ASX..opened with a bang but failed to follow through and closed with a slight whimper. Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT

 

The ASX closed up 99 points to 5559 (+1.8%). It opened with a bang but failed to follow through and closed with a slight whimper. Dow Futures slightly easier down points. The commodity stocks jumped out of the blocks this morning following metal price rises and iron ore to the fore. BHP rose 5.9% and FMG put on another 4.4% whilst S32 gained 5.8% and MIN up 5.2%. Gold miners took a well-earned rest today with NCM down 0.8% and NST down 3.3% but oil stocks found the energy to push higher as the WTI June contract expires tonight. WPL up 4.1% and STO up 4.7%. Banks too finally joined in the party with the Big Bank Basket rising to $105.81 and CBA up 1%. Defensive performers were stuck in the mire with CSL down 1.1% and WOW and A2M falling 0.7% and 3.5% respectively. REITs gained led by GMG up 2.3% and tech stocks inevitably caught the bulrush, XRO up 2.9%, and CPU up 3.2%. The All Tech Index rose 1.4%. In corporate news, JHX cut the dividend but beat expectations and a slightly optimistic outlook helped propel it higher by 11.2%. BBN released a business update and rose 15.4%. In economic news, we had RBA minutes released, consumer confidence gaining 2.2%, and some ABS job numbers. The 10-year yield is higher at 0.96% and the AUD holding at the higher levels. In Asian marlets Japan rose 1.5% and China up 0.82%.

  • ASX 200 up 99 to 5559.
  • High 5607 Low 5501. Average volume.
  • Miners star as oil explodes. Banks play some catch up.
  • All Tech up 1.4%
  • Dow futures down 35.
  • 10-year bond yields firm to 0.96%
  • AUD higher at 65.30c.
  • Aussie gold slips to $2659.
  • Bitcoin falls to US$9558
  • In Asian markets, Japan rose 1.5% and China up 0.82%

STOCKS                                               

  • JHX +11.20% cuts dividend results ok.
  • URW +11.44% good bounce as US and Europe opens for business.
  • OML +8.57% ads are back.
  • WOR +9.63% oil price rise.
  • WEB +8.28% FLT +2.82% travel stocks in demand.
  • AEF +6.75% just keeps ongoing.
  • MSB -8.63% change in substantial holding.
  • ELO -5.26% placement settlement.
  • KGN -4.57% ceasing to be a substantial holder.
  • AQG -2.17% SLR -3.59% PRU -3.38% as bullion falls.
  • WBC +2.15% loses tech boss.
  • OFX -5.88% transaction numbers up 17% in March.
  • COH -3.00% denied appeal.
  • BYE -6.45% completes raising.
  • ISX – brings in independent expert.
  • Speculative stock of the day: Element 25 (E25) +100.00% Butherbird maiden ore reserve statement showing 260mt of manganese ore. 8 Known manganese resources in the Southern Pilbara. The project is 100% owned by E25.
  • Biggest Rises:ZIM, URW, JHX, WOR, NEA, OML, WEB and MMS..
  • Biggest Falls: MSB, KKC, ELO, RED, KGN, JIN and RRL.

TODAY

  • Adelaide Brighton (ABC) +7.50% March and April trading largely in line with expectations. Victorian demand for all products continues to hold firm and has exceeded forecasts. New South Wales market remains subdued. Cost pressures remain, although have been largely offset by cost-out programs. Looking for shareholder approval to change the company’s name from Adelaide Brighton Limited to ADBRI Limited.
  • James Hardie Industries (JHX) +11.20% FY adjusted NOPAT US$352.8m vs consensus US$353.5m. Revenue US$2.61bn vs consensus US$2.59bn. EBIT US$486.8m ex-items vs consensus US$478.0m. Suspended dividends on May 5. Unable to provide meaningful FY21 guidance, however, for the first quarter of FY21, JHX expects its North America segment adjusted EBIT margin to be between 22%-27%. Liquidity anticipated to be greater than US$600m, leverage ratio is expected to remain below 2.0x at the end of Q1.
  • OFX Group (OFX) -5.88% FY underlying NPAT $21.4m vs consensus $18.6m. Turnover $24.7bn vs year-ago $23.7bn. Adjusted EBITDA $38.2m vs consensus $34.8m. A final dividend of 2.35cps declared, unfranked. Management comments, “with the near-term revenue outlook difficult to predict, we will not be committing to positive operating leverage in FY21.”
  • Tabcorp (TAH) +2.52% Board has decided to not pay a final dividend for FY20. Has updated its debt agreements to provide additional flexibility to accommodate COVID-19 impacts. Had $820m of available liquidity on May 15.
  • Hansen Technologies (HSN) +3.79% Expects operating revenues between $298-300m vs previously guided $300-305m. EBITDA (ex-items) forecast in the range of $75-76m vs previously guided $72-77m. Does not envisage a ‘decisive’ downturn in current operations with customers providing essential services to the telecommunications and utility sectors. Notes it has also accelerated several cost-cutting initiatives in response to COVID-19.
  • Baby Bunting (BBN) +15.36% Second half sales up 13.2% vs year ago. Comparable store sales up 8.1% vs year ago. Online sales now 17.3% of total sales, representing growth of around 66% on pcp. To recommence capex that was initially suspended due to COVID-19. Notes a strong balance sheet with ~$35m in undrawn facilities. Expects to recognise a non-cash impairment to the carrying value of its investment in digital commerce technologies of $2-3m.
  • Technology One (TNE) –0.92% First half NPAT up 6% to $19.1 vs consensus $20.6. Pretax income $25.9m vs consensus $28.2m. Revenue $138.2m vs consensus $139.3m. EBITDA $34.8m vs consensus $33.2m. SaaS annual recurring revenue (ARR) up 33% to $110m. Interim dividend of 3.47cps vs year-ago 3.15cps. Expects full year net profit to climb 8-12%.
  • Cochlear (COH) -3.00% to pay ~US$280m as the result of a US patent infringement case. Cochlear has committed bank loan facilities available to fund the Judgment.

ECONOMIC NEWS

  • Click here to view the RBA meeting minutes from May 5.
  • Members agreed that the Bank’s policy package was working broadly as expected.
  • Members discussed the very significant economic contraction that was taking place.
  • Unemployment rate expected to peak at around 10% in the June quarter.
  • Labour market expected to have ongoing spare capacity, and inflation was expected to be below 2% over the following few years.

ANZ Roy Morgan Weekly Consumer Confidence lifted for the seventh straight week, up 2.2% to 92.3 points. Confidence firmed despite news almost 600,000 Australians lost employment in April. Reopening hopes and stimulus efforts are likely helping sentiment.

  • Over the seven weeks from mid-March to early May, total payroll jobs fell by 7.3%
  • The largest net job losses over the seven weeks of the COVID-19 period, in percentage terms, were in Victoria and New South Wales, where the falls in payroll jobs were around 8.4% and 7.7%.

CV19 NEWS

  • Hong Kong’s leader signaled that the city would extend social-distancing measures.
  • Carnival Corp debt cut to Junk by Moodys.
  • Brazil passes UK for third most CV cases worldwide.

BONDS

ASIAN NEWS

  • Sony and Microsoft strike deal on a new AI chip which allows it’s built-in memory and processor to analyse video using AI.
  • China is considering extened loan relief beyond the June 30th deadline for SMEs. The guidance from Beijing is to offer flexibility on principal and interest payments as the banks would see a surge in bad loans in the second half without such measures according to authorities.
  • Yuan weaker again for the fifth straight day. Trading at 7.112 against the USD.

EUROPEAN AND US NEWS

  • European markets expected to open positively.
  • Trump threatens WHO with a permanent funding cut.
  • POTUS says he is taking Hydroxychloroquine.
  • Moderna issues US1.34bn in new stock to hungry investors after vaccine trial.
  • Nasdaq is tightening the rules surrounding listing a company on the exchange.
  • German April new car regos down 61%
  • Ford sales down 75.9% in April.

And finally….

Ordering Pizza in 2020

CALLER:

Is this Gordon’s Pizza?

GOOGLE:

No sir, it’s Google Pizza.

CALLER:

I must have dialled a wrong number. Sorry.

GOOGLE:

No sir, Google bought Gordon’s Pizza last month.

CALLER:

OK I would like to order a pizza.

GOOGLE:

Do you want your usual, sir?

CALLER:

My usual? You know me?

GOOGLE:

According to our caller ID data sheet, the last 12 times you called you ordered an extra-large pizza with three cheeses, sausage, pepperoni, mushrooms and meatballs on a thick crust.

CALLER:

OK  That’s what I want …

GOOGLE:

May I suggest that this time you order a pizza with ricotta, arugula, sun-dried tomatoes and olives on a whole wheat gluten-free thin crust?

CALLER:

What?  I detest vegetable!

GOOGLE:

Your cholesterol is not good, sir.

CALLER:

How the hell do you know!

GOOGLE:

Well, we cross-referenced your home phone number with your medical records. We have the result of your blood tests for the last 7 years.

CALLER:

Okay, but I do not want your rotten vegetable pizza! I already take medication for my cholesterol.

GOOGLE:

Excuse me sir, but you have not taken your medication regularly  According to our database, you purchased only a box of 30 cholesterol tablets once, at Drug RX Network, 4 months ago.

CALLER:

I bought more from another drugstore.

GOOGLE:

That doesn’t show on your credit card statement.

CALLER:

I paid in cash.

GOOGLE:
But you did not withdraw enough cash according to your bank statement.

CALLER:
I have other sources of cash.

GOOGLE:

That doesn’t show on your last tax return unless you bought them using an undeclared income source, which is against the law.

CALLER:

WHAT THE HELL!

GOOGLE:

I’m sorry, sir, we use such information only with the sole intention of helping you.

CALLER:
Enough already! I’m sick to death of Google, Facebook, Twitter, WhatsApp and all the others. I’m going to an island without internet, cable TV, where there is no cell phone service and no one to watch me or spy on me.

GOOGLE:

I understand sir, but you need to renew your passport first. It expired 6 weeks ago!

Clarence

XXX

mt_tryforfree
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