Lacking direction, New Hope falls 12%: Aus shares closed flat on Tuesday

Market Reports

by Jessica Amir

The Australian stock market had a volatile session, going in and out of negative territory after traders and investors absorbed the Central bank’s meeting minutes, as well as the market absorbing some financial results from top 200 oil and coal company, New Hope.

At the closing bell the S&P/ASX 200 index closed 0.09 per cent or 6 points lower at 5,185.

Futures

Dow futures are suggesting a gain of 28 points.
S&P 500 futures are eyeing a rise of 2 points.
The Nasdaq futures are eyeing a gain of 5 points.
And the ASX200 futures are eyeing a 4 point fall tomorrow morning

Local economic news

RBA board meeting minutes didn’t mention the cash rate would likely be appropriately changed this year however RBA members say there are significant and remaining uncertainties and the probability of a rate drop and rise are evenly balanced. The central bank says, financial markets have priced in rates will be dropped ‘by early 2020, following the earlier shift from expected future increases in policy rates.’

The RBA also noted the housing market decline ‘adjustment’, continued with house prices in Sydney, Melbourne and Perth falling further and, and turnover in the housing market had fallen ‘significantly’. Credit conditions tightened and the demand for housing credit noticeably slowed, while mortgage rates remained low.

Forecasts remain that GDP will be about 3 per cent over 2019 and a further drop in the unemployment rate to 4¾ per cent over the next couple of years. Wage pressures and inflation are expected to gradual pick-up.

And the Bureau of Statistics announced property prices fell 2.4 per cent in the December 2018 quarter, this was more than the 2 per cent fall expected by the market.

Company news

Cann Group (ASX:CAN) shares bounced back to January 2019 highs and late 2018 levels after the medical cannabis company reaffirmed its cultivation expansionary plans to commission large scale production. It comes as Cann bought a site for $10.75 million to build a greenhouse in Mildura in North West Victoria to service the domestics and exports markets. The new facility is expected to produce up to 50,000 kilograms of dry flower each year. Construction is tipped to cost $130 million and the site will be fully commissioned in the third quarter of the 2020 calendar year. Meantime, the company just inked a five-year offtake agreement to sell its produced medicinal cannabis to Aurora Cannabis. Once operational in 2020 its revenue guidance should be between $160 million to $200 million. Shares went rose 37.7 per cent today closing at $2.30.

Thermal coal producer New Hope (ASX:NHC) reported growth across all key metrics in its half-year results to 31 January 2019, with profit before tax and non-regular items, rising 33 per cent on the prior corresponding period to $229 million. Its EBITDA grew 31 per cent and its interim dividend rose 33 per cent to 8 cents per share. The bolstered results came from the company increasing its stake in the Bengalla coal mine. Morningstar has the material stock at a $3.50 price for fair value. The company has returned 121 per cent in average shareholder returns year-on-year, while over the last 3 years it’s gone up on average 57 per cent. Shares in saw some selling today perhaps at the hands of profit taking or market expectations for its results.

Westpac (ASX:WBC) announced it is quitting the personal financial advice business and overhauling its management structure. The bank will sell its BT advice business to Viridian Advisory, which will offer employment to around 175 BT advisers and other management and support staff. Proceeds from the sale will depend on the size of the business that transitions to Viridian Advisory. The changes will be complete by June 30 and result in one-off costs of $250 million to $300 million across two years, but, earnings-per-share are expected to improve in the 2020 financial year due to the exit from a high cost, loss-making business.

Telstra (ASX:TLS) priced a €600 million bond issue, raising the capital for general corporate purposes. The notes have a coupon value of 1.375 per cent and mature on the 26 March 2029.

Software giant for the logistics industry, WiseTech Global (ASX:WTC) announced plans to raise $250 million via a fully underwritten institutional placement, followed by a $30 million share purchase plan. The proceeds of the institutional raise will be used to ramp up company growth.

Best and worst performers of the day

The best performing sector was Materials adding 0.9 per cent while the worst performing sector was Health Care, shedding 1.4 per cent.

The best performing stock in the S&P/ASX 200 was Estia Health Limited (ASX:EHE), rising 4.4 per cent to close at $2.61. Shares in TPG Telecom Limited (ASX:TPM) and Aristocrat Leisure Limited (ASX:ALL) followed higher.

The worst performing stock in the S&P/ASX 200 was New Hope Corporation (ASX:NHC), dropping 11.8 per cent to close at $3.89. Shares in HUB24 (ASX:HUB) and Whitehaven Coal Limited (ASX:WHC) followed lower.

Asian markets

Japan’s Nikkei has lost 0.1 per cent, Hong Kong’s Hang Seng has lost 0.3 per cent and the Shanghai Composite has shed 0.2 per cent.

Commodities and the dollar

Gold is trading at US$1,308 an ounce.
Iron ore price rose 2 per cent to US$88.26
Iron ore futures are pointing to a fall of 0.4 per cent.
Light crude is $0.46 up at US$59.28 barrel.
One Australian dollar is buying 70.06 US cents.
  

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter.