ASX 200 Henry Jennings, Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News – END of DAY REPORT.

 

ASX 200 falls 27 points to 6269 on trade war fears. US futures slightly positive up 52 points. A good recovery off its lows at the opening saved some blushes as banks investors were lured by dividends. The big story of the day was the ACCC inadvertently published its blocking of the TPM/HTA merger by mistake. TPM down 13.5% on the news HTA down 28.1%. Big surprise. TLS down 2.1% on the news. Miners were easier despite iron ore price rises as other base metals fell away. BHP was down 0.3% on the news of a huge lawsuit in the UK. FMG showed a modest loss of 1.3%. Energy stocks were slightly weaker with STO down 1%, the worst of the bunch. TWE suffered a big fall of 6.6% on news the CEO Michael Clarke had sold around $7m of stock for ‘personal reasons’. Bond proxies and REITs eased on rate stability. AUD slightly higher at 70.23c. Seems 70c is a tough nut to crack.

Today’s Highlights

  • ASX 200 drops 27 to 6269. Could have been worse. A lot worse.
  • High 6284 Low 6241.
  • ACCC kills TPM/HTA merger. Next stop the courts.
  • Banks hold the line as miners suffer.
  • BHP lawyers up for record UK suit.
  • Gold producers rally but no real conviction.
  • High flyers see profit taking.
  • RBNZ cuts rates to 1.5%
  • AUD up to 70.23c
  • Aussie Gold slips to $1833 on higher dollar
  • Bitcoin firms to $5808.
  • US futures up 51 on trade deal hopes.
  • Asian markets flop with Japan down 1.6% and China steady down 0.16%

STOCKS

  • TPM -13.53% HTA -28.12% ACCC stuffs up. Releases news by mistake. Merger is off.
  • FXL +24.44% positive announcement but overdone. Way overdone.
  • DDR +5.34% great result.
  • MGX +4.76% iron ore price rises.
  • TGR +1.63% fish bounce.
  • SAR +3.55% SBM +1.27% NST +3.93% gold producers rally.
  • NEA -4.29% broker report.
  • TWE -6.62% CEO sell down.
  • HUB -6.66% a devil of a management sell down.
  • Z1P -3.43% profit taking.
  • CIM -0.58% still question marks.
  • PNV -2.90% profit taking.
  • QAN -1.81% trials zero garbage flight.
  • SUN -0.66% quarterly portfolio update.
  • KDR +4.00% interesting move about WES bid price.
  • PPH -4.17% results.
  • Speculative stock of the Day: Stunning day for Orthocell (OCC) +356.52% after revealing patients regained sensation and muscle function following its CelGro treatment. Patients experience 83% improvement in muscle power. The small print is interesting though as only four patients had participated in the trial. The full trial consists of 20 patients with traumatic nerve injury and is expected to be completed in Q2FY19. One to watch. Implications for MSB perhaps.
  • Biggest Risers: FXL, AVH, RMS, MGX, CUV and DDR
  • Biggest Falls: HTA, TPM, APT, HUB, TWE and MP1.

TODAY

  • CSR Limited (CSR) –1.47% Full-year results; net profit after tax came in at $181.7m vs consensus of $183m. Total trading revenue also missed estimates at $2.64bn vs expectations of $2.65bn. EBITDA excluding one-offs came in below expectations at $348.5m vs estimates of $359.4m. A final dividend of 13c per share was declared.
  • Flexigroup (FXL) +24.44% Has added several high-profile retailers for its HUMM BNPL offering. Myer, IKEA, JB Hi-fi New Zealand, Solomon’s Carpets, Strandbags, National Hearing, National Dental Plan, and City Fertility.
  • BHP Group (BHP) -0.32% Confirms it has been served with a $US5 billion ($7.2 billion) group action lawsuit regarding the Samarco dam failure on 5 November 2015. The full claim was served in a Liverpool court on Tuesday, BHP said it intends to defend the claim.
  • Treasury Wine Estates (TWE) –6.62% CEO Michael Clarke discloses the sale of 400k shares at 1722c, worth $6.88m. Clarke beneficially owns 1.8m company securities, made up of 543K ordinary shares and 1.3m performance rights in TWE following the transaction.
  • Automotive Holdings Group (AHG) -0.83% Has unanimously recommended that shareholders accept AP Eagers (APE) -2.20% improved offer of 1 APE share for every 3.6 AHG shares owned. Previously 1 APE share for every 3.8 AHG shares.
  • Pushpay (PPH) -4.17% Results announcement this morning and has achieved its guidance by increasing revenue by US$28.2m from US$70.2m to US$98.4m. Up 40%. Guidance is now for global revenue of around US$122m-US$125m.Gross margins are now 60% up from 55%. The company is providing EBITDAF guidance for the year ending 31 March 2020 of between US$17.5m and US$19.5m. Gross margin of 63% and processing volumes of between US$4.6bn and US$4.8bn.
  • HUB24 (HUB) – 6.66% Chairman Bruce Higgins has sold 200,000 or 20% of his shares at 1515c for $3.03m, leaving him possessing $796,800 of beneficially owned shares.

ECONOMIC NEWS

  • RBNZ cuts rates to 1.50% citing slow global economic growth and the need to support employment.
  • Local futures markets are pricing in a 100% 25bps cut in rates in August.
  • One punter has backed Labor to win with $1m at $1.23. He reckons it is a safer bet than Winx or Liverpool beating Barca.

BOND MARKETS

  • 2-Year bond yields fall 3bps to 1.32%
  • 5-Year yields fall 4bps to 1.35%
  • 10-Year yields fall 4bps to 1.74%

ASIAN NEWS

  • Trade surplus in China falls unexpectedly to US$13.84bn in April from US$26.21bn in the same month a year earlier. Expectations were for a surplus of $35bn.
  • Chinese exports fell 2.7% year on year in April, missing market consensus of 2.3% growth.
  • Chinese imports lifted 4% year on year in April, above market estimates of a 3.6% fall and marking the first increase in 5-months.
  • Looks like 2019 is shaping up as the biggest year for bond defaults. In the first four months, companies have defaulted on US$5.8bn of domestic bonds. Nearly there and half times the record 2018 levels.
  • Tencent has pulled the massively popular PlayerUnknown’s Battlegrounds mobile game in China.

EUROPEAN AND US NEWS

  • Donald J Trump lost US$2.4bn over 10 years on failed business deals according to his tax records.
  • Hackers have stolen $40m worth of Bitcon from Binance Exchange.
  • JP Morgan’s Jamie Dimon says there is an 80% chace of a trade deal.
  • Despite Trump saying that the increased tariffs were paid by the Chinese, it is not so. Actual data from 2017/2018 showed that foreign firms didn’t lower their prices to compensate for the tariffs so the full cost was borne by US companies importing the stuff and consumers. The research house went on to say that the main victims of the traiffs were farmers and blue-collar workers. Some high profile World Bank economists have also said the same thing. Not quite what you hear in the tweets.
  • The acquisition of Monsanto by Bayer has brought all sorts of legal troubles with the glyphosate issue. Now there are reports that plants are showing resistance to the Roundup weedkiller too. Not great news.
  • One thing that could accelerate any falls, is there is a record short position in US VIX derivatives. Can make moves more exaggerated. Much like we saw in 4Q2018. Friday looms.
  • UK MPs expenses scandal is ten years old and still an issue it seems.
  • The Germans are shaking in their boots as Trump is sitting on a report that says that imported cars are a security risk and he has legal rationale to impose heavy tariffs into new cares from Germany and the EU. Happy days.

And finally…………………….

A Lawyer and the Pope died at the same time, both went to heaven.

They were met at the Pearly Gate by St. Peter who conducted them to their rooms.

The Pope’s room was spartan with bare floor, army cot for a bed, and a single bulb for light.

They came to the Lawyer’s room. It was huge with wall to wall carpeting, king sized water bed, indirect lighting, color TV, stereo, Jacuzzi and fully stocked bar. The Lawyer said, “There must be a mistake. This must be the Pope’s room!”

St Peter said, “There’s no mistake. This is your room. We have lots of Pope’s, but you’re our very first Lawyer!”

Private Jones was assigned to the induction center, where he advised new recruits about their government benefits, especially their Army insurance.

It wasn’t long before Captain Smith noticed that  Jones was having a staggeringly high success-rate, selling insurance to nearly 100% of the recruits he advised. Rather than ask about this, the Captain stood in the back of the room and listened to Jones’ sales pitch.

Jones explained the basics of the Army Insurance to the new recruits, and then said: “If you have Army Insurance and go into battle and are killed, the government has to pay $200,000 to your beneficiaries. If you don’t have  insurance, and you go into battle and get killed, the government only has to pay a maximum of $6000.

Now,” he concluded, “which group do you think they are going to send into battle first?”

Clarence

XXXX

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Henry Jennings Contact: henryjennings@mac.com // @henryj007 Has been involved in Investment Banking and Stockbroking since the early 1980's. Stockbroker - Camerons Stockbroking Macquarie Bank - Equity Capital markets Macquarie Group - Divisional Director