Market Wrap – 19th June 2018

Market Summary

The Australian market closed slightly higher as global trade tension continued to linger. Surprisingly (we are in 2018 after all!), the ‘big four’ banks drove the market higher; all (with the exception of Westpac) gaining in excess of 1% in Monday’s trading session. Further, businesses highly exposed to the US market went well on Monday as the US dollar continues to strengthen, whereas the energy and materials sector dragged on the back of weaker commodity prices. US markets closed lower on Monday as investors remained weary regarding current global trade concern. In particular, China’s State Council has imposed its own retaliatory measures against the United States; a 25% tariff to be imposed of $34 billion worth of US products, effective as of 6th July. Despite the poor lead, SPI futures are indicating potentially a positive open in the Australian market, given continued weakness in the Australian dollar as well as strengthening oil prices overnight.


US markets were down – Our market is expected to open higher.

    ASX200  was up 10.1 points or 0.17% to 6,104
    ALL ORDINARIES up 7.5 points or 0.12% to 6,213
    SPI futures contract is up 35 points to 6,154
  • U.S.A:
    DOW  -0.41% to 24,987
    S&P500 -0.21% to 2,774
    NASDAQ +0.01% to 7,747
  • ASIA: 
    HANG SENG  +0.00%
    NIKKEI -0.76%
    SHANGHAI +0.00%
    CSI 300 +0.00%
  • EUROPE: 
    CAC  -0.94%
    DAX -1.37%
    EURO STOXX 50 -1.11%
    FTSE 100 -0.03%
    WTI Crude Oil  +2.30%
    Brent Crude +3.05%
    Gold -0.03%
    Aluminium +0.70%
    Iron Ore +0.00%
    Copper -0.50%
  • BONDS: 
    US 10-year yield  moved to 2.920% from 2.920%
    AUS 10-year yield moved to 2.666% from 2.677%
    AUD  -0.23% to US 0.7423
    US Dollar Index -0.04% to 94.41


Top Performers on ASX200:                                                                                             

  • Saracen Mineral (SAR): +3.64%
  • Pact Group Holdings (PGH): +2.82%
  • Aveo Group (AOG): +2.55%

Bottom Performers on ASX200:

  • Galaxy Resources (GXY): -69%
  • Mayne Pharma Limited (MYX): -26%
  • Technology One (TNE): -2.75%


Stock News                                                                                                                      

  • Atlas Iron Limited (SRX): +22.22% – the explorer rose on Monday after being in a trading halt for the first three hours of the trading session. Just before 1:15pm, the company announced that it had received an offer from wholly-owned subsidiary of Hancock Prospecting (Gina Rinehart owned), Redman Corporation for the acquiring of its shares. The proposition is a 4.2 cent all-cash offer per Atlas share ($390 million offer). Note that company has previously (on April 9th, 2018) received a bid from Mineral Resources; attached to which the bidder has matching rights with respect to any additional bids. the board of Atlas Iron has advised shareholders to ‘take no action’ in relation to the Hancock Prospecting offer.
  • Argosy Minerals (AGY): +10.64% – the lithium explorer rose on Monday after announcing that its main gas supply had been authorised and switched on for its Stage 1 industrial scale pilot plant at the Rincon lithium Project. Note that the Rincon Lithium Project is located in the Salta Province, Argentina. The Stage 1 phase provides the company the opportunity to establish a cost-effective chemical process solution allowing for the consistent production of a battery-grade LCE product for all development stages.
  • South32 Limited (S32): -1.28% – the miner fell on Monday after announcing that it had entered into an agreement for the remaining 83% of shares in Toronto-listed Arizona Mining (TSX: ASX). Such is presented in the form of an all-cash US$1.6 billion offer (C$2.1 billion). This represents an offer price of C$6.20 per share, and a 50% premium on the closing price as of 15th The offer has been unanimously recommended by Arizona Mining’s Board to vote in favour of the offer made from South32 Limited.


Economic News                                                                                                               

  • Japan Trade Balance as of May: a trade deficit of 578.3 billion yen was recorded in May; larger than the 205.2 billion yen expected by the broader market. exports rose by 8.1% in comparison with the previous corresponding period, as compared to market consensus for a 7.5% rise. Likewise, imports rose in excess of expectations, rising 14% in May compared to one year earlier (market forecasts for a 8% rise). This was driven primarily by imported oil from Saudi Arabia, pharmaceutical products from Ireland and aircrafts from the United States. Interestingly, Japan’s trade surplus with the United States fell by 17% in May (to 340.7 billion yen), driven by a 18% reduction in the volume of steel exports.


This week we are awaiting the following economic news

  • Today RBA Meeting Minutes 
  • Today US Building Permits Data for May 
  • Wednesday Bank of Japan Monetary Policy Meeting Minutes 
  • Thursday US Existing Home Sales for May 
  • Thursday RBA Bulletin 
  • Thursday Bank of England Interest Rate and Quantitative Easing Decision 
  • Friday Euro Areas Flash Consumer Confidence Data for June 
  • Friday Japan Inflation Rate Data as of May


By Roger Haidar and Christopher Youssef


This content has been written and published by KOSEC – Kodari Securities.

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