The ASX 200 flip flops to a small 2-point gain (+0.03%) to 5945 Dow futures reversed early losses to be up 40 points which helped sentiment together with RBA Governor Lowe’s comments from a panel discussion. Banks were the swing factor after a broker upgrade helped reverse some morning weakness. The Big Bank Basket rose to $125.44 with CBA up 1.1% and WBC up 0.5%. Other financials were mixed as MFG fell 1.5% and AEF dropped 4.85% after a stellar run with MQG easing back by 0.8%. REITs slipped with GMG down 1% and GPT down 3.4%. Elsewhere, healthcare did well with CSL leading on defensive qualities up 0.6% and FPH up 2.2%. Miners did well BHP up 1% and RIO up 0.4% and gold miners feeling the love from a higher bullion price and a lower AUD. NCM up 3.7% and NST up 4.1%. Bond proxies were soft following the update from TCL with the stock falling 4.1% and SYD down 1.6%. Other travel stocks were left on the runway following the restrictions imposed in Victoria, QAN fell 4.1%, AIA down 1.9%, CTD down 8.0% and FLT down 4.1%. Tech stocks hit a speed bump after ALU issued a slight downgrade, falling 7.6% and dragging the sector to the negative. All Tech Index fell 1.3% and APT down 1.3% and WTC down 5.6%. In corporate news, TYR fell 7.5% after its weekly business update, RMS rose 16.8% on a forecast for a better quarter and CGF in a trading halt having raised $270m with a $30m SPP. JHX rose 7.3% after a good business update from the US and ASB confirmed a US$50m US government investment into shipbuilding and maintenance capacity, up 9.5%. In economic news, Governor Lowe was on a panel discussion and comments helped lift the market on the scale of the economic pullback and the inflation targets. The 10-year bond yield relatively stable at 0.85%. AUD higher at 68.59c. Asian markets weaker with Japan down 0.23% and China down 0.18%.

Today’s Highlights

• ASX 200 gains 2 points to 5945. Average volume.
• High 5973 Low 5881. Good rally off morning lows.
• Big Bank Basket bought back up to $124.27
• All Tech Index down 1.3%
• 93 trading days until the US election.
• Dow Futures up slightly by 40 points.
• 10-year bond yields steady at 0.85%
• AUD steady slips to 68.59c.
• Aussie gold rises to $2553.
• Bitcoin slips to US$9412.
• Asian markets weaker with Japan down 0.23% and China down 0.18%.

STOCKS

• MSB -10.63% big volume too.
• CTD -8.01% travel stocks back under pressure.
• TYR -7.55% business update
• ALU -7.59% business update another small downgrade due to CV19 in China.
• EOS -7.72% appoints CEO for communications
• WTC -5.64% profit taking.
• AFG -4.86% profit taking.
• AEF -4.85% FUM update and profit downgrade.
• RMS +16.76% record quarter coming.
• ASB +9.52% US funding deal.
• JHX +7.27% business upgrade.
• DEG +9.40% further high-grade results.
• NVX +17.58% media speculation on corporate interest.
• PNR +11.90% drilling results.
• BET +7.32% puts away capital raise.
• PGL -7.02% fintechs under a little pressure.
• LEG -7.14% Mawson RC drilling commences.
• AVH -1.10% court approves scheme of arrangement.
• CHC -1.39% distribution.
• CIA +2.08% GS says BUY.
• WHK +63.98% cyber security stocks on the rise. Wrote up in newsletter this morning.
• VGI -8.50% Doug Tynan resigns.
• Speculative Stock of the Day: Vortiv (VOR) +29.73% Business update and news of Indian business valuation.
• Biggest Rises: RMS, ALK, BGL, ASB, DEG, PAR, MYX and SAR
• Biggest Falls: MSB, MEZ, VGI, CTD, AMA, EOS, ALU and TYR.

TODAY

• James Hardie Industries (JHX) +7.27% Expects Q1 North America segment Adjusted EBIT margin to be 27-29% vs previously guided 22-27%. North America exteriors volume growth expected to be between 0-2% vs pcp. Australia volume expected to be flat vs pcp. Europe volume to be in a range of (11%)-(14%) vs pcp. Expects liquidity to be greater than $640m vs previously guided $600m.
• NAB (NAB) +0.54% Multiple PE groups are expected to run the numbers on NAB’s MLC Wealth business. Apollo Global Management has reportedly decided to enter the bidding process. Joining The Carlyle Group, Blackstone, and KKR as interested parties.
• The a2 Milk Co. (A2M) –2.32% Is thought to be interested in acquiring Mataura Valley Milk. Several parties are reportedly still involved in the bidding for business which is expected to be valued at around NZ$400M.
• Altium (ALU) -7.59% FY revenue likely to be below current analyst consensus. New lock-downs in Beijing, China and an increase in COVID-19 cases in parts of the US are having some impact on Altium’s final sprint to the close FY20. Globally, Altium is tracking well with significant deals in the pipeline. Seat growth is +7% on the same period last year. However, the pricing strategy adopted in response to COVID-19 for Altium Designer is impacting revenue potential for the full year.
• Ramelius Resources (RMS) +16.76% Raises quarterly and FY production guidance. RMS has exceeded the production guidance range for the June 2020 quarter, with 74,371 oz of gold produced as of June 21. FY20 production guidance upgraded to 225,000-230,000 oz vs previous guidance 210,000-220,000oz
• Australian Ethical Investment (AEF) -4.85% Guides FY underlying profit after tax (UPAT) to be between $6.8-7.5m. May FUM $3.92bn vs $3.59bn in March. Net inflows $50m. The impact of COVID-19 on investment performance and FUM balances has affected H2 earnings. H2 UPAT is also impacted by lower revenue margins following the reduced superannuation admin fee and processing costs related to the early release of superannuation.
• Metcash (MTS) +1.06% Enters final stage of negotiations to acquire 70% of Total Tools Holdings for $57m. The proposal includes Metcash having a clear pathway to acquire the remaining 30% stake in Total Tools within the next three years, by way of put and call arrangements. reports FY underlying NPAT $209.7m vs consensus $208.6m. Revenue $1.30bn vs consensus 13.58bn. Underlying EBIT $324.2m vs consensus $334.5m. Final dividend of 6.5c/share, fully franked. Food pillar sales continued to benefit from a change in consumer behaviour with total Food sales up 9.3% year on year. The earnings benefit from the increase in sales continues to be marginally offset by higher costs to service the elevated demand and manage health and safety risks. Liquor pillar sales +5.5% year on year despite customers in New Zealand and ‘on premise’ customers in Australia being impacted by COVID-19 trading restrictions. Hardware pillar sales +9.4% year on year underpinned by continuing strong demand in DIY categories.
• Transurban Group (TCL) –4.09% Notes progressive traffic recovery in line with easing government restrictions. Adds traffic will remain sensitive to future government responses. Will pay a distribution of 16.0cps for the six months ending June 30. Anticipates FY21 distribution will be in line with Free Cash, excluding Capital Releases. Has sufficient funds to meet capital requirements and debt refinancing obligations to end of FY21.
• Stockland (SGP) -2.76% Estimates H2 distribution of 10.6cps vs previous guidance of 14.1cps. FY20 funds from operations guidance remains withdrawn. Preliminary revaluations show a reduction in the book value of the portfolio of approximately 6%, including a devaluation in the retail portfolio of approximately 10%. ~95% of its retail town centres stores by rental income are now trading, with more openings expected as level three restriction easing begins to take effect during July 2020.
• Challenger (CGF) – Launch $270m placement and $30m SPP at a price of $4.89/share. Funds management business continues to perform well, with FUM +7% since March. Expects to see an increase in demand for guaranteed income products, including annuities, over the medium term. Business remains well positioned to capitalise on these opportunities. No final FY20 dividend will be paid.
• APN Property Group (APD) -0.94% Announces final distribution of 1.55cps
• Adairs (ADH) -1.30% Chairman Michael Butler to step down after AGM in October.
• SEEK (SEK) +0.55% To recognize a non-cash impairment charge of ($190m)-($230M) in FY20 against the carrying value of Brasil Online, OCC Mundial and four minority early-stage investments. Has seen consistent improvement in weekly billing results since early May in Asia, Australia and NZ. Best estimate for FY20 revenue $1,575m vs consensus $1.575m. EBITDA in the range of $410m vs consensus $397.5m. No FY dividend decision has been made.

ECONOMIC NEWS

• RBA governor Philip Lowe said the coronavirus-induced economic downturn would not be as severe as overseas or as first feared, with hours worked now forecast to fall 10% rather than the “staggering” 20% tipped by the RBA in April.
• Lowe went on to say Governments must incentivise businesses to take investment risks in new technologies and to be entrepreneurial for the economy to become more dynamic and avoid “meandering” after COVID-19.
• Ross McEwan, chief executive of NAB, told a Bloomberg conference that in the short to medium term, the Australian banking sector will be less profitable. But in the long term, the prospects are positive.
• Deloitte cutting 700 roles. KPMG cutting 200 and partner pay by 17%.

COVD-19 NEWS

• Mexico reported 1,044 coronavirus deaths Sunday, the second-highest daily fatality toll from the pandemic, according to data from the Ministry of Health.
• London City Airport reopened for passenger flights Sunday after a three-month shutdown.
• Brazil reported 17,304 new cases on Sunday, a 1.6% increase, bringing the total to 1.08m, according to the States Health Secretaries known as Conass on its website. Deaths increased by 1.3% to 50,608, Conass said.

BONDS

ASIAN NEWS

• Nothing of significance.

EUROPEAN NEWS

• Germany’s Wirecard has said that the missing EUR 1.9bn of cash probably doesn’t exist. The company said it was in “constructive discussions” with its lending banks, including the extension of lines coming due at the end of June. “There is a prevailing likelihood that the bank trust account balances in the amount of EUR1.9bn do not exist,” Wirecard said. There will be a film about this one day.
• John Bolton has said that Trump has put his ‘re-election of National Security’.
• U.S. home-mortgage delinquencies climbed in May to the highest level since November 2011. The number of borrowers more than 30 days late swelled to 4.3m up 723,000 from the previous month. More than 8% of all U.S. mortgages were past due or in foreclosure.
• UK Government reviewing the 2m rule this week.
• Spain reopens to tourists.
• 1000 workers in a German meatworks have tested positive for CV19.

And finally…

A golfer hit a wicked slice off of the tee that ricocheted through the trees and into the next

When the golfer got to his ball, he was greeted by his unintended near-victim, who angrily told him of the near-miss.

“I’m sorry, I didn’t have time to yell ‘fore,’” the slicer said.

“That’s weird,” the other guy replied. “You had plenty of time to yell ‘oh s**t!’

An Italian MaMa Mrs. Ravioli comes to visit her son Anthony for dinner. He lives with a female room mate, Maria.During the course of the meal, his mother couldn’t help but notice how pretty Anthony’s roommate is. Over the course of the evening, while watching the two interact, she started to wonder if there was more between Anthony and his roommate than met the eye. Reading his mom’s thoughts, Anthony volunteered, “I know what you must be thinking, but I assure you, Maria and I are just roommates.” About a week later, Maria came to Anthony saying, “Ever since your mother came to dinner, I’ve been unable to find the silver sugar bowl. You don’t suppose she took it, do you?” “Well, I doubt it, but I’ll email her, just to be sure.” So he sat down and wrote an email:Dear MaMa, I’m not saying that you “did” take the sugar bowl from my house ; I’m not saying that you “did not” take it. But the fact remains that it has been missing ever since you were here for dinner. Your Loving Son Anthony Several days later, Anthony received a response email from his MaMa which read: Dear son, I’m not saying that you “do” sleep with Maria, and I’m not saying that you “do not” sleep with her. But the fact remains that if she was sleeping in her OWN bed, she would have found the sugar bowl by now. Your Loving MaMa

Clarence

XXX