The S&P/ASX 200 is still lower at 6352, just a little higher than the low point of 6348 reached at 12.30 today.
Trading volumes today are highest in Mirvac Group, which is down 1.2 per cent to $2.86 with nearly 20 million shares trading hands. Trading is also heavy in Pilbara Minerals, which is down 5.7 per cent to 62 cents after releasing disappointing quarterly results this morning.
Meanwhile, Stephen Bartholomeusz writes: Ever since the US Federal Reserve pivoted at the start of the year, setting the stock market alight again, markets have been betting there will be no rate rises this year, with a reasonable chance of a rate cut. That may have changed after Friday’s booming US economic data.
The US first-quarter annualised GDP growth of 3.2 per cent surprised on the upside and a was a far cry from the gloomy prognostications at the start of the year that led to the Fed ditching its plans to continue raising US rates this year. The higher-than-expected GDP growth and lower-than-anticipated inflation numbers sit oddly, however, against the futures market’s pricing in of a 40 per cent probability of at least one rate cut this year.
We’ll know more about the Fed’s view of the state of the US economy and its view on the outlook for rates after this week’s two-day meeting of the Fed’s Open Market Committee meeting that starts on Tuesday.
Pioneer Credit is now up 23.8 per cent, while Freelancer is still up 17.8 per cent.
The ASX is down 0.4 per cent to 6353 this afternoon, with low trading volumes of 295 million.
The single biggest rise among top 200 stocks today is asset management platform HUB24, which has not released any news recently but is up 5.5 per cent to $14.89. Its most recent market update was on 18 April (the day before Easter Friday), when it revealed a record quarterly inflow of $793 million in the first three months of this year.
Afterpay Touch is also a big riser today, with a gain of 4.2 per cent to $24.82.
Orica has flagged a $191 million write-down of defective equipment at its Burrup operation and confirmed the troubled explosives plant will fall behind its production target, but its earnings outlook remains unchanged for the year. Orica is one of the world’s biggest explosives makers. Burrup, which is jointly owned by Orica and Yara International, was originally declared commercially operational in 2017, but it has suffered numerous equipment problems since then. Orica chief executive Alberto Calerdon told investors in December that the current remediation work would be finished in the first half of the 2020 financial year.
Orica said the plant’s utilisation would be lower than the 20 per cent forecast at the December shareholder meeting, but said the group’s overall outlook remains unchanged.
Read the full story by Colin Kruger here. Orica shares dropped 1.8 per cent in today’s session to $18.68 and are currently trading at $18.79.
Shares in Audio Pixels are up 12 per cent today after it released a copy of its presentation to an institutional roadshow today. Audio Pixels was founded in 2006 but has not yet produced any tangible products. The presentation does not include any news or substantial new material.
Today shares opened at $19.50, but started picking up around 1pm and reached a high of $21.80 soon after 2pm. Trading volumes are about 20,000 compared to an average of 12,600. Most of the trades are going through CMC Markets and Ord Minnett, suggesting retail shareholders are buying in.
The real estate sector is the worst performer on the ASX200 today with a 1.8 per cent drop compared to a 0.5 per cent drop in the broader index.
The most points are being taken off by Goodman Group and Scentre Group, which are down 2.5 per cent and 1.7 per cent respectively. The worst performer is GPT Group, down 2.9 per cent to $5.82, which released a first quarter update today. And Dexus is down 2.6 per cent to $12.71.
Just two real estate companies in the top 200 are in green today, Aveo Group with a 1.8 per cent rise to $1.93, and Abacus Property is up 0.3 per cent to $3.83.
Engineering and mining services company WorleyParsons is up 0.4 per cent today to $14.52. This morning it told the market that late on Friday it paid the last instalment of a $4.55 billion deal to acquire Jacobs Engineering Group’s energy, chemical, and resources division.
The new merged entity employs 57,600 people across 51 countries. WorleyParsons expects cost synergies of $130 million, but at a cost of $160 million.
It has also returning to the ‘Worley’ brand with plans to drop the ‘Parsons’ from its name. Parsons was added when it purchased Parsons E&C in 2004. Shareholders will be asked to approve the new ‘Worley’ brand at the annual general meeting later this year.
Viva Energy shares have recovered somewhat after reaching an intra-day low of $2.23 this morning and are currently trading at $2.29, a decline on 3 per cent.
Energy reporter Cole Latimer reports the company has recorded a $35 million hit to its earnings thanks to sharply rising global oil prices, and it expects more pain ahead. Viva has recorded an improvement in its refining margins for the 2019 March quarter but volatile oil prices — which have jumped nearly 50 per cent since December — have stripped out its petrol station earnings.
The latest earnings hit comes as the Australian Competition and Consumer Commission reviews Viva’s grip on the fuel retail sector. The ACCC is specifically looking at whether Viva’s proposed acquisition of the half of fuel retailer Liberty Oil it doesn’t own could drive up petrol prices by dominating the market.
Viva originally bought a non-controlling stake in Liberty in 2014 for an undisclosed amount. The deal brought the total number of Viva’s retail sites to 1255 petrol stations and made it the largest single fuel retailer in the country. Caltex and BP are its major rivals.
Another Street Talk column from today’s Financial Review has been confirmed. This time that Bain Capital Credit’s team is keen to test whether the Kerry Stokes-backed Pioneer Credit may be interested in an M&A deal. Turns out it is also interested in a total take-over. Shares are suspended at $1.97.
Pioneer Credit just told the market it has received «several confidential, non-binding, indicative proposals».
«The most comprehensive of these is a non-binding, indicative proposal for the acquisition of all the issued shares in the company, by was of a scheme of arrangement, at a material premium to the current share price.»
Managing director Keith John tells shareholders each proposal is indicative and incomplete and conditional. Discussions are ongoing and none are «regarded as sufficiently advanced to warrant further disclosure at this time». Pioneer has appointed Azure Capital as a corporate advisor.
Shares in GPT Group are down 1.7 per cent this morning to $5.89 as the real estate sector under performs the rest of the market. This morning The Age reported GPT has joined the exclusive club of Melbourne landlords earning millions of dollars in income from heritage building sites that have a nominal value of $1. ASX-listed GPT has successfully disputed the City of Melbourne’s most recent valuation for the site of its 34-storey building at 100 Queen Street. The site is home to the ANZ World Headquarters as well as a clutch of Collins Street’s most important historic buildings.
As a result, the landmark National Trust-listed property, which earns GPT an estimated annual income around $14 million, is worth a mere $2 — $1 for each of the two property titles that cover the block. Read the full story by Simon Johanson here.
And this morning GPT released a March quarter update confirming it is on track to meet 2019 guidance of 4 per cent growth for both Funds From Operations per security and Distributions per security. The update shows the slump in consumer demand is not hurting their retail portfolio, which continues to maintain high occupancy.
Banking reporter Clancy Yeates writes that we should expect ANZ Bank, Westpac, and National Australia bank to face a few questions about the falling cost of funding when they deliver their half-year results over the next week.
A note from Citi analysts Brendan Sproules and Thomas Strong highlights that a key measure of banks’ funding costs has returned to its long-run average, and they expect it to stay around these levels.
This chart shows the extent of the fall in the spread between the bank bill swap rate (an interbank funding market) and the overnight index swap. The slump has occurred after the US Federal Reserve’s «pivot» away from raising interest rates, and the very weak inflation reading in Australia last week.
All else being equal, the move in bank funding costs could boost bank profits by 3 to 4 per cent if costs stay at these levels. Given banks raised mortgage rates last year based on higher funding costs, it will also probably raise questions about whether banks will now reverse some of these hikes.