ASX 200. Henry Jennings, Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT.

 

ASX 200 rallies another 22 points but well off early highs. US futures up 40 points. Another day in the AUSTRAC dog house for WBC down 1.3% and dragging the other three with it. CBA the only one to escape from the banking black hole up 0.4%. Miners were positive today with BHP up 1.8% and FMG up 1.8% as iron ore prices grind higher. Healthcare was back in rude health as CSL rose 1.4% on another broker upgrade. TLS even joined in the fun today rising 2% in advance of the investor day Wednesday. Bond proxies in demand as yields rose 2bps in the 10s to 1.09%. In coprorate news, the WBC reverberations continue. APT rose 7% after a almost clean bill of health from independent audit on AUSTRAC issues. NUF crashed 17.5% on a profit warning and sales rebate issue. SIG put on 9% after agreeing a supply deal with Chemist Warehouse and CTX was well served by a move to split the property assets off, rising 7%. BOQ in a halt as it raises fresh capital to bolster balance sheet. Nothing on the economic front and Asian markets firmed on the high turn out and pro democracy vote in HK. Japan up 0.6% and China up 0.3%. Hong Kong rallied 1.8% on the results for pro-democracy candidate wins.

  • ASX 200 rallies 22 to 6731.
  • High 6758 Low 6718.
  • WBC still in the spotlight. Other weigh.
  • BOQ capital raising.
  • APT passes muster.
  • Miners push higher.
  • TLS rallies ahead of investor day Wednesday.
  • 10-year bond yields stronger at 1.09%
  • AUD steady at 67.96c
  • Aussie gold weaker at $2150
  • Bitcoin falls to US$6705
  • US futures up 40
  • Asian markets better with Japan up 0.6% and China up 0.3%.

STOCKS                                               

  • QAN +1.96% all time mile high club reached.
  • ALL -0.61% all time high close.
  • MYX -5.15% broker cuts PT.
  • MTS +0.71% upgraded by Citi.
  • DOW -0.12% Perth Met contract.
  • ISX – still suspended. Business update.
  • WGX -0.49% AGM comments.
  • CLH -7.82% CEO exits in a hurry.
  • CCL -1.40% board appointment
  • WBC -1.33% slide continues. Pricing period starts tomorrow for SPP.
  • SLM +20.00% sells catalogue business.
  • SIG +9.02% Chemist Warehouse deal
  • APT +7.05% AUSTRAC audit ticks boxes.
  • AD8 +3.07% heading to all time high.
  • WEB +3.51% rally continues.
  • NUF -17.53% downgrade and $9m sales rebate issue.
  • JIN -3.10% UK approvals
  • HM1 +3.19% weekly NTA.
  • HLS -2.56% AGM Comments.
  • PME -5.10% under pressure.
  • PNV -6.01% SOHM short sale tip.
  • MLX -4.17% slide continues.
  • BBN -6.82% rattle thrown out of pram.
  • Speculative stock of the day: Simavita (SVA) +480% as their adult nappy technology gets a CE Mark in the EEA. Smartz alert nappies. Provides feedbnack on wetness, dehydration, falls and ambient temperature.
  • Biggest Risers: SIG, PGH, APT, CTX, OPT and BWX.
  • Biggest Falls: NUF, PPK, PNV, DTL, SSM and MYX.

TODAY

  • Afterpay (APT) +7.05% Final AUSTRAC Audit results. Pretty much an all clear for APT. Afterpay reaffirms that it has not identified any money laundering or terrorism financing activity via its systems to date. Hardly a surprise. The money laundering possibilities of buying clothing on APT is a long shot especially when WBC offered far more choice on that front allegedly. The Report refers to “matters of historic non-compliance by Afterpay and makes recommendations in relation to Afterpay’s ongoing AML/CTF compliance. The Report states that the majority of these matters have been addressed, with the remainder covered in the recommendations. Afterpay fully accepts and is actioning all recommendations from the Independent Auditor”. Key points: There is now an appropriate level of awareness and engagement. Low risk business. Appropriately aligned to the AML/CTF Act and Rules. AML/CTF controls are more appropriately focused on consumers. This report is a significant positive for the company.
  • Galaxy Resources (GXY) -4.00% is set to sell the product from its Sal de Vida deposit for 25%-30% below the benchmark price. CEO Simon Hay said the lower margins are a temporary compromise that is worthwhile considering the global drop in prices as they look to resuscitate the Argentinian project.
  • Jumbo Interactive (JIN) -3.10% has received approval to acquire UK-based external lottery manager Gatherwell by the UK Gambling Commission. The acquisition is expected to contribute $8.6m in ticket sales, $1.6m in revenue and $0.5m net profit before tax to FY20 results.
  • Healius (HLS) –2.56% guidance update at AGM. The company expects FY20 underlying NPAT to be between $94m and $102m.
  • Caltex Australia (CTX) +6.97% is looking to list its real estate portfolio. The IPO would be for up to a 49% interest in 250 core convenience retail sites in 1H20. UBS has been appointed lead manager for the IPO, alongside financial advisor Grant Samuel, while Herbert Smith Freehills has been appointed legal advisor. The company said it would pay rental payments of $80-100m to the property trust in its first year.
  • Sigma Healthcare (SIG) +9.02% has signed a 4.5 year, ‘first-line’ agreement with My Chemist/Chemist Warehouse Group for its FMCG products. Sales in the first full year of operations are expected to be $700m-800m.
  • Nufarm (NUF) –17.53% The company has identified additional sales rebate claims, around $9m , and is investigating its procedures which is of concern and will impact the bottom line, but of more concern is the profit warning. “The majority of Nufarm’s first half earnings are generated in the second quarter and while it has become increasingly difficult to forecast the half year results with reasonable confidence, the company expects first half earnings before interest, tax, depreciation and amortisation to be significantly lower than the prior year. More from the company, “Trading conditions have been difficult for FY20 to date and this has resulted in lower earnings in all regions for the first quarter compared to the prior year. In particular, high channel inventories and substantially lower demand in North America has resulted in first quarter earnings before interest, tax, depreciation and amortisation of approximately $20m below the corresponding period for this region and it is considered unlikely this will be mitigated in the second quarter”. Hardly a surprise that the stock is down but the issues in the US are new ones and although the market has concentrated on the drought impact, it seems the company has more issues than that to address.

ECONOMIC NEWS

  • TD Securities says US Fed will cut twice in first half of 2020.

BOND MARKET

  • Biggest bond rally in years is driving the Japanese away. Japan sold a net 47bn yen of sovereign debt in September taking the years sale to 139bn Yen. The Japanese are set to be net sellers for the first time since 2013.

  • UBS Group AG sees the local 10-year yield hitting a record 0.5% next year if the US and China cannot do a deal.The yield has slumped 122bps this year, the most since 2014, to 1.10%.
  • 2 – year bond yields unchanged at 0.75%
  • 5 – year bond yields up 1bps to 0.77%
  • 10 – year bond yields up 2bps to 1.09%

ASIAN NEWS

  • Hong Kong celebrates first violence free weekend in six months.
  • HK Pro-Democracy parties win huge mandate. For what? Carrie Lam crushed.
  • Chinese ‘pacman’ Mengniu Dairy, is now buying Kirin’s beverage business for US$419m which includes a bunch of Australian milk brands like Dairy Farmers and Farmers Union. This comes straight after the acquisition of Bellamy’s.

EUROPEAN AND US NEWS

  • Bitcon has fallen to a six-month low as China threatens a crack down.

  • LMVH is closing in on a deal to buy Tiffanys. Maybe a breakfast meeting could seal the deal?
  • Boris has set out his vision for a post Brexit Britain. NHS big winners. Hair stylists big losers.
  • And then there were 18. Michael Bloomberg launches Presidential campaign.
  • Novartis agrees a US$9.7bn deal to buy The Medicines Company.
  • Thanksgiving this week. Black Friday kicks off retail frenzy.

And finally…

Job interviewer: “And where would you see yourself in five years’ time Mr. Jeffries?”

Mr. Jeffries: “Personally I believe my biggest weakness is in listening.”

 

So much has changed since my girlfriend told me we’re having a baby. For instance my name, address and telephone number!

 

Do you know why women aren’t allowed in space?

To avoid scenarios like: “Houston, we have a problem!”

“What is the problem?”

“Yeah, great, pretend like you don’t know what I’m talking about!”

Clarence

XXXX

mt_tryforfree

Financial Markets and Political Commentary

 

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Henry Jennings Contact: henryjennings@mac.com // @henryj007 Has been involved in Investment Banking and Stockbroking since the early 1980's. Stockbroker - Camerons Stockbroking Macquarie Bank - Equity Capital markets Macquarie Group - Divisional Director