ASX 200 gets smacked down 134points to 6932 (1.9%) in a huge sell off. Elevated volumes following a slide in the US and some hits to individual companies. SPI futures were pointing to a dismal opening, but bargain hunters failed to turn up and were ambushed if they had. News that China is looking at increasing domestic iron ore production and diversify ore sources, sent big miners into a tailspin. Iron ore was off 5% plus in Asian trade, but the market saw cracks appearing everywhere. BHP dropped 3.4%, FMG down 3.1% and RIO down 3.7%. Other commodity stocks collapsed. So much for the supercycle perhaps. Gold miners lost their shone, NCM down 2.3%, NST off 3.5% and EVN dropping 3.3%. S32 down 3.6% with other base metal stocks under pressure, OZL off 3.8%. Energy stocks got whacked too STO off 2.2% and WPL down 2.6%. Banks were hit hard, bears were growling with the Big Bank Basket falling to $173.83. MQG dropped 2.7% and insurers slipped with QBE down 2.6%. No place to hide in industrials, CSL fell 1.0%, GMG down 1.0%, TCL fell 2.7% and TLS disconnected down 2.0%. Incorporate news, EML have fallen foul of the Central Bank of Ireland free falling 45.6%, over money laundering and other potential issues, the stock cratered % with the company unable to quantify the potential cost to the business. EML derives around 27% of its global income from Ireland’s back door into Europe and the lucrative gift card market. Shareholders are rightly bewildered, but something has gone very wrong. Elsewhere MNY lifted guidance to $38m, APX rallied hard as shorts scrambled after reaffirming guidance, KMD found a new CEO, he was in the surf all the time. GEM cuts its dividends, AZJ saw a big shareholder dump around 4.4% at 350c. In economic news, the wage price index for the March quarter up 0.6% vs estimates up 0.5%. Westpac-Melbourne Institute consumer confidence May: -4.8% to 113.1. The fall likely capturing some disappointment in the Federal budget, which had high expectations. 10-year yields steady at 1.76%. Asian markets ease Japan down 1.6%, China off 0.4%. Dow futures down 100 points.
- ASX 200 down 134 points to 6932. Wipe outs across the board.
- High 7049 Low 6917. No sign of bargain hunters yet.
- Fed minutes in sight. Volatility is back. Crypto collapso
- Dalian iron ore down by 5%. More curbs in Tangshan.
- Big Bank Basket crashed from $177.29 to $173.83.
- All Tech Index down 1.4%
- Dow futures down 100.
- Australian Gold drops to $2370.
- 10-year yield steady at 1.76%
- AUD steady at 77.87c
- Bitcoin whacked to US$39277
- In Asia markets smacked. Japan down 1.6%, China off 0.4%
- APX +17.44% reaffirms guidance and strategic pivot.
- NXL +4.57% shorts squeezed again.
- BVS +1.93% change in substantial holding.
- EML -45.63% Central Bank of Ireland throws an AML spanner into the works.
- PDN -8.26% uranium pullback.
- SBM -6.97% broker downgrades
- PPK -4.16% profit taking.
- CTT +9.01% bucking the trend with luxury in fashion.
- PRN -6.25% broker downgrades continue.
- LBY -10.29% capital raising.
- POD -7.06% profit taking.
- ABR +6.18% senior management appointment.
- MGV +9.09% good drilling results.
- EMH +7.36% strong results from locked cycle tests.
- RHY +8.56% still drawing strength from research.
- Speculative Stock of the Day: BPM Minerals (BPM) +161.90%. Completes placement to acquire projects in Earaheedy. Close to RTR recent finds. Placement at 20c now 55c.
- Biggest Winners: APX, IMU, CTT, ABR, NXL, TLA and MGF.
- Biggest Losers: EML, STX, PDN, CRN, SBM, CHN and PRN.
- Prospa Group (PGL) +2.30% Provides business update; April total originations $41.5m vs year-ago $2.9m. Update: April monthly originations of $8.5m. Over $2bn in total lending through its platform.
- Fortescue Metals Group (FMG) -3.14% Repeats FY21 guidance at an investor presentation. Sees FY21 iron ore shipments between 178 – 182Mt. Expects C1 costs in the range of US$13.50-US$14.00/wmt. Capex between US$3.0-US$3.4bn.
- Eagers Automotive (APE) +0.76% Reports YTD (30-Apr) underlying profit continued operations of ~$127m; statutory PBT continued operations ~$170m.
- United Malt Group (UMG) +1.58% H1 Profit (after tax) $13.2m vs year-ago $18.8m. Reports H1 (in constant currency): Revenue $589.6m vs year-ago $664.6m. EBITDA $52.7m vs year-ago $77.9m. Interim dividend 2.0c/share (unfranked), below target payout ratio of ~60% reflecting ongoing impact of COVID-19. Outlook for 2H21: Expect that 2H21 volume remains below pre COVID-19 levels. Corporate costs (including higher insurance) of $12m for FY21. Capex expected to be ~$120m for the full year, managing inflationary pressure and delays on materials for construction projects. Expect gearing to be maintained within target range of 2.0x -2.5x Net Debt/EBITDA at end FY21.
- Helloworld Travel (HLO) +1.47% Receives a one-year extension to the government travel agreement. Seeing a strong recovery across all its corporate businesses. April corporate travel total transaction value +580% vs year ago and down 45% vs 2019. New Zealand based retail and wholesale businesses are experiencing a surge in bookings following the announcement of the Cook Islands bubble.
- McPherson’s (MCP) +1.06% Completes operational review: reaffirms FY21 guidance. Operation review outcomes: Focus on core owned brands and key domestic channels. This strategy will be achieved by streamlining existing operations within the Australian domestic market to focus on core competencies. Health & wellness – a new growth platform with Global Therapeutics which provide a springboard for future category and product growth. Expand international footprint. Intends to broaden its export markets beyond Asia, with early planning already underway including a fulsome market testing strategy and engagement with select distributors predominantly across the online channel in the United States and Europe. The operational review also identified efficiencies across the business to reset the group’s cost base and enhance profitability. These include opportunities across the following functions: Warehousing, Distribution,Procurement and product cost formulation, Selling, general and administrative expenses. FY21 guidance unchanged: Revenue $200-205m vs consensus $208.7m. EBIT $10-13m vs consensus $15.8m. FY26 target: Revenue ~$300m. EBIT ~$50m.
- Appen (APX) +17.44% Issues trading update and corporate restructure; to hold conference call today. Restructure: Will change reporting currency from $A to $USD. Restructure to consist of four customer facing business units – Global, Enterprise, China and Government Global business unit is responsible for delivering data annotation services to major US technology customers and Enterprise business unit will leverage our product suite and AI-driven automation to grow revenue within our 300+ current enterprise customers. China and Government businesses will continue to operate separately and will focus on capturing market share. Trading update and Guidance: YTD revenue plus orders in hand for delivery in FY21 is US$260m at the end of April 2021. Underlying EBITDA for the year ended 31-Dec-21 is expected to be in the range of US$83-90m.
- Webjet (WEB) +0.64% Issues FY21 financial result (9-month period due to new 31-March year- end) underlying NPAT -$88.8m vs -$42.3m in FY20. Reports FY21 (9-Months): Revenue $38.5m vs $266.9m in FY20. Time to value $453m vs year-ago $3.02bn in FY20. Outlook: Expected to have materially lower cost base going forward.
- G8 Education (GEM) -3.00% Provides trading update at AGM; Group’s booked LFL occupancy as at 14-May-21 is ~70.8%, -3.3% 2019 pre-COVID levels. Trading update: The group has closed the gap to 2019 by 0.7%pts since February. The 255 metro centres are -7%pts below 2019-year levels driven by recovery from prolonged lock down activity in Victoria and increased supply in WA. These centres will be the focus of the 2021 and 2022 improvement program. Wages are currently performing in line with expectations. The group’s employee payment remediation program announced in Dec-20 is on track, with payments to current team members to be substantially completed by the end of Jul-21. Despite very encouraging trends throughout the year, voluntary turnover was 19% at Dec-20 following higher-than-average centre manager movements in Q4. These movements have settled in 2021, bringing the current centre manager turnover to circa 17%.
- EML Payments (EML) -45.63% Irish subsidiary, PFS Card Services, received regulatory concerns from the Central Bank of Ireland. EML said it is presently unable to estimate the potential direct and consequential costs and impacts of the correspondence on the Group’s consolidated FY21 results. Excluding these costs, the company remains on track to achieve results previously guided to for the FY21 year.
- Wage Price Index for the March quarter up 0.6% vs estimates up 0.5%, to be up 1.5% on the year vs estimates of a 1.4% lift. Michelle Marquardt, Head of Prices Statistics at the ABS said “After two-quarters of minimal growth, wages rose 0.6% for the second successive quarter. This quarter saw a return to regular patterns of wage growth for the time of the year, supplemented to some extent by pay rises for the final group of award workers scheduled in the Fair Work Commission’s annual wage review (2019-2020).”
- Westpac-Melbourne Institute Consumer Confidence May: -4.8% to 113.1. The fall likely capturing some disappointment in the Federal budget. The reading is still the second-highest print for the Index since April 2010 and does follow an 11% rise in the Index over the previous three months.
- Vaccine Tracker – 1.51bn doses in 176 countries. 25m doses a day. In US, 276m doses 1.77m doses a day.
- In the U.S., the latest vaccination rate is 1,771,807 doses per day, on average. At this pace, it will take another 4 months to cover 75% of the population.
- Record deaths in India of 4,529 but cases have halved recently.
- Argentina recorded 745 Covid-19 fatalities and 35,453 infections.
- China says crypto will not be able to be used as a currency.
- Shortages in the semiconductor industry are getting even worse, complicating the global economy’s recovery from the coronavirus pandemic.
- Chip lead times, the gap between ordering a chip and taking delivery, increased to 17 weeks in April.
- The Singapore Exchange is considering introducing an EV metals contract. The Singapore Exchange, which is the world’s biggest clearer of iron ore derivatives and is bringing in a Steel Rebar contract.
US AND EUROPEAN HEADLINES
- European markets looking a similar soft opening. French curfews begin to be rolled back tonight.
- Fed minutes. UK CPI up 0.6% M/M in line with forecast.
- Biden takes on China over EVs.
- Spike in lumber prices send housing starts down 9.5% Surge in material rises.
- Larry Summers accuses Fed of ‘dangerous complacency’ over inflation.
- US has delayed trading bans as White House looks at enforcement.
- Silicon Valley guru Sandy Robertson sees a lot of junk in the SPAC market. Does that make it SPAC Junk.
- Irish health system gets hit by hackers. US$20m is the ransom to not release personal data.
- JP Morgan names too women to run consumer bank unit. Dimon’s successor?
- Nvidia is making it hard to use the next generation of chips to mine crypto.
A Texan was taking a taxi tour of London and was in a hurry.
As they went by the Tower of London the cab driver explained what it was and that construction of it started in 1346 and was completed in 1412.
The Texan replied, “Shoot, a little old tower like that? In Houston we’d have that thing up in two weeks!”
Next they passed the House of Parliament – started in 1544 and completed in 1618.
“Well boy, we put up a bigger one than that in Dallas and it only took a year!”
As they passed Westminster Abbey the cab driver was silent.
“Whoah! What’s that over there?” asked the Texan.
The driver replied, “I don’t know, it wasn’t there yesterday.”