ASX 200 rallies 19 points to close at 5422 after a strong rally took the market off its morning lows. Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT

 

The ASX 200 rallies 19 points to close at 5422 after a strong rally took the market off its morning lows. UK GDP gave it a final kick higher. Dow futures turned positive up points. CBA was the big news this morning and the results looked ok. No dividend of course as a quarterly update but the sale of CFS to the Barbarians was a good sign. The Big Bank Basket rose to $107.36. The big swing factor in the rally.  Miners were also stronger with BHP up 0.9% and FMG up 3.9% on higher iron ore prices, NCM rose 1.4% on a slightly better gold price, AQG also did well as its merger with a Canadian gold miner was on focus, rising 5.1%. Tech stocks were slightly positive with APT up 4.3% and XRO up 0.5% ahead of the numbers tomorrow. The All Tech Index was up 0.4%. TLS had a good day up 1.3% although REITs remain in the doghouse on property valuation fears not helped by CBA saying that property could fall 30% under its worst-case scenario in two years. In corporate news, MSB returned to trade having raised US$90m at 320c, REX rose 32.2% after confirmation of funding approaches to substantially beef up routes and capacity. GMA got downgraded by Fitch and CGR dropped 41.6% after a business update. In economic news, the government was swamped with money for its latest bond auction and consumer confidence lifted by 16.4%. The 10-year yield was steady at 0.94% and the AUD barely nudged the speedo. Asian markets off lows with Japan down 0.3% and China unchanged.

  • ASX 200 up 19 to 5422.
  • High 5422 Low 5302. Solid rally off lows.
  • Big Bank Basket up to $107.36.
  • CBA cheers. Miners do well as Iron ore price rises.
  • All Tech up 0.5%.
  • Dow futures up 30.
  • 10-year bond yields steady at 0.94%
  • AUD slips to 64.76c.
  • Aussie gold rallies to $2632
  • Bitcoin rallies to US$8907.
  • Asian markets mixed with Japan down 0.3% and China slightly higher by 0.1%

STOCKS                                               

  • AVH +8.70% buyers return as company set for US.
  • AQG +5.08% merger with SSR of Canada.
  • BUB +4.13% looking good.
  • AX1 -7.20% Blundy fall out?
  • HVN -5.70% retail woes.
  • EBO -2.30% capital raising weighs.
  • MSB -1.45% back from US$90m placement at 320c.
  • CGR -41.58% Business update.
  • LTR +4.76% strong multi-element anomalism returns.
  • NTO +13.48% GS Investor presentation.
  • CBA +1.91% well-presented results.
  • MQG -0.58% capital note bookbuild.
  • Speculative stock of the day: Regional Express (REX) +32.22% follows a response to media speculation, REX has been approached by various parties looking to fund REX with domestic operations. The number of $200m has been mentioned. Given the interest, REX is evaluating the opportunity and any operations would commence next March.
  • Biggest Rises: AVH, MYX, RSG, DTL, AQG, APT, and BUB.
  • Biggest Falls: AX1, AWC, ORE, HVN, GMA, CRN, and WOR.

TODAY

  • CBA (CBA) +1.91% Q3 unaudited cash net profit from continuing operations of $1.3bn. Additional loan loss provisions of $1.5bn for the potential impact of COVID-19. Total provisions now stand at $6.4bn. CET1 capital ratio of 10.7% after payment of 1H20 dividend and the COVID-19 provision. Consumer arrears were seasonally higher in the quarter, but lower year on year. The group’s net interest margin was lower than 1H20 due to reduced earnings on capital and deposits from low-interest rates, partly offset by asset repricing, strong growth in at-call deposits, and lower wholesale funding costs. To sell a 55% stake in Colonial First State to KKR for ~$1.7bn.
  • Rio Tinto (RIO) +1.36% CEO Jean-Sébastien Jacques at a presentation at Bank of America, has reportedly said the company is keeping a watchful eye on acquisition opportunities. Notes the market is currently finding it difficult to value companies and the COVID-19 recovery pathway is not clear.
  • Stockland (SGP) -1.1% Management notes the outlook remains uncertain and funds from operations and distribution guidance remain withdrawn until further notice.
  • Sigma Healthcare (SIG) -0.85% remains on track to realise the full $100m of targeted benefits from Project Pivot. Chemist Warehouse supply re-commencement 80% complete, expects to be operating at full run-rate under this agreement by June 30. Proposed sale and leaseback of distribution centres has received 13 expressions of interest; transaction expected to be finalised in 3Q20. Volume (ex-Chemist Warehouse) +70% in March. Pharmacy brands appear on track to remain above-market growth for the current year. Hospital pharmacy services show signs of maintaining FY20 growth (+26%) in the current year. MIA seeing a significant uplift in volumes and revenue.
  • BHP Group (BHP) +0.94% CEO Mike Henry has said that the capital framework which the company introduced in 2016 had been a game-changer that has helped drive high-quality returns and growth, and as a result, would not be going anywhere despite the impact of the coronavirus pandemic. Henry added that BHP could act on the right M&A opportunity but noted that the focus is on organic growth
  • Australian Finance Group (AFG) – To raise $45m via a 1 for 5.5 entitlement offer and $15m via institutional placement at 115c. Operating results to April have been strong, however, COVID-19 is expected to create some economic uncertainty moving forward and to have an adverse impact on lodgements and settlements into 1H FY21.
  • SIV Capital (SIV) +11.97% declares return of capital of 30c/share, funds were generated by the sale of the hospitality group. Record date June 11.
  • Eclipx Group (ECX) +4.82% H1 cash NPAT up 12.8% to $15.5m vs year-ago. Revenue down 4.6% to $336.4m vs year-ago. Right2Drive remains the last of the six non-core businesses in the group. ECX intends to exit Right2Drive consistent with the Simplification Plan during 2H20. Noted it was unable to provide full-year guidance due to the uncertain trading conditions and said no dividend would be paid until leverage is reduced.
  • Bapcor (BAP) +1.57% CFO Greg Fox to retire at the end of the current financial year. Noel Meehan has been appointed CFO and Company Secretary effective July 1.

ECONOMIC NEWS

  • Wage Price Index for the March quarter: +0.5%/qtr to be up 2.1% over the year – both in line with consensus.
  • Westpac-Melbourne Institute Consumer Confidence Index for May lifted 16.4% to 88.1pts, up from the extremely weak 75.6 read in April. The index is still relatively weak by historical standards. Click here to view the full release.

CV19 NEWS

  • Things not working out well in Brazil, it reported 881 deaths on Tuesday, pushing the total to 12,400. Last week, the country surpassed the U.K.’s daily death toll, trailing only the U.S. in terms of recorded daily deaths.

BONDS

  • The government’s debt agency, (the AOFM) is set to print a new record $19bn bond issue after attracting $53.5bn of bids for its new December 2030 syndicated offering. A new record raising. Positive sign with the demand that strong. The pricing of the bond was set at 8 basis points over the implied yield of the 10-year futures contract, or an implied yield of just over 1.02%.

ASIAN NEWS

  • The Philippine economy could face its deepest contraction for years, with the government now projecting it to shrink by 2% to 3.4% this year.
  • Indian PM Modi has pledged a US$265bn stimulus package. The headline number of the package at 10% of GDP is a good one. More details to come in the next few days.

EUROPEAN AND US NEWS

  • European futures set to open around 1% lower.
  • UK GDP fell 2% in the March quarter. The forecast was around 2.5%.
  • Stan Druckenmiller has said the risk/reward on stocks is the worst he has seen in years. He calls the prospect of a V-Shaped recovery a ‘fantasy’. He said he wouldn’t be surprised if the Trump administration’s response to the coronavirus outbreak becomes the “poster child for the worst public policy decisions ever made from a cost-benefit analysis.” Who is Stan? A fund manager who has returned around 30% a year over 30 years. Worked with Soros.
  • Trump has ordered a Federal pension fund not to invest in Chinese stocks.
  • In a US poll conducted on Monday and Tuesday Trump trails Biden by 8%. 41% of US adults approved of his performance as POTUS. 56% disapprove, up 5%. 46% of registered voters said they would back Biden in the November 3 presidential election, while 38% would vote for Trump.

And finally….

One day in a nursing home, old Mr. Smith goes up to a nurse and says, “My penis died.”

Deciding to humour him, the nurse says “Oh, poor baby. I’m sorry to hear that.”

Two days later the nurse is making her rounds and sees Mr. Smith wandering the halls with his frank and beans hanging out.

“Mr. Smith!” she cries. “I thought you said your penis had died!”

“It did. Today’s the viewing.”

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