Market Wrap – 2nd July 2018

Market Summary

The last day of the month, quarter and financial year witnessed an underwhelming trading day with the ASX200 shedding 20 points or 0.3%, unable to make 4 straight weeks of gains. The ASX200 added about 8.5% over the financial year matching the growth experienced in the prior year with the best performer being the energy sector up almost 40% largely on the back of the increase of oil prices rising almost 60% over the period. A2M was the best performer on the ASX 100 tripling in value followed by WHC which managed to increase by 108%. US markets edged lower towards the close however managed to finish the day in the green. The 45 point gain in the S&P500 was quite unusual relative to other markets as the MSCI world excluding US Index was stuck near its low point. Low risk countries such as Norway have benefited from the trade-war fears and other political issues as they are political neutral and remain uninvolved in the global trade wars.

US markets were up – Our market is expected to open higher 

  • AUSTRALIA:
    ASX200  was down 20.8 points or -0.34% to 6,195
    ALL ORDINARIES down 16.1 points or -0.26% to 6,290
    SPI futures contract is up 23 points to 6,171
  • U.S.A:
    DOW  +0.23% to 24,271
    S&P500 +0.08% to 2,718
    NASDAQ +0.09% to 7,510
  • ASIA: 
    HANG SENG  +1.58%
    NIKKEI +0.15%
    SHANGHAI +2.13%
    CSI 300 +2.49%
  • EUROPE: 
    CAC  +0.90%
    DAX +1.05%
    EURO STOXX 50 +0.89%
    FTSE 100 +0.28%
  • COMMODITIES: 
    WTI Crude Oil  +0.27%
    Brent Crude +1.09%
    Gold +0.42%
    Aluminium -1.03%
    Iron Ore +0.89%
    Copper +0.02%
  • BONDS: 
    US 10-year yield  moved to 2.860% from 2.840%
    AUS 10-year yield moved to 2.637% from 2.632%
  • CURRENCIES: 
    AUD  +0.76% to US 0.7403
    US Dollar Index -0.82% to 94.23

Top Performers on ASX200:

               

  • Afterpay Touch Group Limited (APT): +8.85%
  • Mayne Pharma Group Limited (MYX): +4.19%
  • Perpetual Limited (PPT): +3.74%

Bottom Performers on ASX200:

  • Credit Corp Group Limited (CCP): -3.63%
  • Seven West Media Limited (SWM): -3.45%
  • CSR Limited (CSR): -3.37%

 

 

Stock News                                                                                                                      

  • Australian Pharmaceutical Industries Limited (API): -3.37% – CSR shed 3.37% on Friday after rallying on Wednesday on the back of the release of the companies AGM noting that normalised NPAT will be within the range of analyst forecasts of $176m to $204m.
  • Wattle Health Australia Limited (WHA): +31.46% – WHA announced their deal to supply infant formula worth $6.5m within the coming 6-12 months in China to a State Owned Enterprises (STE) which will see the volumes exported double within the coming year.
  • Virtus Health Ltd (VRT): +3.98% –The largest fertility clinic operator in Australia is continuing to expand globally announcing the purchase of a Danish fertility clinic on Friday for the sum of $43m.

 

Economic News                                                                                                               

  • AU HIA New Home Sales: New homes sales fell 4.4 per cent in May to be down 12.8 per cent from the peak in December, as buyers struggled to obtain financing from the major banks and migration slowed, reports AFR;
  • AU Private Sector Credit: Loan growth to housing investors was flat in May, leaving the annual growth rate at 2% — the lowest level on record. Multiple analysts have highlighted tighter lending standards as a key factor which will weigh on house prices. Despite the slowdown in investor lending, JP Morgan said credit growth still exceeded deposit growth for the fifth straight month, reports Business Insider;
  • EU Inflation Rate: The inflation rate in the Euro Area is expected to edge up to 2 percent year-on-year in June 2018 from the previous month’s 1.9 percent, and in line with market expectations. It is the highest rate since February 2017, mainly boosted by higher prices of energy and food, reports Trading Economics;
  • US Inflation: Inflation in the U.S. is back after more than half a decade of falling short. A price measure watched closely by the Federal Reserve hit the central bank’s target after running below it every month for six years, as a strong labor market nudges wages higher and robust economic growth squeezes slack out of the economy. Though inflation hits consumers and businesses with more expensive purchases and loans, the Fed believes a little bit of inflation at a consistent and predictable rate is needed to keep the economy growing steadily and at a healthy pace. The Commerce Department’s price index for personal-consumption expenditures, excluding food and energy costs, rose 2% in May from a year earlier after running below that mark every month since April 2012, reports WSJ;
  • US Michigan Consumer Sentiment: Consumer sentiment for the US stood at 98.2 in June 2018, compared with a preliminary reading of 99.3 and slightly above May’s 98. Both consumer expectations and current economic conditions came in weaker than initially thought, reports Trading Economics;
  • US Baker Hughes Oil Rig Count: Crude Oil Rigs in the United States decreased to 858 in June 29 from 862 in the previous week, reports Trading Economics;
  • CN PMI: Growth in China’s manufacturing sector slowed in June after a better-than-expected performance in May, official data showed, as escalating trade tensions with the United States fuel concerns about a slowdown in the world’s second-biggest economy. China’s economy has already felt the pinch from a multi-year crackdown on riskier lending that has driven up corporate borrowing costs, promoting the central bank to pump out more cash by cutting reserve requirements for lenders.The findings are in line with recent data including credit growth, investment and retail sales pointing to slowing growth in China’s economy, as policymakers navigate debt risks and a heated trade row with the United States.

 

 

This week we are awaiting the following economic news

 

  • Wednesday US Durable Goods Orders for May
  • Tuesday AU AIG Manufacturing Index
  • Tuesday AU ANZ Job Advertisements
  • Tuesday US ISM Manufacturing PMI
  • Wednesday AU RBA Interest Rate decision
  • Wednesday AU TD-MI Inflation
  • Wednesday AU Building Permits
  • Thursday AU AIG Services Index
  • Thursday AU Balance of Trade
  • Thursday AU Retail Sales
  • Thursday CN Caixin Composite PMI
  • Thursday EU Markit Composite PMI
  • Friday US Fed Interest Rate Decision
  • Friday US Jobless Claims
  • Friday EIA Crude Oil Stocks Change
  • Friday EIA Gasoline Stocks Change
  • Friday US ISM Non-Manufacturing
  • Friday US ADP Employment Change
  • Friday US IBD/TIPP Economic Optmism Index

 

Roger Haidar | Research Analyst & Dealing Assistant

Christopher Youssef | Dealing Assistant

Laurence Parker-Brown | Senior Vice President
Level 9, Chifley Tower, 2 Chifley Square, Sydney, NSW 2000
T: +61 2 9955 3151 E: dealingdesk201@kosec.com.au
W: www.kosec.com.au