AGL & Vocus takeover talks kick off: Aus shares close at new 11.5 yr high, 1.6% up

Market Reports

by Jessica Amir

The Australian share market opened higher, continuing to push higher throughout the session before closing at a new 11.5 year high, taking the XJO’s winning streak to five days and we closed 1.6 per cent higher. 

Most of the sectors on the ASX made a gain, with almost all of the sectors gaining one per cent or more, with Healthcare up 3.5 per cent, Industrials gaining 2.5 per cent and Consumer Discretionary following.

The likes of imagery company, Nearmap (ASX:NEA) gaining 9.3 per cent, taking the stock back to where it last traded at the end of May, after announcing new 3D and artificial intelligence products.

Bravura (ASX:BVS) a similar story, it rose 5.5 per cent clawing back from recent selling.

But we had positive news from the outset with the Dow on Wall Street closing higher for the sixth straight session after President Donald Trump revealed proposed tariffs on Mexican imports would be suspended indefinitely.

At the closing bell the S&P/ASX 200 index closed 102 points higher to finish at 6,546.

Futures market

Dow futures are suggesting a rise of 65 points.
S&P 500 futures are eyeing a rise of 7 points.
The Nasdaq futures are eyeing a lift of 29 points.
And the ASX200 futures are eyeing a 71 point rise.

Economic news

Business conditions weakened further in the month of May, and now well below average according to NAB’s business survey. Confidence saw a post-election spike in May but conditions have further declined with the private sector continuing to lose momentum.

Business conditions fell 2 points to 1 index point in May. It was on the back of a decline in profitability and trading (sub-components).

Company news

Coca-Cola Amatil (ASX:CCL) presented at Deutsche Bank’s global consumer conference in Paris highlighting that one of its priorities for FY19 is to focus on ‘key selling weeks’ like ‘summer, Easter, football finals, Christmas’ with marketing. For example it recently did a campaign for the Cowboys and the Broncos. It also is focusing on its Mount Franklin water bottles being made from 100 per cent recycled plastics. Coca-Cola also says it will continue to target a medium term dividend payout ratio of over 80 per cent, despite the group’s underlying EBIT fell 6.5 per cent from FY17 to FY18 to $634.5 million (continuing operations). Shares in Coca-Cola Amatil (ASX:CCL) closed 1.4 per cent higher at $10.00

AGL (ASX:AGL) shares saw sharp selling today falling 7.2 per cent after it made a $3 billion takeover bid to takeover Vocus (ASX:VOC) at $4.85 per share. Vocus shares went the other way rising 8.9 per cent. Sequoia Investment Management says should AGL should continue to generate strong cashflows it’s comfortable holding AGL to gain exposure to Australian utility infrastructure. However, if the bid it will reassess. Last week AGL was downgraded from a Buy to a Neutral or by Goldman Sachs.

The Star Entertainment Group (ASX:SGR) shares lost 15.7 per cent after warning of lower earnings due to slowing domestic revenue growth in the second half, with International VIP turnover falling 31.1 per cent. Star expects FY19 earnings EBITDA to be $550-$560 million, down from the $568 million in FY2018.

Buy now pay later company, Afterpay (ASX:APT) has today announced plans to undertake a minimum of $300 million with institutional investors. Pricing will be determined via an institutional bookbuild, with an underwritten floor price of $21.75 per new share. At the same time Anthony Eisen, Nicholas Molnar and David Hancock agreed to sell 2.05 million, 2.05 million and 400,000 shares respectively, allocated the shares to Tiger Management and Woodson Capital.

Best and worst performers of the day

The best performing sector was Healthcare adding 3.5 per cent while the worst performing sector was Utilities, shedding 2.5 per cent.

The best performing stock in the S&P/ASX 200 was Nearmap (ASX:NEA), rising 9.4 per cent to close at $6.50. Shares in vocus group limited (ASX:VOC) and Costa Group Holdings Limited (ASX:CGC) followed higher.

The worst performing stock in the S&P/ASX 200 was The Star Entertainment Group Limited (ASX:SGR), dropping 15.7 per cent to close at $3.80. Shares in AGL Energy. (ASX:AGL) and Regis Resources Limited (ASX:RRL) followed lower.

IPOs

Online small business lender, Prospa Group (ASX:PGL) has floated on the ASX today rising 18 per cent after it issued shares at $3.78 it opened at $4.50 and it closed at $4.46. Macquarie Capital (Australia) Limited, UBS AG, Australia Branch were the underwriters.

Asian markets

Japan’s Nikkei has added 0.3 per cent, Hong Kong’s Hang Seng has added 0.9 per cent and the Shanghai Composite has gained 2.2 per cent.

Commodities and the dollar

Gold is trading at US$1,329 an ounce.
Iron ore price rose 0.9 per cent to US$101.51
Iron ore futures are pointing to a rise of 6 per cent.
Light crude is US$0.57 lower at US$53.42 a barrel.
One Australian dollar is buying 69.55 US cents.