper spray by the police. He’s now a seasoned veteran.

 I hate Russian dolls…so full of themselves.

I told my doctor that I broke my arm in two places. He told me to stop going to those places.

What do you call it when Batman skips church? Christian Bale.

 What’s orange and sounds like a parrot? A carrot.

 

Need more material if you are out there…henry@marcustoday.com.au

Clarence

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