ASX..tempered with some caution ahead of results and our proximity to China…Australian Market Wrap. Headlines, Stocks, Bonds, Economic & Asian Market News. END of DAY REPORT with Henry Jennings.

 

The ASX 200 rose 27 points to 6976 although way off the opening best levels. US futures down 50 points. A strong opening on the back of the bounce in the US but tempered with some caution ahead of results and our proximity to China. Miners found friends as commodities showed some signs of life with BHP up 1.5% and FMG up 0.45% as a cyclone approaches the Pilbarra. Gold stocks fell on the pullback on bullion with NCM down 0.9% and NST down 1.5%. Could have been worse. In a mixed banking sector UBS named CBA as the world’s most expensive bank and it fell 1.2%. Lithium and battery related stocks had a day out at the beach on the back of the huge rally in Tesla, PLS up 11.3% and GXY up 17.7% squeezing a whole new bunch of shorters. Tech stocks higher after the sector surged in the US overnight, WTC the pick of the bunch, up 9%, with APX up 3.8% and industrials doing better led by CIM up 9.8% after a sigh of relief greeted the results. In other corporate news, JHG fell 0.3% after its results and MFG up 1.4% after a FUM report. On the economic front, governor Lowe spoke at the lunch club today, urging government and business to borrow more to increase productivity. Rates on hold, over to you, Scotty. New vehicle sales have tumbled again with a 12.5% fall in January as bushfires bite. The 10-yield bond yield rose to 1.03% and Asian markets continue to bounce on the increasing stimulus from the PBoC and others. Japan up 1.4% and China up 3%.

  • ASX 200 up 26 to 6976 although off highs.
  • High 7009 Low 6963 Average volume.
  • CSL closing in on CBA as the most valuable ASX listed company.
  • Miners higher on commodity bounce.
  • Banks mixed. CBA downgraded.
  • Industrials and tech stocks firm.
  • Lithium stocks climb out of depression.
  • 10-year bond yields rally to 1.03%
  • AUD firms to 67.38c
  • Dow futures up points.
  • Aussie gold drops to $2312
  • Bitcoin steady at US$9186
  • Asian markets feeling slightly better with Japan up 1.4% and China recovering 3%.

STOCKS                                               

  • LVT +15.69% 49m shares to be released from escrow. Weird it rallied.
  • ORE +18.95% GXY +17.70% PLS +11.29% SYR +14.58% lithium bounce
  • TPW +10.89% rally continues.
  • SMP +14.17% business update.
  • WTC +8.98% shorts cover pre results.
  • CIM +9.80% relief at results and CEO change.
  • LOV +8.40% Colette goes under.
  • IEL +6.19% fears overdone.
  • NEA +7.44% bottoming.
  • RSG -4.55% RRL -4.31% PRU –3.06% Gold price falls.
  • FDV -7.83% profit taking.
  • PGC -6.15% downgrades continue.
  • SPT -4.67% disappointment.
  • CBA -1.22% broker downgrades
  • MFG +1.38% tops $100bn under management.
  • NWH +5.52% contract win.
  • ALQ +1.05% US$116m profit.
  • DOW +0.41% PRN admits interest.
  • EOS -4.39% profit taking.
  • OEC -8.27% consolidating.
  • Speculative stock of the day: Betmakers (BET) +56.25% the company signed an exclusive deal for horseracing in New Jersey to deliver fixed odds betting. Now looking at doing deals with other US racetracks to access this market.
  • Biggest Risers: ORE, PLS, CIM, WTC, LOV, NEA and BWX
  • Biggest Falls: RSG, EOS, RRL, MYX, RMS, PBH, PPK and DHG

TODAY

  • Janus Henderson Group (JHG) –0.26% Released solid results after hours last night. Q4 EPS 65c ex-items vs consensus 66c. Revenue beat estimates at $601.2m vs consensus of $548.0m. Adjusted operating income came in at $171.0m vs consensus $162.4m.
  • Computershare (CPU) +1.06% Is continuing its strategy to build scale, acquiring US firm, Corporate Creations Enterprises for $142.9m. The deal is expected to be EPS accretive in its first full year post-completion. Funded from existing cash balances and undrawn debt facilities
  • Australian Unity Office Fund (AOF) -0.67% reports H1 funds from operations (FFO) of 9c vs year-ago 6c. NPAT $23m vs year-ago $13.1m. NTA per unit 285c vs year-ago 267c. Distribution per unit 8c vs year-ago 7.9c. Reconfirms FFO guidance between 17.3-17.7c. FY distribution guidance reaffirmed at 16c/unit.
  • Genworth Mortgage Insurance Australia (GMA) -2.81% reports FY underlying NPAT $97m vs year-ago $93.9m. Net earned premium (NEP) was up 6.0% on FY18 and above guidance of -5% to +5%. Declared a fully franked final ordinary dividend of 7.5cps. In FY20 net earned premium (NEP) is expected to be within the range of (5%) to +5%, y/y. Loss ratio is expected to be between 45% and 55%. Continues to target a FY20 payout ratio range of 50% to 80% of Underlying NPAT.
  • Perenti Global (PRN) +4.96% confirms media speculation that it is considering a potential acquisition of Downer’s mining services division.
  • Cimic (CIM) +9.80% numbers dropped last night with a $1bn annual loss after huge write-downs in Dubai. Juan Santamaria was named as its new CEO. The FY results included a 24% fall in construction profits of $470m and a 4% drop in services. Mining profits rose 41% to $603m. Analysts are still wary of the company despite the write-downs due to the high level of receivables, amounts owed to CIM but not paid. Receivables rose 14% in 2019 to $3.5bn. Guidance has been revised down to $800m after the Dubai write down.

ECONOMIC NEWS

  • Governor Lowe shifts the rate cut dial with his speech to August. Better economic times ahead. Read an edited transcript of Lowe’s speech here. Bushfires will take 0.2% off GDP.
  • The AiG Construction Index improved marginally in January to 41.3, seasonally adjusted, up from 38.9 in December.
  • The index has been below 50 since September 2018.
  • The Federal Chamber of Automotive Industries (FCAI), the group that collates industry figures, said on Wednesday that dealers sold 71,371 vehicles in January, 12.5 % lower than the year-earlier month, when dealers sold 81,994 vehicles. January 2020 also had one less selling day than the same month a year ago.

BOND MARKET

ASIAN NEWS

  • Macau shuts casinos, night clubs and bars. Online gambling takes off? 41 casionos in Macau.
  • Deaths now 500. Spreading to Japan. 10 infected on a cruise ship off Japan.
  • The PBoC has fixed the onshore yuan at 6.9823, the highest fix since December 27.
  • Softbank’s top US executive of the US$100bn Vision fund to leave.

EUROPEAN AND US NEWS

  • State of the Union fails to heal wounds. Nancy tears up speech. Not happy Jan. Trump performs well. Unbackable to win.
  • Impeachment trial result tomorrow. No surprises here.
  • Trump declares war on drug companies.
  • Tesla rally getting crazy. Ford shares disappoint down 10% on results. Saudi wealth fund sold its stake in Tesla in 4Q. Too soon. Missed out on big run. Now holds only 39,000 shares, down from 8.2m Doh.
  • If the Democrats cannot organise a chook raffle in Iowa what chance have they got in the election?
  • Looks like Buttigieg is ahead in the Iowa chook raffle. Sanders second. Bye Bye Biden.

And finally………..

A truck driver would amuse himself by running over lawyers.

Whenever he saw a lawyer walking down the side of the road he would swerve to hit him, enjoy the load, satisfying “THUMP”, and then swerve back onto the road. (at this point some of you are probably wondering how the trucker could distinguish the lawyers from the humans. (Obviously he saw the trail of slime they left!)

One day, as the truck driver was driving along he saw a priest hitchhiking.

He thought he would do a good turn and pulled the truck over. He asked the priest, “Where are you going, Father?”

“I’m going to the church 5 miles down the road,” replied the priest.

“No problem, Father! I’ll give you a lift. Climb in the truck.”

The happy priest climbed into the passenger seat and the truck driver continued down the road.

Suddenly the truck driver saw a lawyer walking down the road and instinctively he swerved to hit him. But then he remembered there was a priest in the truck with him, so at the last minute he swerved back away, narrowly missing the lawyer.

However even though he was certain he missed the lawyer, he still heard a loud “THUD”.

Not understanding where the noise came from he glanced in his mirrors and when he didn’t see anything, he turned to the priest and said, “I’m sorry Father. I almost hit that lawyer.”

“That’s okay”, replied the priest. “I got him with the door!”

 

I thank you…I’m here all week

Clarence

XXXX

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Financial Markets and Political Commentary