Afternoon trading June 11

Thanks Oscar and morning crew.


Half-time round-up:

Aussie shares soared to a fresh 11-year peak as traders played catch-up with global markets after a long weekend that saw the U.S. and Mexico patch up their differences.

The ASX 200 surged 86 points or 1.3 per cent this morning towards a fifth day of gains. The market hit an intraday peak at 6530, its highest point since January 2008.

The rally followed two strong sessions on Wall Street as Mexico and the U.S. struck an immigration deal to avoid sweeping tariffs on Mexican goods coming into the U.S. The S&P 500 put on 1.1 per cent on Friday and another 0.47 per cent overnight.

A broad rally here saw gains in most sectors, from defensive assets such as health giants Cochlear and CSL to riskier sectors such as technology. Cochlear jumped 2.3 per cent to an eight-month high. CSL fared even better, rising 2.9 per cent to its strongest point since September.

Altium was the best of the teach leaders, rising 3.8 per cent. Wisetech gained 3.1 per cent and Xero 2.7 per cent. Buy-now-pay-later giant Afterpay went into a trading halt for a capital raising on the day the sector gained a new listed competitor. Shares in Prospa Group commenced trade today 18.5 per cent above their listing price. The company intends to push the buy-now-pay-later model to small businesses looking to buy stock and equipment.

The utilities sector slumped 2.2 per cent after energy giant AGL moved on telecom group Vocus. Shares in AGL tumbled 6.5 per cent after the company announced a non-binding, indicative offer valuing the telecom's shares at $4.85. It has been a nerve-wracking few weeks for shareholders in Vocus, with Swedish infrastructure firm EQT lobbing a bid at $5.25, then walking away after doing their due diligence. This morning Vocus shares rallied 8.1per cent to $4.14, well short of the AGL offer price. The gap suggests scepticism that the latest offer will lead to a deal.

The prang of the day was casino group Star Entertainment, whose shares fell 17 per cent after the company warned of lower earnings this year. The company cited a number of reasons for the slowdown, principally a 1.5 per cent downturn in revenue from big-spending international VIPs.

The session brought relief for shareholders in beleaguered gold miner Dacian, whose shares lost three-quarters of their value in three brutal sessions last week after the company downgraded its production guidance for its flagship mine in WA. The share price bounced 11.5 cents or 30.2 per cent this morning to 49.5 cents.

Another bout of sabre-rattling from U.S. President Donald Trump had little impact on Asian markets. Trump threatened to hike tariffs on Chinese imports if Chinese President Xi Jinping does not attend a G-20 meeting later this month where the two leaders are scheduled to meet. Asian traders appeared to dismiss the latest threat. China's Shanghai Composite rallied 1.5 per cent, Hong Kong's Hang Seng 0.7 percent and Japan's Nikkei 0.4 per cent. In the U.S., S&P 500 futures rose six points or 0.2 per cent.

Turning to commodity markets, crude oil futures rose 22 cents or 0.4 per cent this morning to $US53.48 a barrel. Gold futures gained $3.60 or 0.3 per cent to $US1,332.90 an ounce.

On currency markets, the dollar was buying 69.6 US cents.

Trading: I picked up a few DCN at the close on Friday. Why? Two reasons: firstly, the rule of threes; and secondly. the long weekend. Extreme moves tend to run in threes before there is a counter-reaction (note that it's a tendency, not some sort of iron universal law). Also the trading range had been shrinking with each session, suggesting a loss of downward momentum. The second reason is that weekends often act as circuit-breakers when shares are heavily overbought or oversold - a useful pause for reflection. The extra day exaggerated the likely impact of this effect. Using the three-day rule, I hope for another day of gains tomorrow, followed by a possible short-term peak/reversal on Wednesday. However, in trading anything can happen so I've set a trailing stop. Note that I have no view on DCN's long-term prospects. This is purely a short-term trade for me. I'll leave the valuations to others.