ASX 200 rallied back from deep early losses..Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News.

 

ASX 200 rallied back from deep early losses losing only 5 points to 5775. 58 points due to big four rally. The big winners today were the bashed-up banks.

The Big Bank Basket rose to $117.79 from $110 yesterday. Dow futures rose slightly. The banking sector was ignited this morning on UBS moves to upgrade and a realisation that things may not be that bad. NAB up 7.8% after a huge turn out for its free money SPP. WBC also rallied hard up 8.0% and MQG joined the fun up 2.1%. Sector rotation is the name of the game currently as it is in the US. The bombed-out stocks and sectors are doing well. The All Tech Index went nowhere today having been a leader recently. APT gave up some recent gains falling 2.2% and TNE down 5.6% as brokers downgraded after an update. Healthcare too remains under pressure with CSL down 6.4% (big switch) and RHC down 2.1%. Miners were also out of favour as iron ore slipped with BHP down 2.9% and RIO down 2.4%. Gold miners got pummelled on a stringer AUD and a weaker bullion price. The double whammy killed them with NCM down 7.2% and NST down 10.9%. Energy stocks held firm with WPL up 1.3% and STO up 2.9%, but some bombed out industrials did really well. SXL rallied 27.03% and URW up 9.0% putting in two days of gains, MAQ rose 9.3% on thin volume and builders found sound foundations with BLD up 7.3% CSR up 7.7% and ABC up 6.1%, name change has helped clearly. In corporate news, NAB increased the size of its SPP due to huge demand, BKL tapped the market in a capital raising and PDI released some good drill results and then apologised for a 10g/t typo. The 10-year bond yield was steady at 0.88% and the AUD remains bid at 66.40c. Meanwhile in Asian markets, Japan is about to get another stimulus package, trading up 0.8% and China down 0.5% as tensions in HK increase and the yuan falls. HK down 0.7% as crowds gather and arrests grow.

Today’s Highlights

  • ASX 200 down 5 to 5775. But plenty going on beneath the surface.
  • High 5836 Low 5714. Banks charge higher.
  • Big Bank Basket $117.79 Big four account for +58 index points.
  • All Tech falls 2.2% on sector rotation.
  • Dow Futures up 50
  • 10-year bond yields unchanged at 0.88%
  • AUD firms to 66.40c.
  • Aussie gold falls to $2570 as AUD rallies.
  • Bitcoin steady at US$8862
  • Asian markets mixed Japan up 0.8% and China down 0.5%.

STOCKS

  • SXL +27.03% radio stars.
  • HLO +10.50% travelling well.
  • AMA +10.92% more cars more crashes.
  • CYL -0.69% USFDA approval to file for Technegas
  • VUK +15.51% UK banking bounce back.
  • MAQ +9.34% broker upgrade.
  • ANZ +8.6% WBC +8.04% NAB +7.81% UBS upgrades outlook.
  • ABC +6.13% recovery play.
  • OCL +4.69% talked up on Ausbiz.
  • SAR -11.19% NST -10.92% GOR -9.12% bullion down AUD up. Not good for gold.
  • APT -7.86% profit taking.
  • SVY -11.02% profit taking.
  • Speculative Stock of the Day: No stand outs today.
  • Biggest Rises: VUK, MMS, MAQ, URW, ANZ, CSR and BOQ.
  • Biggest Falls: SAR, NST, GOR, EVN, APT and CSL

TODAY

  • ALS (ALQ) +1.99% Reports FY underlying NPAT up 4.8% to $188.8m vs guidance $185-195m and consensus $186.9m. Revenue up 9.8% to $1.84bn vs consensus $1.83bn. Final dividend of 6.1 cps partly franked to 70% vs year-ago 11.5cps. Total revenue in April was down 9% vs pcp. Notes green shoots of improvement in trading with restrictions easing.
  • Blackmores (BKL) – Launches a $92m institutional placement and $25m SSP priced at $72.50/share; guides FY20 underlying NPAT between $17-21m, unchanged. COVID-19 is driving a material increase in demand for Blackmores’ immunity products, although that only makes up a small portion of the portfolio.
  • Japara Healthcare (JHC) +2.70% Expects FY non-cash impairment charge between $270m-$300m due to COVID-19. The expected adjustment will have no impact on debt facilities, cash flows, capital management or normalised earnings. Reported an occupancy rate of 91.7% on 26 May. In light of the uncertain economic outlook, all other greenfield and brownfield development projects have been placed on hold.
  • Wesfarmers (WES) –0.49% There are rumours WES may look to offload its $1bn, 4.9% stake in Coles after it comes out of escrow on Friday. There is speculation funds from a sell-down could be used to take advantage of current market disruption. WES last Friday announced the shakeup of its underperforming Target brand. Expects to take a $950m hit in its FY on the back of impairments and one-offs.
  • NAB +7.81% Given the strong support shown by shareholders, NAB has decided to increase the SPP size by $750m above its original target of $500m, raising a total amount of $1

ECONOMIC NEWS

  • Construction work done for the March quarter fell 1% vs consensus -1.5%.
  • Residential work done fell 1.6%; non-residential was flat; engineering fell 1.1%.

COVD-19 NEWS

  • South Korea reported 40 new coronavirus cases in 24 hours, the biggest increase since April 8.
  • Los Angeles Mayor said all retailers in the second-largest U.S. city may open for in-store shopping as of Wednesday.
  • Mexico reported a record increase of 501 deaths, bringing the total to 8,134.
  • Coronavirus cases in the U.S. increased 1.1% as compared to the same time yesterday, to 1.67 million, the slowest daily increase since March.
  • Quarantine flights to NZ from Australia could start within weeks. No going to QLD though.

BONDS

ASIAN NEWS

  • China’s offshore yuan slumped to approach a record low after falling around 0.4%. It has lost around 1.2% in the last month.
  • Japan is readying yet another US$1 trillion stimulus package. Must be around the 50th in the last few decades.
  • A Chinese EV maker Tianneng Power International, listed in HK had its accounts called into question. Cloudy Thunder (short seller specialist) reckons stock is worthless.
  • More protests in HK. US will announce reprisals against China perhaps later this week. Or maybe not.

EUROPEAN NEWS

  • European futures signal a slightly higher open.
  • SpaceX on the verge of sending humans into space.
  • Twitter is putting its fact checker function to work on Presidents Trump’s tweets. Apparently some may contain ‘potentially misleading information’.
  • The Uk is still a mess as pressure continues on Boris after his chief adviser takes a Sunday drive to visit a castle for his wife’s birthday.
  • The new three C’s are coming in. Things to avoid: closed spaces, crowded places and close contact.
  • France unveils a stimulus package for French car makers.
  • Tesla will cut prices for some cars in US.
  • Apple will open 100 stores in the US.

And finally….

Two lawyers are leaving the office. “I can’t wait to get home,” says one of them. “As soon as I walk in the door, I’m going to rip my wife’s panties right off.”

“I know the feeling,” the other says.

“No, I’m serious,” says the first. “They’re killing me.

An attractive, well-dressed woman walks into a shop that sells very expensive Persian rugs. She looks around and spots the perfect rug and walks over to inspect it. As she bends to feel the texture of the rug she farts loudly. Very embarrassed, she looks around nervously to see if anyone has noticed. As she turns back, standing next to her is a salesman.

“Good day, ma’am, how may we help you today?”

Very uncomfortably she asks, “Sir, how much does this rug cost?”

“Ma’am,” he answers, “If you farted just touching it, you’re gonna crap when you hear the price!”

You know you’ve gone to the wrong stockbroker when you ask him to buy 10,000 shares in IBM and he asks you how to spell it.

Clarence

XXXX

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Financial Markets and Political Commentary