ASX 200 falls 49 points to 7106 (-0.7%). Late sell-off too at the close. No real reason, but banks wilted as 10-year yields continue to slip, the Big Bank Basket fell to $186.43 (-0.5%). CBA down 0.7% leading the sector lower. Financials elsewhere also slipping MQG down 0.3% and ASX falling 0.9%. Insurers eased and healthcare fell back a little as CSL down 1.4%, SHL fell 0.9% and RHC down 0.5%. Industrials also under the pump, consumer stocks faring badly, WES down 1.8%, COL down 2.2% and WOW off 2.6%. REITs slipping slightly, GMG up 1.3% bucking the trend. In resources, most sectors fell back, iron ore stocks down, BHP off 0.9% after a blip yesterday, FMG fell 3.7% and the gold miners gave up some recent gains, NCM down 2.5% and NST down 3.4%. Lithium stocks held up with PLS up 1.4% and AKE up 1.4%, oil and gas stocks slipped, STO down 1%. Coal stocks whacked hard on slowing demand in China despite YAL in a trading halt as its majority owner looks to tidy it up. WHC and NHC hit hard, the latter also with a business update not satisfying the market. In the tech sector, all the talk was the bid for APX up 29.2% before heading into a trading halt, WTC rallied 2.4% and CPU up 0.6%. The All-Tech Index up 1.0%. In corporate news, APX in demand on the news, GAL went nuts again on assay results up 49.2%, ALQ up 6.1% on pleasing results, EDV fell 6.0% on its investor day and CRN down 5.6% on its AGM presentation. On the economic front, Private sector capital expenditure contracted 0.3% in the March quarter. Asian markets mixed, Japan up 0.1%, China up 0.5% and HK down 0.9%. 

End of Day Podcast – Wednesday, May 25

Headlines

  • Winners:  APX, FCL, ALQ, ARU, TUA, TYR, PBH, CCX
  • Losers: NHC, TER, PSI, EDV, NAN, CRN, TAH
  • Positive sectors: Tech. Lithium.
  • Negative sectors: Banks. Resources. Industrials. Healthcare.
  • High 7181 Low 7106 Late sell off closes on lows.
  • Big Bank Basket: Down to $186.43 (-0.5%)
  • All-Tech index: Up 1.1%
  • Gold: Steady at $2612
  • Bitcoin: Steady at US$29697
  • Aussie Dollar: Fell to 70.72c
  • 10-Year Yield:Falling to 3.22%
  • Asian markets: Mixed, Japan up 0.1%, China up 0.5% and HK down 0.9%
  • US Futures: Dow down 59 Nasdaq down 72.

Major Movers

  • APX +29.22% bid from Canadian tech company.
  • ALQ +6.08% results
  • GAL +49.21% assays confirm discovery with drilling to resume.
  • RWL +15.69% thin volumes.
  • G6M +8.51% King Island mine gathering fans.
  • PBH +5.04% small bounce.
  • YAL – trading halt pending a mop up from its Chinese parent, Yankuang.
  • BYE +8.82% SM58 G5 well logs.
  • CAT -10.87% disappointing results.
  • M7T – 3.17% change of director’s interest.
  • Speculative Stock of the Day: Resource Mining Corp (RMI) +28.57% Investor presentation. Focus on Tanzania and PNG. Ni Co projects.

In the News

  • Westpac (WBC) to merge BT’s personal and corporate superannuation funds with Mercer Super Trust and sell Advance Asset Management business to Mercer Australia. Estimated net effect after-tax gain of $225m.
  • Virtus Health (VRT) said CapVest has not formally responded to Virtus’ request for confirmation of whether or not it will increase its offer. Virtus started talks with BGH after yesterday’s revised 815c bid.
  • Appen (APX) receives indicative and non-binding proposal from TELUS International at 950c, cash. In the past 12 months, the Appen share price has fallen more than 50%. Year to day revenue and orders in hand is US$297m, +14% vs a year ago. Now in trading halt until Monday.
  • Catapult Group International (CAT) – Full-year underlying EBITDA -US$5.8m vs year-ago US$7m. Revenue US$77m vs year-ago US$67.3m. Operating cash flow is expected to be positive for FY23. They noted that FY22 was subject to supply chain challenges and cost inflation. Those pressures are expected to continue at a moderate degree throughout FY23, impacting freight, cost of goods sold (COGS), wage costs, and inventory sourcing.

Economic News/Bond Markets

  • Private sector capital expenditure contracted 0.3% in the March quarter.

New capital expenditure in seasonally adjusted volume terms

Total capital expenditure

  • Energy bills to rise. The Australian Energy Regulator (AER) has decided to pass on increases to a benchmark power prices. The tariffs which are called ‘default market offers’ will be lifted between 8.5% and 18.3% in NSW, up to 12.6% in QLD and 9.5% in SA. The increases come into effect from July. Some estimates see those changes resulting in a ~$250 increase a year in energy bills.

Asian Markets

  • China’s demand for thermal coal is likely to keep falling through the rest of the first half. Consumption of China’s mainstay fuel is expected to decrease moderately over May and June after slumping steeply in April, the China Coal Transportation and Distribution Association said at a briefing.
  • CV19 lockdowns are also affecting LNG cargoes, BloombergNEF estimates that China’s imports in May have fallen 2m tons from last year to 5.1m tons as many traders stayed on the sidelines while Covid was spreading.
  • South Korea raises benchmark rate to 1.75% as inflation climbs.

US and European Headlines

  • Davos continues.
  • Russia offers to pay USD debt in rubles. Could trigger a default.
  • Elon Musk has secured additional equity funding for his Twitter purchase.
  • Central Bank of Russia has a rate setting meeting this morning.
  • Nvidia warns of a slowdown in gaming market and has some Russian woes.
  • Chelsea finally sold to the Americans. Highest price ever for a sports club.
  • Boris in trouble again for late night parties at No 10.
  • Klarna CEO says fintech will focus less on growth and more on ‘short-term profitability’.

And finally….

Clarence

XXX

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