ASX 200 rallies 17 points to 6629 (+0.3%) on very light volumes. School holidays and end-of-year marketing reports taking their toll. RBA decision kept many players on the sidelines as Lowe moved 50bps as widely expected. Rally petered out at the close. Resources doing ok despite some concerns in iron ore, BHP rose 0.3%, FMG up 1.5% and RIO unchanged despite news on Simantou. Gold miners doing well today as consolidation begins, GMD the latest to swoop on DCN up 3.3%. Base metals and lithium flat. Energy stocks better with crude rising again, STO up 0.4% and WDS up 3.8%. Coal stocks modestly higher. Banks switched around from losses to gains and back to losses on RBA move, CBA down 0.2% on reports it may need to write off $2bn on BNPL investment. The Big Bank Basket fell to $160.75 with NAB down 0.3% with MQG up 0.9%. Insurers flat as floods prevail in NSW. Healthcare better with CSL up 1.5% and industrials firm, COL up 0.4%, EDV up 0.7% and WES rising 0.6%. ’Old Skool’ tech doing ok, REA up 3.8%, CAR up 1.4% and SEK up 3.5%. Tech better led by CPU up 0.2% and WTC rising 5.2%. In corporate news, RRL up 10.7% on record gold production, ALG up 8.5% going ex div and ex return of capital. BUB tapped the market for $63m at 52c, RSG up 15.6% on an operational update. In economic news, RBA moved up rates by 50bps, Chinese PMI better again. Mixed markets in Asia with Japan up 0.5%, HK flat but China down 0.9%. 10-year yields steady at 3.54%.

Headlines

  • Winners: 360, RRL, BRN, PNV, SYA, ALG, SBM, SLX
  • Losers: VRT, GQG, OBL, URW, DGL, MGR, ECX, RIC
  • Positive sectors: Iron ore. Gold miners. Healthcare.  
  • Negative sectors: REITs. Insurers. Banks. Base metals.
  • High 6657 Low 6597. Very low volumes.
  • RBA raises rate 50bps as expected. First ever back to back 50bps rise.
  • Big Bank Basket: Falls to $160.75
  • All-Tech index: Up 2.2%.
  • Gold: Lower at $2634
  • Bitcoin: Heading higher at US$20280
  • Aussie Dollar: Higher at 68.57c
  • 10-Year Yield Higher at 3.54%
  • Asian markets: Asian markets mixed, Japan up 0.5%, HK flat and China down 0.9%
  • US Futures: Dow up 112 Nasdaq up 87- European markets opening firm by around 0.8%.

nd Lows

Major Movers

  • RRL +10.69% record gold production.
  • SYA +10.00% director buying.
  • BRN +10.59% dogs are bouncing.
  • PNV +10.11% kicking on.
  • 360 +11.34% dogs bounce.
  • SLX+6.42% buyers on Duke LOI.
  • SBM +8.48% M&A possibility.
  • IVZ +17.14% resource upgrade to 20Tcf and 845m barrels.
  • EMV +14.85% presentation to come.
  • RSG +15.56% operational update.
  • DUB -0.68% appoints Sarah Diamond as NED.
  • VRT -9.99% update on takeover offer.
  • EMR -2.33% exceptional results but misses bullseye.
  • Speculative Stock of the Day: Atomos (AMS) +51.11% sales update. Revenue in excess of $82m. Strong finish to the year.

In the News

  • Bubs Australia (BUB) to launch $63m equity raising at 52c to fund US growth plans.
  • Champion Iron (CIA) appoints Donald Tremblay as CFO effective September 12.
  • SRG Global (SRG) awarded maintenance contracts with combined value of ~$100m
  • Regis Resources (RRL) reports Q4 production 123,901oz vs quarter-ago 103,129oz. On Friday Wyloo abandoned plans to increase its stake.
  • REIT deals have fallen 19% last month to below 12-month average.
  • Whitehaven Coal (WHC) – new legal; challenge to the expansion at Narrabri. Bushfire Survivors for Climate Action (BSCA) has sought a judicial review of the IPC’s ruling.
  • ARB – appoints Lachlan McCann as its next chief executive effectively immediately. McCann was the COO.

Economic News/Bond Markets

  • CBA expects the ASX 200 to rebound by 7-9% over 2022/23, after falling by around 10% over the past financial year.
  • The American Association of Individual Investors’ Asset Allocation Survey: Cash allocations are at their highest level since April 2020, but still below their historical average. Added equity allocations fell for the sixth time in seven months, but still remain above their historical average.
  • ASIC has extended the ban in binary options trading until the end of the decade.
  • ETF Securities has today launched two new currency hedged bond funds: ETFS US Treasury Bond (Currency Hedged) (USTB) – ETFS USD High Yield Bond (Currency Hedged) ETF (USHY).

RBA Decision – 50 bps rise today to 1.35%

  • Global inflation is high. It is being boosted by COVID-related disruptions to supply chains, the war in Ukraine and strong demand which is putting pressure on productive capacity.
  • Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices.
  • Inflation is forecast to peak later this year and then decline back towards the 2–3% range next year.
  • The unemployment rate was steady at 3.9% in May, the lowest rate in almost 50 years. Underemployment has also fallen significantly.
  • The Board will also be paying close attention to the global outlook.
  • The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data.
  • The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

Asian Markets

  • China’s services activity beat expectations in June and jumped to the highest level in nearly a year. The Caixin Services Purchasing Managers’ Index soared to 54.5 in June from 41.4 in May.
  • Last week, the official gauge of non-manufacturing activity showed a jump to 54.7 in June
  • Yellen calls China to discuss reducing tariffs. Biden ready to do a deal.
  • Thai inflation at 14-year high of 7.66%

US and European Headlines

  • US markets back online. European markets expected to open higher, German up around 0.8%
  • Chaos reigns in Europe as holiday makers queue for hours at airports. On Monday, Scandinavian airline SAS cancelled 173 flights, more than half of its schedule. Files for Chapter 11 in US.
  • According to aviation data firm Cirium, 400 flights were cancelled in all U.K. airports between June 24 and June 30.
  • Another Crypto platform and lender, Vauld, has paused withdrawals.
  • Turkey’s inflation hits 79%.
  • Rihanna is worth around US$1.4bn as a singer and CEO of Fenty Beauty. Youngest billionaire in US. Some of Rihanna’s net worth is from her successful music career. Most of it is from her three retail companies: Fenty Beauty, Fenty Skin and Savage X Fenty.
  • Norway’s offshore oil workers on strike and Nord Stream pipeline closes for maintenance on July 11th til 21st.
  • Large Hadron Collider (LHC) has restarted today after three years of maintenence.

And finally….

A Polish farmer was working in his fields when he dug up an old oil lamp. When he rubbed some of the dirt off it, a genie appeared, & as per tradition offered him three wishes, each of them 12 months apart.

The farmer thought about it for a few minutes, then said “I’d like the Chinese Army to invade Poland, then withdraw again”. The genie says You shall have your wish. A few months later the Chinese Army rolls over the Polish border, stays for a while, then withdraws back to China.

The next year, the genie reappears and asks the farmer for his second wish. Without hesitation, he again asks for the Chinese Army to invade Poland, then withdraw. The genie is somewhat surprised by this, but grants the wish, so the Chinese Army attacks Poland once more, then withdraws.

The following year, the genie appears again for the third wish, and the farmer asks for the same thing again! The genie asks but why do you want this to happen to your country a third time?

The farmer explained, “Because if the Chinese Army has invaded Poland three times and withdrawn, then that means that they’ve gone right through the Soviet Union six times!”

Clarence

XXX

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