END OF DAY

ASX 200 gave up all its early gains to finish down 10 points to 6594 (-0.2%). US futures flip-flopped and jobs numbers came in better than expected below the headline-making it more likely that the RBA has to go harder. The Big Bank Basket slipped again to $157.67  (-0.3%). CBA down 0.2% and WBC off 1.9% with insurers off as QBE slipped 2.0% and SUN fell 1.0%. MQG held up and ‘Buy Now Pain Later‘ stocks rose slightly with ZIP up 1.0% and SQ2 up 1.5%. Healthcare was also under some stress with CSL dropping 0.9%, COH off 2.9% and RHC down 1.4%. Industrials were mixed with TCL down 1.6%, REITs better as GMG rose 2.4% and supermarkets COL and WOW both slipped slightly. Tech stocks went sideways with the Index unchanged, WTC rose 1.8% and XRO up 0.3%. Resources were a happy place today, BHP up 0.3% and RIO rising 0.7%, lithium back in fashion as LTR rallied 3.9% and PLS up 3.9%. Uranium back too, with PDN rallying 1.6% and coal stocks bouncing back. SMR up 10.5% and CRN rising 6.1%. Oil and gas stocks better, WDS up 0.7% and BPT up 0.3%. Oil slightly higher in Asian trade. In corporate news, LNK were shaken and stirred by 10.4% as the ACCC has concerns with the Dye and Durham bid, SIQ fell 10.9% after losing a government contract in VIC, HUM rattled down 14.8% on a business update. On the economic front, more bad news on our doorsteps with house price forecasts but official jobs data still showed a booming economy and a 3.9% unemployment rate despite participation heading higher again. Mixed session in Asia with HK and China slipping. Local 10-year yields back down to 4.04%. 

Headlines

• Winners: INR, 5EA, SMR, BRN, NMT, LKE, CRN, MGX
• Losers: SIQ, LNK, LFS, PXA, ING, MXT, SGM, QAN
• Positive sectors: Iron ore, Lithium, REITs, Base metals.
• Negative sectors: Healthcare. Banks. Insurers. Consumer staples.

• High 6672 Low 6584
• Big Bank Basket: Drifts to $157.67 (-0.3%)
• All-Tech index: Unchanged.
• Gold: Lower at $2619 as AUD gains.
• Bitcoin: better at US$22,169
• Aussie Dollar: Higher at 69.80c
• 10-Year Yield:Heads down to 4.04%
• Asian markets: Mixed Japan up 0.6%, China down 0.6% and HK down 1.5%.
• US Futures: Dow down 98 (now 217) Nasdaq down 65

Major Movers

• INR +12.68% lithium bounce.
• SMR +10.45% bargain hunting.
• LKE +9.54% follow through on rally.
• RF1 +4.78% buy back notice.
• APE +5.44% announces buy back.
• BRN +10.26% heading into index soon.
• 5EA +11.42% bargain hunters.
• NEW +24.24% good day
• TRS +18.95% appointment of CEO and business and capital update.
• HIO +15.48% 20Mtpa BFS and MOU with Flinders Ports.
• DRE +10.81% first drilling at Yin intersects high-grade rare earths.
• RNU +14.29% more high-grade graphite at Siviour.
• SIQ -10.91% loses contract.
• LNK -10.43% ACCC has issues.
• ING -4.44% no one loves ’em.
• QAN -4.03% oil price finally?
• CPU -2.43% yields slip.
• HUM -14.81% rattled on update.
• VHT -7.76% change of director’s interest.
• Speculative Stock of the Day: Green Tech Metals (GRE) +146.43% intersection of Cu-Zn mineralisation increases potential for expansion at Whundo. 32m @ 2.43% Cu from 75m, including 17m @ 4.37% Cu and 0.46% Zn from 90m

In the News

• BHP has decided not to sell NSW’s biggest coal mine after receiving no interest at the price it wanted. BHP will instead seek to extend the operation’s life from 2026 to the end of fiscal 2030, and pledged to work with the local community over the next eight years on a closure plan. BHP has a provision of about $700m for the closure of Mt Arthur and expects rehabilitation work to last about 10 to 15 years after mining ends
• Flight Centre (FLT) to invest more than $30m to retain staff.
• Eagers Automotive (APE) launches buyback of up to 10% of shares. To run for 12 months from June 30.
• Australian regulator says Dye & Durham’s proposed acquisition of Link (LNK) raises preliminary competition concerns.
• Hummgoup (HUM) – “The trading environment is very tough for Humm Consumer Finance (HCF), with intense competition, rising interest rates, and weakening consumer sentiment. HCF has experienced a reduction in net receivables, net yield compression and higher expenses. Profits are materially lower as compared to this time last year.”
• Australian Ethical (AEF) expects FY22 underlying profit between $9.8-10.2m which management said reflects a mid-point increase of 9% on FY21 (excluding performance fees). FUM at the end of May was $6.64bn vs $6.83bn at the end of March. Negative investment performance cited. While not clear if related, AEF also announced that an institutional client will be redeeming a $340m investment which represents 1.7% of annual revenue.
• Volpara Health Technologies (VHT) Chairman Paul Reid discloses purchase of 115k shares.
• Reject Shop (TRS) appoints Phillip Bishop as CEO. FY22 earnings tracking in line with consensus EBIT estimates and management is eyeing an on-market buyback.
• Bubs (BUB) announces a supply agreement with Walmart which will purchase a Boeing 747-400F plane full with 85k tins in it.
• China to set up centralised iron ore buyer to counter Australia’s dominance.

Economic News/Bond Markets

ABS Jobs numbers: Seasonally adjusted estimates for May 2022:

• unemployment rate remained at 3.9%.
• participation rate increased to 66.7%.
• employment increased to 13,510,900.
• employment to population ratio increased to 64.1%.
• underemployment rate decreased to 5.7%.
• monthly hours worked increased by 17 million hours.

And yet we are worried about a recession.

• ANZ has downgraded its house price forecast for 2022, sees a decline of 5% this year, then a 10% fall in 2023, citing faster increases in the cash rate. For some perspective, house prices would still be 6% above pre-pandemic levels at the end of 2023.

• ANZ has updated its economic forecasts: GDP growth cut to 3.2% from 4.3% this year. Sees the RBA cash rate at 2.6% by early next year. Expects inflation to hit 7% by the end of the year before falling to 3%.

Asian Markets

• China said its giant Sky Eye telescope may have picked up signs of alien civilisations although the reports have now been deleted from the Science and Technology Daily web site. ET phone home but seems the Science and Technology Daily people were not answering media questions.
• China’s home prices fell for a ninth month in May. New home prices in 70 cities, excluding state-subsidised housing, dropped 0.17% last month from April.

US and European Headlines

• Bank of England set to raise rates by 25bps today.
• European futures pointing to a positive start.Just.
• Robinhood’s shares have plunged more than 80%, cutting its market capitalisation to as low as US$5.99bn. The firm had US$6.19bn of cash and cash equivalents at the end of the first quarter.
• ECB has tried to stem the issues with European bond markets by instigating a new fragmentation tool. Here lies the problem:

• The new ‘Anti- Fragmentation Tool’ or AFT has failed to stop Italian 10-year yields, back up to 4.17%.
• The world’s most expensive cities

• Dr Fauci has CV19 but few symptoms.
• Ford CFO has said that inflation has made making a Mustang Mach-E unprofitable. Not hurting demand though.
• Elon Musk is talking to Twitter employees today. Maybe we find out how keen he is to buy the company.
• Biden accuses oil companies of ‘profiteering’. Biden needs oil companies to be ‘patriotic’ and lower prices.

And finally…

Clarence

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