That is all from us today. Thank you for your time and your comments.
We will not be here tomorrow as the market is closed for Anzac Day, but will be back on Friday.
Paladin Energy is up 16 per cent today to 14.25 cents after it quashed a rumour the company may be thinking about an equity raising. The stock has traded at an average of 17.4 cents over the past year.
“Paladin would like to make it clear that it currently has no intention to raise capital to fund a partial or full buy-back or early redemption of these notes,” chief executive Scott Sullivan told the market, referring to its 2023 Secured Notes.
“There are currently no repayment obligations in respect of the notes and at the appropriate time the company will consider all options available to it to obtain sufficient funding to repay the notes by their maturing in 2023.”
Cash Converters International was up as much as 13.8 per cent to 16.5 cents today, but have since retreated back to 15.5 cents. This morning Perpetual revealed it is the investor who has been buying up shares lately, including 4.8 million purchased on 17 April. Cash Converters average share price over the past five years is 52 cents.
It now owns 11.02 per cent of the stock, the second largest shareholder after EZCORP International with 34.75 per cent.
It is looking more likely there will be a rate cut in the middle of the election, according to notes coming from economists this afternoon. The Australian dollar dropped 0.8 per cent today as it at US70.36 cents this afternoon. It has not been below US70 cents since earlier this year.
AMP Capital’s Shane Oliver this afternoon sent out a note highlighting that the Reserve Bank of Australia has been overestimating inflation for years, but cannot simply solve the problem by reducing its target. It is currently targeting between 2 per cent and 3 per cent inflation.
“Lowering the target would be a huge mistake and would see inflation targeting lose all credibility and only lock in low inflation (and the risk of deflation) for longer,” he says.
“We have been looking for two rate cuts this year since last December and had thought that the RBA would wait till after the election before starting to move. However, with underlying inflation coming in much weaker than expected our base case is now that the first cut will come next month, with the RBA likely to conclude that it’s too risky to wait until unemployment starts to trend up.”
Similarly, ANZ’s Hayden Dimes and David Plank write that: “The downward surprise to core inflation in first quarter leaves the RBA will little choice but to cut the cash rate by 25 basis points at its May meeting, with another 25 basis points likely to follow in August. The much lower than expected outcome for core inflation means that something has to materially change in order for the RBA to credibly forecast an eventual return to 2 per cent inflation.”
“We have doubts that modest rate cuts will do much to push inflation sustainably higher, but it’s hard to see that the RBA has much choice but to use the tool at its disposal, ie a lower cash rate. We don’t see the timing of the election being a constraint on the RBA acting.”
Telecommunications analyst Paul Budde has shared his thoughts on how successful Macquarie Bank’s proposed new mobile service might be.
“This is an interesting development. It doesn’t happen that often that an investment itself launches a mobile service, to be known as Nu Mobile. Even more remarkable is that it launches a niche mobile service known as a Mobile Virtual Network Operator (MVNOs). Such companies have been around for two decades but very few have been able to gain any mass market traction. In general, in the developed economies, all MVNOs together in one specific country, hardly ever get more than a 5% market share of the overall national mobile market.
This would certainly be the situation in Australia where Amaysim is the largest MVNO with around one million subscribers. What of course is interesting is that the Bank is launching a recycled mobile phone service. Based on their financial interest in the smart phone market (through existing leasing offers) this would most likely be the link to why they are launching the service.
This will most certainly appeal to those people interested in circular economy. This potential market is growing and will have a large group of people interested in this movement, but overall this will still remain a niche market. Separately such a used phone market can also be very price competitive and this could be another market that they will appeal too.
So overall a greet ‘green’ initiative but it is doubtful if they will be able to reach a market size big enough for them to be of any real financial interest. Perhaps they will build it up and then sell it off to a company more aligned with niche market experience in the telecoms industry.”
Heavy snow, Yellow Vests protests, and Rostock roadworks are behind a mixed first quarter result for Atlas Arteria, a toll road owner that used to be part of the Macquarie Group. Macquarie still owns 6.3 per cent of the company but Lazard is the biggest shareholder with 10 per cent. Toll increases helped pushed toll revenue up 2.3 per cent for the January – March period compared to the same time in 2018. Atlas Arteria shares are currently 1.2 per cent higher are $7.19 and reached a high of $7.26 today.
Its roads in France had lower traffic in first quarter of 2019 because 2018 had a bumper ski season (and Easter falls in Q2 this year), and in January the Yellow Vests protests blocked travel. While car trips are down, truck and heavy vehicle trips increased.
In the US Atlas Arteria owns the Dulles Greenway near Washington DC. Traffic fell 4.6 per cent in January due to the federal government shutdown. And heavy snow on 13th and 14th of January cut traffic by as much as 80 per cent.
And the Warnow Tunnel in Rostock, Germany, has seen a 11 per cent increase in traffic thanks to roadworks on competing roads.
Heavy snow saw daily traffic on Atlas Arteria’s Dulles Greenway road drop by up to 80 per cent. Credit:ALEX BRANDON
In the US, Twitter shares jumped 15 per cent after the social media platform smashed revenue expectations and pledged to make it more appealing for users to log on frequently. The Nasdaq-listed company had forecast revenue up to $US775 million ($1.09 billion) for the first quarter of 2019 and came in at $US787 million.
It also reported 134 million ‘monetised’ active daily users, or the number of users that log on during a day and would be exposed to paid Twitter advertising content, representing an 11 per cent increase. Twitter shares closed at $US39.77 on Tuesday, up 15.64 per cent.
Bloomberg analysts were expecting earnings per share to come in at less than 20c, but the company revealed this figure would be 25c. In a conference call with analysts on Tuesday morning, Twitter chief executive Jack Dorsey said the company was focused on making it more attractive for users to log on frequently. “The more relevant we make Twitter for people, the faster they see something that interests them, the better the experience,” he said.
A key part of this project is using machine learning to detect harassment and abuse online faster.
The S&P/ASX 200 is currently up 0.9 per cent at 6376 as the market continues to rally at the highest levels in 11 years. Lower-than-expected inflation data has helped boost the market further today as it increases the chances of a cut in the official cash rate, which would be good for consumer spending.
The biggest gains are in Bellamy’s following a market announcement at lunchtime that it has secured new approvals from Chinese regulators for premium products. Bellamy’s is up 16 per cent to $11.20.
WiseTech Global is up 3.9 per cent to $22.18, and Exlipx Group is up 5 per cent to $1.02, the first time the stock has poked above $1 since McMillan Shakespeare walked away from a proposed purchase.
Meanwhile, someone likes the look of Trade Me’s new chief executive, Anders Skoe, with a 2.25 million block trade going through at 12.45pm.
Shares in Bellamy’s Australia rocketed from $9.67 to $11.96 this afternoon after the formula maker told the market it had secured key regulatory approvals from China’s State Administration for Market Regulation (SAMR) last night. The approvals relate to formula made at its ViPlus facility in Toora, south east Victoria. ViPlus recently got a four-year renewal on its Certification and Accreditation of the People’s Republic of China licence.
“Bellamy’s is awaiting final certification of all changes from SAMR which it hopes to receive shortly. Prior to producing, the parties may make further amendments to the approve artwork through the SAMR process, which could take a few months,” Bellamy’s told the market this afternoon. It will start selling the new product as soon as the artwork approvals come through.
The ViPlus approval is separate to another application regarding its super-premium Camperdown powder. ViPlus is designed for the premium offline segment in China and setting up production will cost Bellamy’s up to $6 million.
“Initial interest and feedback from sub-distributors is strong, given the strength of the Bellamy’s brand, its ‘made in Australia‘ status, and the premium formulation”.
Having wiped out the gut-wrenching trough in the closing months of 2018 with a 17 per cent bounce since the start of 2019, investors in the US sharemarket appear to be really excited about the outlook for the US economy and corporate earnings. Except they are not. Late last year the US sharemarket was plunging, falling almost 20 per cent from the record levels it set in September. Overnight on Tuesday, having bounced back nearly 25 per cent since its nadir in late December, it again registered a record close.
There is, however, an estimated $US3 trillion ($4.2 trillion) of cash sitting nervously in money market funds on the sidelines and, according to Bank of America Merrill Lynch, about $US90 billion of withdrawals from US equity funds so far this year. Those two statistics indicate heightened investor scepticism that last year’s turmoil was just a blip in the longest bull market in history. While 80 per cent of US companies that have reported so far in the early days of the quarterly reporting season have surpassed expectations, those expectations were low. Most analysts’ predictions had earnings for S&P 500 companies falling in the March quarter. Now they see modest single-figure gains.