The Match Out: ASX tumbles into the end of May, BOQ in trouble with the regulators, CPI higher than expected

Overseas markets underperformed overnight, which weighed on the open locally. Resources were particularly on the back foot with strength in the USD putting pressure on materials, while coal also fell to two-year lows to hold energy stocks back. The rest of the market followed suit, particularly following a higher-than-expected CPI print at 11.30 am, up 6.8% in April vs the 6.4% expected. A very weak close resigned the ASX200 to its worst day since March. The soft end to the month resulted in a fall of -218pts/-2.98% in May, the worst monthly decline since December. Tech was the key bright spot in the weakness, up 11.56% while Consumer Discretionary was the main laggard, falling -6.19%.

• The ASX 200 finished down -118pts/ -1.64% at 7091
• The Tech sector was best on ground (+0.01%) as the only sector to finish higher
• Energy (-2.52%) was the worst of the sectors today with Materials (-2.18%) and Financials (-2.03%) also more than 2% worse off.
• Local Inflation data was higher than expected, increasing the chances of another hike by the RBA at their next meeting on Tuesday. CPI was up 6.8% in April, higher than the 6.3% in March, and also above the 6.4% expected.
• China PMI data was also weaker than expected, manufacturing PMI at 48.8 was about 1 point below consensus.
• Bank of Queensland (ASX: BOQ) -5.36% fell to a new 2-year low today after announcing an enforceable undertaking had been put in place. More on that below.
• Paladin (ASX: PDN) +2.35% returned from a trading halt saying that there was no indication the Namibian Government was looking to take an equity stake in their uranium mine for no cost. The comments from the Namibian Energy Minister are likely to relate to new projects.
• Silver Lake (ASX: SLR) -1.88% the gold company continue to push for a look at St Barbara’s (SBM) Leonora asset, offering $718m in cash and shares in an attempt to bump Genesis (ASX: GMD) off the deal.
• Betmakers (ASX: BET) +20% the tech behind a number of wagering companies announced a restructure that will see their cost base reduced by 23% by next quarter, mostly on a lower headcount.
• Iron Ore was down -1% in Asia today but the major miners were all worse off than the underlying commodity. BHP is the worst off, down -3.38%
• Gold was up marginally in Asian trade, hanging around $US1962/oz, most gold stocks higher in the flight to safety.
• Asian stocks were soft as well, Nikkei -1.41%, Hang Seng -2.58% and China -0.6%.
• US Futures are pointing to a weak session, S&P -0.34%.

ASX 200 chart

Bank of Queensland (BOQ) $5.47

BOQ -5.36%: The regional bank announced it had entered into an enforceable undertaking with both APRA and AUSTRAC on the back of risk and governance concerns. The bank will need to appoint both an external auditor for AUSTRAC as well as an independent reviewer for APRIA as they look to work through a number of concerns from the regulators. They have 120 days for submissions to both as well, while APRA has added an additional $50m in risk capital requirements while the issues are worked through.

Market Matters In the Media

Market Matters Portfolio Manager Harry Watt joined Ausbiz this afternoon to talk through three of our top picks in the small-cap space.

Click here to watch.

Broker moves

• IDP Education Cut to Neutral at Macquarie; PT A$22
• IDP Education Raised to Buy at Bell Potter; PT A$27.40

Major movers today

Have a great night,

The Market Matters team.

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