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

 

ASX 200 up 56 to 6787. US Futures rise points on trade peace hopes. The market was dominated by two pieces of news today, Brian Hartzer’s resignation from WBC and the takeover of CTX by a Canadian company. WBC rose 1.7% on the news of a executive and board reshuffle although not seen as enough by some and the Canadians ACT bid 3450c for CTX with the stock rising 13.4%. The WBC news brought the bargain hunters out for the finance sector after days of being sold off, CBA rose 1.1% and ANZ up 0.4%. MQG as usual pushed ahead up another 0.7% and insurers had a good day despite a mini cyclone hitting Sydney this afternoon. Miners were back in demand, BHP up 0.1% and FMG up 1.4% on increasing iron ore pricing, Energy stocks too were better led by WPL up 0.8% and STO up 0.4%. Healthcare as usual dominated by CSL up 2.3% but COH also in the green today up 2.2%. Bond proxies better as a defensive play with TCL up 1%. In corporate news, WBC dominated but BOQ returned to trade and fell 5.8%. EVN has bought a Canadian gold producer and rose 2.4%, CTX followed up its cunning plan for a property spin off with a non-binding approach from Canadian predator ACT. 10 -year bond yield fell slightly ahead of RBA chief tellers long awaited speech tonight on ‘Unconventional Monetary Policy’. Across the region, Alibaba started life listed in HK and rose around 7% and Chinese stocks rose ahead of changes to MSCI weighting due soon. Japan up 0.35% and China up 0.1%. Carrie Lam fronted media for her weekly briefing and is in a reflective mood.

ASX 200 rallies 56 to 6787.

  • High 6798 Low 6738.
  • Banks rally as Hartzer thrown overboard.
  • Miners do well as iron ore rises.
  • Energy stocks up and away.
  • Interest rate sensitive stocks better.
  • 10-year bond yields ease to 1.08%.
  • AUD weaker at 67.80c
  • Aussie gold weaker at $2145
  • Bitcoin falls to US$6525
  • US futures up 32
  • Asian markets better with Japan up 0.35% and China up 0.10%.

STOCKS                                               

  • CTX +13.43% takeover approach from Canadians at 3450c.
  • AVH +6.09% AGM Comments
  • PPK +5.69% AGM presentation
  • NWL -0.81% AGM chairman’s address.
  • BOQ -5.79% returns from capital raising.
  • AWC -3.73% broker downgrade.
  • SIG +1.38% Citi downgrades to sell.
  • BVS +11.83% AGM comments.
  • SEK +3.03% affirms guidance.
  • LYC -3.48% AGM Comments
  • AMP -3.31% Capital Notes 2 Presentation.
  • PET -3.19% guidance reaffirmed. Think thats the fourth time.
  • BKW +0.44% property division upbeat.
  • NWH +4.03% confirms top line guidance.
  • SWM -2.56% Goldmans cuts to sell.
  • MLX -unchanged- puts Nifty on Care and Maintenance.
  • APT -1.38% Bell Potter lifts target
  • EMR +5.13% reinstatement to listing and investment approved for Okvau Gold.
  • EVN +2.36% Red Lake acquisition in Canada.
  • QAN -0.69% job cuts on the cards.
  • Speculative stock of the day: Simavita (SVA) +86.21% two days in a row. Adult nappy technology gaining friends. Up 500%+ in two days.
  • Biggest Risers: CTX, BVS, ORE, AVH. PPK and PPH.
  • Biggest Falls: BOQ, HUB, OPT, VGI, BIN and AWC.

TODAY

  • Westpac (WBC) +1.72% Brian Hartzer has resigned. CFO Peter King will take over as interim CEO until a replacement can be found. Chairman Lindsay Maxsted will also step down next year.
  • Caltex (CTX) +13.43% In a trading halt after receiving a non-binding & conditional takeover offer from Alimentation Couche-Tard Inc of 3450c cash per share (prior offer from grp was 3200c per share). CTX last traded at 2979c.
  • Evolution Mining (EVN) +2.36% has acquired a Canadian gold mine, Red Lake gold Complex for US$375m in cash with an additional US$100m on resource discovery. EVN will fund the deal through $600m in unsecured loans.
  • Qantas (QAN) –0.69% To focus on head office job cuts, the AFR has reported QAN will lay off hundreds of workers before Christmas. The restructuring will not impact pilots, cabin crew or airport staff, which are quoted to be growing.
  • SEEK (SEK) +3.03% Provides trading update and reaffirms FY20 guidance at AGM; dividend pay-out now expected to be between 30-50% of cash NPAT vs prior period 50-60% pay-out. Highlights weak macro conditions across key markets including ANZ, Asia and China and points to a potential impact on FY20 guidance if they deteriorate further.
  • AMP Limited (AMP) -3.31% Launches $200m capital notes offer to help meet general funding requirements, including to fund additional tier 1 capital.
  • Brickworks (BKW) +0.44% Provides outlook at AGM; “the outlook across the divisions varies. North American acquisitions have come at an opportune time and will provide a new and significant earnings contribution as the building industry in Australia moves through the current downturn. “Another strong year is expected for Property, and WHSP is expected to deliver a stable and growing stream of earnings and dividends over the long term.”

ECONOMIC NEWS

  • RBA News: Guy Debelle said wage growth would remain largely unchanged at current levels. Governor Phil talks tonight on ‘Unconventional Monetary Policy’ or UMP.
  • Weekly consumer confidence falls from 109.9 to 106.8 – the lowest result in 4 years.

BOND MARKET

  • 2 – year bond yields unchanged at 0.76%
  • 5 – year bond yields down 1bps to 0.77%
  • 10 – year bond yields down 2bps to 1.08%

ASIAN NEWS

  • Alibaba debuts in Hong Kong listing after being 42 times oversubscribed. Up nearly 7% on debut. Keep calm and Carrie on Lam fronts media for first time since pro-democracy election wins. Offers nothing except reflection.
  • Money is heading to China and HK stocks. MSCI is about to include a whole swathe of Chinese stocks in Shanghai and Shenzen in the global indices. A shares will now have a weighting of 12.1% up from 7.9% in the MSCI China Index and 4.1% in the MSCI EM Index. Also 204 A shares including 22 on ChiNext will also be added to MSCI China index bringing the total to 472 stocks.
  • US/ China hold a phone call and have “reached consensus on properly resolving relevant issues”. December 15th is looming large now.  Great graphic from Bloomberg on the twists and turns of a trade deal.

EUROPEAN AND US NEWS

  • Musk now has orders for 200,000 Cyber Trucks.
  • The deal is back. US$70bn in M&A announced in a single day. Boom. Merger Monday is back.
  • Powell says room to build on US expansion.
  • World trade contracted sharply in September. The volume of global trade dropped by 1.3% in September compared to the previous month, after a 0.5% expansion in August, according to data from the CPB World Trade Monitor.

  • Investors chasing yield are pumping huge sums of money into US Subprime car loans. At $29bn so far this year, issuance of subprime auto ABS is on track to surpass 2018’s record haul of $32bn. This won’t end well. There was more than US$1.3tn of US auto debt outstanding at the end of the third quarter.

 

And finally…

A guy is sitting at home when he hears a knock at the door.

He opens the door and sees a snail on the porch. He picks up the snail and throws it as far as he can.

Three years later there’s a knock on the door. He opens it and sees the same snail. The snail says: ‘What the hell was that all about?’

‘Animals may be our friends. But they won’t pick you up at the airport.

 

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