The Trump / China trade hangover lingered over the market this morning and we’d expect that theme to continue for the remainder of the week, however it wasn’t all one way traffic with more green about than US trade would have implied. Banks were mostly higher on the day, resources were down but finished off their lows while some of the high beta growth stocks felt the pain. At its worst, the index was down more than 50pts near the open this morning before buyers stepped out of the shadows – the market closing up around +20pts from the lows.
On the economic front, our friends over the ditch cut rates, with the RBNZ taking the benchmark from 1.75% to 1.50% putting more pressure on the RBA to do the same next month, while Chinese trade data showed stronger import numbers against a backdrop of weaker exports.
Economic Data Today
Overall today, the ASX 200 lost -26 points or -0.42% to 6269. Dow Futures are trading up +8pts / +0.03%.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE;
Telcos - Big news this afternoon with the ACCC inadvertently posting their determination on the proposed deal between TPG Telecom and Vodafone Hutchison Australia, opposing the deal. The announcement was dated 9th May - Bloomberg reported the following…. Australia’s competition regulator issued a post dated May 9 on its website Wednesday saying that it would oppose the * “ACCC announced it would oppose the proposed acquisition,” read the May 9 post on the regulator’s website which provides a timeline of the proposed deal.
- Minutes later, after Bloomberg News phoned the ACCC to query the posting, it was removed from the website and replaced with an entry, also dated May 9, that reads “Proposed date for announcement of ACCC’s decision.”
- Representative for TPG Telecom said he was not aware of any decision, while a representative for Vodafone Hutchison didn’t immediately reply to a voicemail message. (Source Bloomberg).
Stocks in the sector were whacked with TPG Telecom (TPM) -13.53% to $6.06, being hit from ~$7.20 just prior to the news while Telstra (TLS) fell by -2.08% to close at $3.29 – it lost 10c in short order post the release.
TPG Telecom (TPM) Chart
Telstra (TLS) Chart
The telco sector rallied on the original news back in Augist of 2018 on the expectation that consolidation in the sector would alleviate some of the aggressive pricing pressures playing out. Before the proposed deal played out (August 2018), TPM was trading below $6 while Telstra (TLS) was around $2.85. Vocus (VOC) however has been the big mover, trading up from ~$2.40 in August to above $4.00 yesterday – before closing at $3.86 today.
Vocus communications (VOC) Chart
Insider selling – Treasury Wine Estates (TWE) hit -6.62% today after reports that CEO Michael Clarke sold 400k shares between the 1-3rd May – the news out pre-mkt today. Interestingly enough, no lame excuse provided by the CEO for the sale (which is refreshing), although selling 400k of a 942,994 total holding (+ performance rights) is a big line valued at just under $7m. This also came on the heels of a US hedge fund slamming TWE at a conference saying they inflate sales and key win brands are actually in decline - a double whack for TWE which is a much loved / highly rated stock.
Treasury Wines (TWE) Chart
….also on the insider sell list was HUB24 (HUB) with the Chairman Bruce Higgins flicking 20% of his shares on Monday at $15.15 - about $3m worth. A very good price given the stock closed today at $13.59 down -6.66% on the session.
HUB24 (HUB) Chart
CSR -1.47% - This morning they reported FY19 results booking a 14% decline in profit from continuing operations to $181.7m and a final dividend of 13cps franked at 50%, taking the full year dividend to 26cps. The market is clearly expecting very little from the company and while todays result was weak, it was within 2% of downbeat market expectations. At the top line, revenue was up 4% across the group with growth in all businesses. The talked about weakness in housing persisting for the next 12 months, although the decline to be at a slower pace. On 10x and a yield ~7% yield this is starting to look interesting.
….and finally, AP Eagers (APE) has been given the green light to acquire AHG with the AHG board backing the takeover. We covered the sector in a recent report (here)
· Credit Corp Downgraded to Hold at Canaccord; PT A$22.58
· G8 Education Upgraded to Buy at Morningstar
· Perpetual Upgraded to Hold at Morningstar
· NRW Holdings Downgraded to Hold at Wilsons; Price Target A$2.50
· Ainsworth Game Downgraded to Sell at Wilsons; PT A$0.67
· Aristocrat Downgraded to Hold at Wilsons; PT A$27.51
· Harvey Norman Cut to Neutral at Macquarie; Price Target A$4.20
· JB Hi-Fi Downgraded to Neutral at Macquarie; PT A$25.83
Never miss an update
Stay up to date with the latest news from Market Matters by hitting the 'follow' button below and you'll be notified every time I post a wire.
Market Matters publishes daily market reports and sends SMS alerts when we transact on our portfolio. To get our latest market views and hear when we take new positions, trial Market Matters for 14 days at no cost by clicking here.