ASX 200 closes down 53 to 5497 (-1.0%) in a sloppy end to the week. Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT

 

ASX 200 closes down 53 to 5497 (-1.0%) in a sloppy end to the week.

Up 92 points for the week. Dow futures down points. After a cautious start news from China mid-morning gave the bears a reason to head to a picnic. China is tightening HK restrictions putting it on a collison course with US. Banks were once again under pressure with the Big Bank Basket falling to $104.28. CBA lost 0.6% and NAB down 1.2%. MQG came under some pressure too dropping 1.3%. Miners slipped on some profit taking and Chinese news, BHP down 0.5% and RIO down 2.0% but FMG continue to go from strength to strength losing only 0.1%. Gold miners flatlined, NCM down 0.5% and energy stocks ran out of fuel, WPL down 2.2% and STO down 4.0%.  Healthcare too was easier led by CSL down 2.4% which was under pressure again. Seems that investors are rotating into stocks with more exposure to a reopening. Consumer stocks eased with WOW down 1.0% and COL down 1.25%. ALL slipped 1.73% despite some mildly positive broker comments. TLS remains a cardigan stock slipping 1% and other techs wearing better clothes fared much better. APT rose 1.2% and APX up 1.0%. The All Tech Index flat lined. In corporate news, PSI rose 6.4% on a trading update, SIQ also in the green with a 7.6% rise after a change in substantial holding and JMS did well up 3.5% after some director shareholding buying. WES fell 0.1% after announcing another restructure and store closure program at Target. In economic news, Fitch has put us on negative outlook as risks rise on leverage to China etc. The 10–year bond yield fell to 0.86% and the AUD was slightly weaker at 65.33c. Asian markets were hit on China’s moves to clamp down on Hong Kong with the islands market dropping 4.8% and China down 1.9%. Japan fell 0.8%.

Today’s Highlights

ASX 200 down 53 to 5497. Wilted ahead of weekend on China issues.

High 5570 Low 5495 Lower volume.

Chinese conference weighs on sentiment.

Big Bank Basket down to $105.13

All Tech unchanged.

Dow Futures down 85

10-year bond yields down to 0.91%

AUD steady at 65.33c.

Aussie gold eases to $2645.

Bitcoin slips to US$8984

Asian markets were hit on China’s moves to clamp down on Hong Kong with the islands market dropping 4.8% and China down 1.9%. Japan fell 0.8%.

STOCKS

JMS +3.51% directors shareholding.

SIQ +7.59% change in substantial holding.

LYC +6.00% US/Chinese tensions.

NEA +4.31% rally continues.

IEL +5.09% students to return?

NWH -9.36% buyer’s remorse.

URW -6.93% debt issues continue to weigh.

EOS -3.75% profit taking.

BUB -2.84% sours.

EHL -12.05% ceasing to be a substantial shareholder.

MYR +7.41% rental renegotiation and store openings.

HT1 +15.32% low volume.

BET +12.90% results of meeting.

PNR +5.88% drill results bring buyers.

ECX +8.00% business update.

Speculative Stock of the Day: Predictive Disc (PDI) +33.78% corporate presentation at Mining 121 EMEA Conference. Trading halt announced late in the day ahead of more results. They will be good.

Biggest Rises: SIQ, PSI, CTD, LYC, COE, IEL and AVN

Biggest Falls: NWH, URW, PLS, AHY, RMS, MYX and AQG.

TODAY

Sydney Airport (SYD) +1.97% Has confirmed at its AGM that it will not pay an interim distribution for FY20. SYD management also said it does not “foresee the need to raise equity” having raised $850m in bank facilities.

Aristocrat (ALL) -1.73% CEO Trevor Croker expects all the company’s gaming venues to be reopened by September. Croker added that April was a particularly difficult month with only a handful of casinos open around the world. The stock fell 5% on its results yesterday.

Wesfarmers (WES) –0.05% Actions following the Target review include the conversion of suitable Target stores to Kmart stores, the closure of a number of Target stores and a restructuring of the Target store support office. Notes restructuring costs and provisions in Kmart Group of ~$120-$170m, reflecting Target store closure costs, inventory write-offs and a restructure of the Target store support office. Non-cash impairment in Kmart Group of ~$430m-$480m, including an impairment of the Target brand name and a ~$300m impairment to goodwill in its Industrial and Safety division.

Woodside Petroleum (WPL) -2.21% CEO Peter Coleman has told newswires he does not expect a quick V-shaped economic recovery, adding that it’s going to last well into next year and possibly 2022. Coleman said that he does not believe that gas prices can get any lower than they are at the moment.

Downer EDI (DOW) -3.69% settles Spotless class action; settlement to impact FY results by $35m pre-tax.

Monash IVF Group (MVF) -2.65% completes the retail component of its entitlement offer, raising $15m at A$0.52/share.

Myer Holdings (MYR) +7.41% To reopen all remaining stores from 27-May-20.

ECONOMIC NEWS

Australia’s AAA credit rating outlook was cut to negative by Fitch Ratings.

Australia’s economy is expected to contract 10% in the first half and unemployment surge to 10% in June.

Fitch predicts Australia’s economy will shrink by 5% in 2020.

This is the AAA club with Australia, the only one with a negative outlook downgrade. Club members: Canada, Denmark, Germany, Netherlands, Sweden, Norway, Singapore, Switzerland and Luxembourg.

ASIAN NEWS

China reiterated a pledge to implement the first phase of its trade deal with the U.S. despite setbacks from the coronavirus outbreak.

China has abandoned its usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the virus.

Democracy advocates called for protests against sweeping national security legislation China introduced today.

Premier Li Keqiang pledged to “establish sound legal systems and enforcement mechanisms for safeguarding national security” in Hong Kong and in the neighbouring region of Macau. This puts more pressure on the US who is reconsidering its special trading status. Trump has warned that the U.S. would respond to any move to curtail protests and democratic movements in Hong Kong.

EUROPEAN NEWS

European markets rattled and expected to open around 1% lower on China/HK moves.

UK retails sales down 22.6% for April.

The UK plans to track CV19 using sewage.

Italy has raised a record EUR22bn in a bond sale after stimulus boosts confidence.

Facebook offering employees the option to work remotely. Here is the kicker, compensation will be adjusted to take into account locations. The ultimate outsourcing will accelerate globalisation.

And finally…

Bill and his father are out fishing and drinking beer while discussing football and NASCAR.

All of a sudden Bill says, “Dad, I think I’m gonna divorce my wife. She hasn’t spoken to me in over six months.”

His father, silent for a moment, slowly takes a sip of his beer and says, “Son, you better think it over; women like that are hard to find.”

A guy was sitting quietly reading his paper when his wife walked up behind him and whacked him on the head with a rolled-up magazine.

“What the hell was that for?” he asked.

“That was for the piece of paper in your pants pocket with the name Mary Lou written on it,” she replied.

“But you don’t understand,” he pleaded. “Two weeks ago when I went to the races, Mary Lou was the name of one of the horses I bet on.”

“Oh honey, I’m sorry,” she said. “I should have known there was a good explanation.”

Three days later he was watching a ball game on TV when she walked up and hit him in the head again, this time with the iron skillet, which knocked him out cold. When he came to, he asked, “What was that for?” he pleaded.

“Your horse just called!”

A beautiful young woman about to undergo a minor operation is lying on a gurney in a hospital corridor awaiting the medical staff.

A man in a white coat approaches her, lifts up the sheet, and visually examines her naked body. He walks away and confers with another man in a white coat. The second man then approaches the girl and performs the same examination.

When a third man approaches her, she asks impatiently, “These examinations are fine, but when are you going to start the operation?”

He shrugs and says, “Your guess is as good as mine, lady. We’re just here to paint the halls.”

Clarence

XXX

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Financial Markets and Political Commentary
 

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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