Good morning folks, I don’t know about you lot but it feels like someone flicked a switch and the winter arrived right on June 1. Had to dig out the beanies and wool socks. Kiwis like to get a head-start on Queens Birthday, with it falling in the first Monday of June over here which is today. It's next Monday instead for most of Australia except for WA & QLD, so the ASX will have its doors shut next Monday too (the 10^th).

Thanks to @ttward, @Ravgnome & all the aftermarket loungers. A lot of sport over the weekend if that’s your thing (it is mine, spoilt for choice right now). Well done to Liverpool & Kloppo for their UCL win. It wasn't the best of games, but their supporters won't care one bit about that.

Weekend Market Wrap-up

The ASX showed admirable resilience after diving early on the back of Donald Trump announcing more tariffs, this time on Mexico in what a viewing as more levering of the United States economic weight for political gamesmanship. Far from being about economic or trade reasons, this one would appear to be blatantly political.

Perhaps much of the ASX 200’s resilience was due to the forthcoming rates decision from the RBA which is widely expected to be a cut. There’s also a degree of scepticism over these latest tariffs, as Donald Trump does have a history of going for shock and awe first up before eventually dialling things back. The benchmark index closed up 4.8 points or 0.08% to 6,396.9 after a last minute rally. The ASX 200 was down 0.92% for the week but up 0.96% for the month, and the as ASX All Ordinaries fell 0.82% for the week but rose 1.01% through May..

The aforementioned tweets from Donald Trump were easily the most notable piece of news for the markets to digest over the weekend, which sent more tremors throughout world markets. Having turned his attention to Mexico he certainly has lived up to his own nickname of “tariff man” as he sought to leverage the economic power of the U.S. to get Mexico to stop people illegally crossing into the U.S. via the U.S./Mexico border, which has been one of the hot points of his presidency from the very start.

The headline economic news in Australia arrives on Tuesday afternoon when the RBA will release it’s highly anticipated latest interest rates decision. The general consensus among economists is an expectation that the rates will be cut for the first time since mid-2016. There will also be GDP numbers on Wednesday, of which the year on year numbers are not expected to be too flash and expected to be the weakest in almost a decade, back to when we were just coming out of the GFC.

The ASX All Ordinaries gold index saw large gains on the back of the rising uncertainties and gold prices. Overall it was a mixed bag sector wise as is to be expected with the ASX 200 flat, healthcare, as well as mining and industrials, saw gains over half of a percent.

Those gains were balanced out by declines in 2 of the most volatile sectors in recent times, energy which shed 1.39% after oil futures dropped sharply, and IT, which fell 3.34% after Link Administration Holdings (LNK) fell 23.07% after a trading update blamed Brexit uncertainty for the softer performance of the company's European operations. Link on Friday said it expects its net operating profit for the 12 months to June 31 of between $195 million and $205 million, down on the $206.7 million reported in FY18. Appen (APX) also added to the sectors under-performance as the next worst performer on the index, dropping 6.64%.

The big winner on the Index was Eclipse Group (ECX) which rose 29.48% Ceo Julian Russell who only took over the job mid-May said a simplified Eclipx would concentrate on the vast opportunities to expand its novated vehicle leasing in the small-to-medium business market. Eclipx has endured a bit of a torrid 18 months, falling from over $4 a share to a low of 54c late in March. Their shares closed at $1.12 on Friday.

Lynas Corp (LYC) continued their strong week on the back of China stating they could shackle the supply of rare earth minerals to the United States, which comes on the back of the growing trade dispute between the two economic heavyweights. Malaysia Prime Minister Mahathir Mohamad also indicated from Japan that the operating licence for Lynas's $800 million processing plant at Kuantan would be renewed despite concerns about the storage of low-level radioactive waste. "We will allow Lynas to carry on because otherwise we are going to lose a very big investment from Australia”. Lynas Shares were up 11.31% for the day, and 29.24% for the week, closing at $3.05.

Costa Group (CGC) shares bounced a little after plunging 27% the day and adding a further 5.07% to the downside in the first half of Friday’s session, before they recovered somewhat to close at $3.95 per share and up 5.33% on the previous days close.

The Aussie dollar is buying 0.6939 USD, 0.5494 GPB, 0.6206 EUR, 75.13 JPY, and 1.061 NZD.

The ASX 200 futures are pointing towards a fall of 32 points this morning, or a fall of half of a percent.

In the rest of Asia, it was a bit of a mixed bag. The Shanghai Composite was softer by 0.24%, Japan’s Nikkei fell sharply and lost 1.63%, Hong Kong’s Hang Seng was down 0.79%, and the Korean Kospi again bucked the wider trend and gained what was a respectable 0.14% when put in context of the days action.

The European equity markets were almost all down, the seldom quoited Russian MOEX the one major European market that managed a positive day, gaining 0.22%. The broad pan-European index STOXX 600 fell 0.81%. The German DAX fell 1.47%, London’s FTSE 100 fell 0.78%, and Paris’ CAC 40 fell 0.79%.

In the American markets, the Mexican BMV IPC fell 1.38% on the news of the United States are targeting tariffs starting at 5% from June 10, with the potential to rapidly rise to 25% by October. The tariffs are being seen to be an attempt to leverage the economic weight of the U.S. to try to force Mexico to do more to prevent people from Illegally crossing the border into the United States. That tariffs are being used directly in relation to the border situation has more than raised a few eyebrows on both sides of the political spectrum, and it seems likely there is going to be some internal opposition to these latest measures. Mexico sends around eighty percent of it’s exports to the United States, which are mostly manufactured goods, and have stated they will respond in kind if the U.S. goes ahead with the tariffs.

Speaking of the United States, their stocks were amongst the hardest hit on the back of this news. The Dow was down 353.84 points or 1.41% to 24,815.04 points, the lowest close since late January. The S&P 500 was down 38.8 points or 1.32% to 2,752.06, while the Nasdaq fell 114.4 points or 1.51% to 7,453.15.


The MSCI world equity index was down 0.98% for the day, and down 6.04% for the month of May. But the wide-reaching index is still up 8.62% year to date.

In commodities, the price of gold rose 1.31% to $1,305. WTI crude fell 5.43% to $53.34 barrel, while Brent crude fell 5.29% to $62.97.

The dollar index, which tracks the U.S. dollar against six major currencies, was down 0.57% to 97.61.

Economic Data June 3-7

Via Commsec (click here for the full pdf).

Please include the STOCK CODE in your post out of respect for your fellow traders, use OT (off topic) for non-stock related content.

As Cleo would normally remind us, don’t forget to take some time out during the day to walk around and de-stress a bit, drink some water, keep the mind clear and sharp so you’re making the right decisions, and not making panic trades or boredom trades.