Good morning traders. Thanks @ttward, @Ravgnome & the aftermarket loungers. US markets closed softer this morning, the Nasdaq the worst performer of the main trio, down 48.15 points, or 0.63%
So much happening on the British front today. The PM Theresa May has indicated she will resign by May 22 if Parliament back's a deal to leave the EU, which is a weird way may just provide some people incentive to back the deal. Also, here’s a “simple” picture to explain where we are at today regarding Brexit, and what has been going on.
ASX Market Report
Australian shares have rebounded from a broad slump to close slightly higher for a second day in a row.
After dropping below 6,100-mark for the first time in over a month in early trade, the benchmark S&P/ASX200 bounced back in the afternoon, closing up 5.4 points, or 0.09 per cent, to 6,136 points on Wednesday.
The broader All Ordinaries closed up 4.5 points, or 0.07 per cent, at 6,217.6. "It's a bit of a choppy day, there's a little bit of uncertainty in the market," CommSec market analyst James Tao said.
Investors were worried about the "yield inversion" in the United States bond market, Mr Tao said, referring to the unusual situation that has developed in which bonds with longer maturities have lower yields than bonds with shorter ones. Some have taken that as a sign of a recession is imminent, although other economists say it's not quite that simple.
The Australian bond market has featured no such inversion but yields continued to plummet on Wednesday after the Reserve Bank of New Zealand switched to a dovish stance and said a rate cut was now more likely than a rate hike. Australian three-, five- and 10-year bonds all set fresh all-time lows, and the Aussie dollar dropped 0.4 per cent as well.
On the ASX, tech stocks led gainers, up collectively 0.89 per cent, with Afterpay Touch up 1.89 per cent to $19.97, Wisetech Global up 1.38 per cent to $22.84 and Xero up 1.86 per cent to $48.73.
Utilities led decliners, down 1.34 per cent, with APA Group down 1.95 per cent to $10.08 and AGL Energy down 1.41 per cent to $21.61.
Lynas Corp and Wesfarmers both rose after the rare earth mineral miner rebuffed the Perth conglomerate's $1.5 billion, $2.25-a-share unsolicited takeover offer.
Lynas shares closed up 1.9 per cent to $2.14, while Wesfarmers stock rose 0.71 per cent to $34.04. There was no indication what Wesfarmers' next move might be. A spokeswoman said the company would be responding "in due course".
Cromwell Property Group was down 0.45 per cent to $1.105 after it confirmed it had made an offer to London-listed property trust RDI REIT, a London-listed property trust with a market capitalisation of $686 million.
Among the big four banks, Westpac was down marginally - 0.08 per cent, or two cents, to $25.95 - while ANZ, NAB and Commonwealth were up between 0.18 per cent and 0.48 per cent.
Pharma giant CSL dropped 0.98 per cent to $192.33, while mining giant BHP gained 0.93 per cent to $37.90.
Rio Tinto rose 1.52 per cent to $95.23, while Fortescue Metals gained 2.42 per cent to $6.78.
The Aussie dollar was buying 71.02 US cents, from 71.22 US cents on Tuesday.
Mr Tao said investors would be keeping an eye on the US-China trade talks on Thursday, which are set to resume in Beijing.
ON THE ASX:
* The benchmark S&P/ASX200 index was up 5.4 points, or 0.09 per cent, to 6,136 points at 1630 AEDT on Wednesday.
* The All Ordinaries was up 4.5 points, or 0.07 per cent, to 6,2137.6.
* At 1630 AEDT, the SPI200 futures index was down two points, or 0.03 per cent, to 6,113.
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 71.02 US cents, from 71.22 US on Monday
* 78.55 Japanese yen, from 78.42
* 63.1 euro cents, from 62.98
* 53.89 British pence, from 54.02
* 104.47 NZ cents, from 103.16
In Asia
Asian shares slipped on Wednesday, giving up small gains made the previous day as investors tried to come to terms with a sharp shift in U.S. bond markets and the implications for the world’s top economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent while Japan’s Nikkei average lost 0.6 percent.
Chinese stocks bucked the trend, with the benchmark Shanghai Composite rebounding 0.6 percent, the blue-chip CSI 300 climbing 1.1 percent, and Hong Kong’s Hang Seng advancing 0.5 percent.
The New Zealand dollar took a tumble after the country’s central bank blindsided markets by saying the next move in interest rates would likely be down, abandoning its long-standing neutral stance. While the Reserve Bank of New Zealand (RBNZ) kept the official cash rate (OCR) at 1.75 percent as expected, it surprised many by flatly stating “the more likely direction of our next OCR move is down.”
The kiwi dollar dived 1.6 percent to a two-week low at $0.6797, while bond and bill futures rallied sharply, taking yields to fresh all-time lows.
The Australian dollar was dragged down in its wake, falling 0.4 percent to $0.7102, though the Aussie did make hefty gains on its kiwi counterpart.
In Europe
European shares fell on Wednesday, handing back early gains as bond yields continued to flag recessionary fears and investors awaited indicative votes on a series of alternate Brexit options in parliament.
German 10-year yields, already below zero percent since last Friday, fell further in negative territory, while the U.S. bond yield curve remained inverted - a key signal of recession - dampened appetite for risk.
The pan-region STOXX 600 index fell 0.4 percent as indexes slipped across the region, led by bourses in Paris and London.
The moves were reminiscent of late last week, when investors ditched equities to run to the safety of bonds after weak European and U.S. data on Friday stoked global growth fears.
Investors remain anxious with a part of the U.S. yield curve inverted, Marc Chandler, chief market strategist at Bannockburn Global Forex, wrote in a note.
Acknowledging the growth worries, ECB President Mario Draghi said on Wednesday the European Central Bank could further delay a planned increase in interest rates if it needs to, and may look at measures to mitigate the effects of negative interest rates.
Draghi’s comments had propped up banking stocks in the region but a more than 7 percent fall in Swedbank limited gains. The Swedish Economic Crime Authority said it was searching the bank’s head office as part of a probe into whether insider trading regulations were breached.
Defensives such as utilities, real estate and healthcare stocks slipped the most on the STOXX.
London’s FTSE 100 fell 0.5 percent ahead of a closely watched vote by British lawmakers at 1900 GMT on a range of options on how to overcome the political impasse over Brexit.
“The Brexit vote taking place today is not legally binding so its just a political measure of fleshing out or mapping out of what British lawmakers or MPs would like to see in their version of the deal,” said David Madden, an analyst at CMC Markets.
British Prime Minister Theresa May is expected to indicate a date for quitting as the price for getting her twice-defeated Brexit deal ratified.
As the United Kingdom’s three-year Brexit crisis spins towards its finale, it is still uncertain how, when or even if it will leave the European Union.
In the United States
The S&P 500 and Nasdaq fell on Wednesday as U.S. bond yields fell again and a prolonged inversion in the yield curve fanned growth worries.
Benchmark 10-year Treasury yields slid on Wednesday, but came off 15-month lows reached overnight as investors remained focused on central bank dovishness globally.
The yield curve inverted for the first time since 2007 on Friday and if the inversion continues to persist it could indicate that a recession is likely in one to two years.
Interest-rate sensitive financial stocks were down, with the S&P 500 financial index falling 0.3 percent.
“The inverted yield curve, that’s what worries investors and it’s why you’re getting selling here. It’s definitely a slowing economy indicator, and whether it goes into a recession or not, nobody really knows. But it will put a pause in the market,” said Alan Lancz, president, Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio.
Investors have been fretting about slowing economic growth since last week after the Federal Reserve did a stunning about-turn on rate hikes and dour factory data from the United States, Europe and Japan.
The Dow Jones Industrial Average rose 1.82 points, or 0.01 percent, to 25,659.55, the S&P 500 lost 8.36 points, or 0.30 percent, to 2,810.1 and the Nasdaq Composite dropped 37.73 points, or 0.49 percent, to 7,653.80.
Not all data was bleak. A Commerce Department report showed that U.S. trade deficit dropped more than expected in January, likely as Chinese purchases of soybeans spurred a rebound in exports after three straight monthly declines.
Australian News
Investors can learn plenty from the Future Fund’s financial moves. Australia’s Future Fund, founded by former Treasurer Peter Costello in 2006, is still going strong and its financial decisions can help everyday Australians become better investors.
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ANZ and NAB bosses say banks are still 'ready to lend' amid responsible lending clampdown. The bosses of ANZ and NAB have told a parliamentary hearing their banks are willing to lend, amid a greater focus on responsible lending in the wake of the banking royal commission.
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ANZ chief executive Shayne Elliott says structural issues and internal processes should cop the brunt of the blame for misconduct across the banking sector, and not “a few people with bad intentions”. Mr Elliott told the House of Representatives’ economics committee on Wednesday that blaming banks well-publicised failings on greed risked sparing institutions from facing up to necessary systemic and cultural change.
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National Australia Bank's interim chief executive Philip Chronican says he was surprised at the depth of wrongdoing uncovered both at the company and across the financial sector, but says his bank now has the capacity to win back customers' trust. Mr Chronican told the House of Representatives' economics committee on Wednesday the royal commission had identified a "significant gap" between what NAB told it and what the bank was doing, for which former boss Andrew Thorburn was ultimately forced to take responsibility.
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Banks are likely to lose the power to set executive pay given their failure to address endemic problems, according to the financial sector's key regulator. Australian Prudential Regulation Authority (APRA) chair Wayne Byres said attempts to change the culture around incentives and remuneration had not been successful and regulatory intervention seemed inevitable.
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Investment in renewable energy is set to slump heavily in the early 2020s as experts warn a policy vacuum has sucked confidence from companies in the sector. BIS Oxford Economics predicts Australia will hit a renewable energy investment peak this year but this high will be shortlived.
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The federal government is aiming to capitalise on the growing demand for valuable minerals used in renewable energy, aerospace and other industries with a strategy to spur investment in minerals such as cobalt and lithium. Trade Minister Simon Birmingham said there were "huge economic opportunities" for Australia in the field, with critical minerals driving significant innovation in defence, space and other industries.
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The energy market operator has issued fresh warnings of potential gas shortages on the east coast unless new pipelines and import terminals are built. The Australian Energy Market Operator (AEMO) says Victoria and NSW could face a gas shortfall of 20 petajoules unless more sources of gas are found.
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Global News
US trade chief tries to explain China talks. Blurred line between ‘forced’ and legitimate tech transfers underscores murky waters of ongoing negotiations
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The U.S. current account deficit increased more than expected in the fourth quarteramid declining exports, pushing the overall shortfall in 2018 to its highest level in 10 years, and U.S. companies repatriated a record amount of foreign earnings last year following the Republican tax overhaul.
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The Dow's newest member: Dow Inc.. Dow Inc., the century-old maker of plastics and packaging, will join the 30-stock index on April 2 when US stock markets open.
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Boeing can regain public trust, but it's running out of time.
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Speed limiting technology looks set to become mandatory for all vehicles sold in Europe from 2022, after new rules were provisionally agreed by the EU. The Department for Transport said the system would also apply in the UK, despite Brexit.
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Volkswagen and Amazon are teaming up to develop cloud computing that should make the German carmaker's vast factory network more productive. The companies announced Wednesday that they are undertaking a project to combine data from all machines, plants and systems from 122 Volkswagen plants around the world.
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S&P said on Wednesday it had downgraded its credit rating on Jaguar Land Rover, and its owner, even deeper into junk and put it on review for a possible further downgrade due to the growing risks of a no-deal Brexit and U.S. import tariffs. S&P cut its rating on senior unsecured notes of Jaguar (JLR), Britain’s biggest carmaker, and its owner India’s Tata Motors Ltd to ‘B+’ from ‘BB-‘ following JLR’s weaker than expected third-quarter results.
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China has banned imports from a second Canadian canola firm, its customs administration said Tuesday, the latest escalation in a burgeoning row between the two countries. Following the detection of harmful organisms in canola shipments from Viterra Inc., China's customs authority has decided to revoke the firm's company registration and suspend imports of its canola seeds, it said in an online statement.
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China’s economic journey skirts road to perdition. President Xi’s triumphant European tour fails to hide the problems lurking on the horizon
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China's President Xi Jinping on Tuesday attempted to dispel concern about his country's growing presence in Europe at a meeting with French, German and EU leaders who stressed their desire for a more balanced relationship. French President Emmanuel Macron was joined by Germany's Angela Merkel and European Commission chief Jean-Claude Juncker for talks in Paris with the visiting Chinese leader which took place against a backdrop of growing tensions caused by Donald Trump's America.
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Stock News
Galan Lithium non-executive director buys shares on-market
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De Grey Mining Ltd’s (ASX
EG) recently appointed non-executive Peter Hood has purchased 500,000 shares in the company for $49,109 via on-market trades. The purchase doubles the size of Hood’s holding in the company to one million shares, further aligning himself with shareholders and the future success of De Grey.
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Rare earths miner Lynas Corp says it won't engage with Wesfarmers' $1.5 billion offer after the Bunnings owner announced a takeover bid on Tuesday. The Lynas board told the ASX on Wednesday morning it had evaluated the offer and "concluded that it will not engage with Wesfarmers on the terms outlined in the indicative and highly conditional proposal".
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Lynas looks to WA, not Wesfarmers, for its Malay solution. Western Australia might hold the key to Lynas Corp's future despite the rare earths miner rejecting a $1.5 billion takeover offer from Perth-based Wesfarmers on Wednesday. WA’s Environmental Protection Authority (EPA) confirmed it had recently met with the company to discuss approvals, including secondary processing in the state.
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Fortescue's Andrew Forrest says the global iron ore market is likely to have a shortfall following the Brazil dam spill and mine curtailments at top supplier Vale, and warned other producers face constraints in boosting output. "We do have to face the reality of a potential deficit," Mr Forrest said in a Bloomberg Television interview at the Boao Forum in Hainan province.
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Meteoric Resources queried by ASX after 44% share price jump
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Leigh Creek Energy resource is South Australia's largest gas reserve for commercial use. The company is working through negotiations with potential gas buyers for use on the domestic market while it progresses the scoping aspects of the lucrative fertiliser business case.
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Gascoyne Resources lost $47.2 million in the December half and has written down the value of its underperforming Dalgaranga gold operations by $33.5 million. The miner has struggled to meet production forecasts at Dalgaranga since first gold was poured in May.
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Technology Metals Australia Ltd (ASX:TMT) is in a trading halt pending the release of a resource update for the Gabanintha Vanadium Project in WA. The company says the trading halt will allow it to finalise technical and administrative aspects in relation to the resource update.
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CropLogic Ltd (ASX:CLI) will utilise its CropLogic realTime technology to optimise yields from its 150-acre trial hemp farm in Oregon. The goal is to showcase and validate the company’s technology in a bid to service the US hemp market, which is projected to triple to $22 billion by 2022.
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Apparently, fried chicken and waffles is a thing? I will only serve you this if you promise to walk/run 5k afterwards. Just by looking at this I gained a couple kg’s.
