The ASX 200 sagged again today down 70.5 points to 6019 (1.16%). Dow futures sagged too on news that the GOP is struggling to agree on stimulus proposal for next week, down 115. Plus, increased tensions with China as Pompeo goes full attack dog. Banks were hit ahead of APRA next week as IAG cut its dividend to a big fat zero. The Big Bank Basket fell to $126.89 with CBA down 1.2%. Insurers caught the IAG bug and fell with SUN down 3.5% together with MQG down 0.6%., Healthcare under pressure as CSL drops below $280 support on a higher AUD, down 1.9%. Miners too under pressure as iron ore futures fell 1.8% in Singapore, BHP down 0.5% and FMG off 0.5%, gold was surprising given the USD bullion price approaching $1900, but NCM fell 0.5% and NST down 2.5% together with EVN down 7.8%. Energy stocks ran out of energy STO down 1.2% and WPL down 0.2%. Meanwhile in REITS VCX fell 2.5% after a revaluation of its empty shopping centres. Tech stocks were being rotated out of into not sure what maybe cash. APT down 3.0%, XRO off 0.6% and MP1 down 6.6%. In corporate news, GOR down 2.1% on its production update. IAG is off 7.8%, no dividend, and reduced margin guidance. BOQ is down 3.9% on its Basel III report. CCX has launched an $80m raising at 305c to fund the acquisition of US-based Catherine’s. June preliminary figures show that the value of Australian exports increased by $2.35bn or 8% driven by strong exports of iron ore. The value of goods imported rose by $1.29bn or 6% driven by increases in imports of petroleum. Asian markets were volatile with Japan closed again due to a Sports Day holiday but China down 3% on the ramp up in tensions.

Today’s Highlights

• ASX 200 falls 70.5 to 6024. Unchanged pretty much for the week. Down 10.
• High 6086 Low 6011. Below average volume.
• Big Bank Basket $126.89
• Banks under pressure ahead of APRA next week.
• AUD hurting CSL.
• Miners and gold miners on commodity weakness in Asia.
• Mid-caps still doing ok. Punters still playing.
• All Tech Index falls another 1.9%
• 70 trading days until the US election.
• Dow Futures down 110.
• 10-year bond yield steady at 0.86%
• AUD falls to 70.80c
• Aussie gold better at $2663 yet gold stocks fell. Go figure.
• Bitcoin rallies to US$9555
• In Asia, Japan closed for their Sports Day and China falling hard down 3% on increased tensions.

STOCKS

• IAG -7.80% dividend canned.
• PBH -4.38% profit taking as virus continues unchecked in US.
• YOJ -13.33% book squaring.
• 3DP -7.89% profit taking and stops.
• MNS +32.35% fast charging battery news.
• 5GN +8.59% bugger.
• ALC +6.67% new NHS contract.
• BUB +4.62% book squaring.
• GAL +20.75% quarterly cheers.
• PTL +5.48% sells more bleach. Special div.
• MGX +3.50% iron ore price rises help.
• MIN -0.61% record iron ore and lithium in quarter.
• OPT +1.87% new director.
• TPG +4.70% book squaring bounce.
• APT -3.04% profit taking and rotation.
• NVX -2.50%% presentation no new news.
• VCX -2.49% cuts property valuations
• EVN -7.772.062.52% GOR -% NST -% quarterlies and profit taking.
• Speculative Stock of the Day: Aroa Biosurgery (ARX) +80.00% New IPO in the skin space. Kiwi version of PNV and AVH. Aroa’s key product Endoform is a scaffold that aids tissue regeneration in cases such as complex wounds, hernias and breast reconstruction. Better revenue than either.
• Biggest Rises: IGO, CMM, TPG, CEN, BUB, SHV, FCL and SIG.
• Biggest Falls: IAG, EVN, MP1, COE, WSA, AEF and URW.

TODAY

• Gold Road Resources (GOR) -2.06% Q2 Gruyere gold production 71,865oz, AISC $1,233/oz. Gold sales 28,700oz at an average of $2,498/oz. No material Covid-19 production impacts. Receipts from customers $71.8m. Reiterates FY20 production guidance 250Koz -285Koz. FY20 AISC expected to be $1,150- $1,250oz vs prior guidance $1,100-$1,200oz.
• Insurance Australia Group (IAG) -7.80% Expects to report full-year gross written premium growth (GWP) of ~1.1% vs year ago, in line with guidance. Forecasts an insurance margin of 10.1%, vs guidance of 12.5-14.5%, with the shortfall largely driven by adverse natural perils, prior period reserving, and credit spread factors. FY20 cash earnings are expected to amount to $279m. Unlikley to pay a final dividend for FY20. Sees new business volumes returning to more normal levels in most of its core portfolios. Retention levels have remained high over the course of FY20.
• Vicinity Centres (VCX) -2.49% June portfolio valuation down $1.79bn or 11%. Chadstone, Premium CBD and DFO outlet centres saw net valuation loss of 8.8%. 21bp softening in WACR to 5.47% vs 5.26% at the end of December. Customer visitation across the portfolio is 68% of the prior-year level, with 83% of stores trading. Excluding Victoria, portfolio customer visitation increases to 80%, with 95% of stores trading.
• Bank of Queensland (BOQ) -3.89% Quarterly APRA Basel III Pillar 3 report includes an increase of $112m relating to +90 days past-due loans. At the end of May common Equity Tier 1 Capital Ratio 9.8% vs 9.9% as at the end of February.
• City Chic Collective (CCX) – Confirms acquisition of Catherine’s. Launches $80m placement and $10m SPP at 305c/share. FY20 sales revenue (unaudited) $194.5m vs year-ago $148.4m. Underlying EBITDA $26.5m. Net cash of $3.9m.

ECONOMIC NEWS

• June preliminary figures show that the value of Australian exports increased by $2.35bn or 8% driven by strong exports of iron ore. The value of goods imported rose by $1.29bn or 6% driven by increases in imports of petroleum.

You got the silver

• Mark Mobius says buy gold too. “When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold.”

COVID-19 NEWS

• Victoria Premier Daniel Andrews reported six deaths, all of them connected to aged-care facilities, and 300 new cases on Friday. That took total deaths in the state to 55.
• South Korea, one of the first countries to allow professional sports to resume without fans in early May, will allow spectators to attend baseball games from July 26.
• Top Glove Corp. has  jumped past Public Bank Bhd. to become the second most valuable stock on Malaysia’s equities benchmark. Ansell doing well too.
• Brazil reported 59,961 cases, its second highest on record, for a total of 2,287,475. The nation, with the worst outbreak after the U.S., recorded another 1,311 deaths for a total of 84,082.

BONDS

ASIAN NEWS

• China’s economy will expand 2% this year, according to a survey of economists. Growth in the current quarter will be 5.2% from a year ago, faster than the 3.2% expansion in the three months to June.

• China closes US consulate in Chengdu. Its on. Houston we have a problem.
• China threatens to stop recognising UK HK passports. Its on there too.

EUROPEAN NEWS

• Narrative shift on China rhetoric from Pompeo now targeting Communist Party rather than the people. Tried that with Venezuela and Iran but didn’t work out too well. Not sure China is ripe for regime change. Tit for tat continues. Communist party has ‘failed the world’. Not sure what the world was expecting.
• Jim Chanos has made a cool US$100m from his short in Wirecard. Hello Jim.
• UK shopping will now include mandatory masks in shops. Go online.
• The rain in Spain falls mainly on Catalonia as it grapples with the second wave of the virus.
• Republican talks on stimulus fall into disarray delaying talks on the looming cliff.
• Trump cancels Florida convention.
• In the US, CV cases took 3 months to get to 1m and only 16 days to get from 3m to 4m. The power of maths.
• UK Retail sales up 13.9% MoM against 8% expectations. A nation of shopkeepers and consumers to match.

And finally…A picture of Adele being driven round by Noel Gallagher..

 

 

 

I’m no geometry expert, whose idea was it to put a circular pizza in a square box, then to eat it in triangles?

Clarence

XXX