Friday 13th December – Australian Market Wrap

The ASX 200 celebrates up 31 to 6740 on Boris win and trade deal lite.Jason nowhere to be seen today. US Futures up points. Blue touch paper lit this morning as a potential trade deal (not signed yet) and a Boris victory take another two risks off the table. UK exposed stocks rally hard. Miners rallied hard on hopes for an agreement, BHP rose 1.9% and FMG up 2%. S32 also had a good day on index changes up 2.9%. Banks too back in the winner’s enclosure with WBC leading the charge up 1.7% after a mammoth AGM yesterday. CBA up 0.4% and MQG bounced hard too up 1.6%. Energy stocks in demand with WPL up 1.1% and ORG up 1.4%. Elsewhere things drifted off with healthcare stocks taking a pause CSL down 0.4% and FPH down 2.3%. Bond proxies also slipped as the 10-year yield rose, TCL down 1.3% and SYD down 2.45% after announcing a 19.5c distribution that clearly underwhelmed. Consumer staples also eased with WOW down 1.45% and COL down 0.7%. REITs too under the pump with GMG down 2.8% and MGR easing 4.3%. Tech stocks bounced back in places, LNK up 5%, CPU up 3.2% and XRO up 0.6%. UK exposed stocks did very well as Boris emulates Maggie with a historic win, VUK up 7.7% and JHG up 3.8%. In corporate news, PDL got a wriggle on post AGM up 8.1%, DXS fell 1.4% after an independent valuation failed to inspire, SUN rose 0.7% after a raft of new executive appointments. Nothing on the economic front as trade deals and UK vote dominated. 10-year yields back up to 1.27% on a huge day and the AUD firing higher to 69.28c. Asdian markets better with Japan up 2.46% and China up 1.39%

  • ASX 200 up 31 to 6740. Volume on low side again.
  • High 6753 Low 6721. Range tightens.
  • Market up 32 points in a week. Feels like more.
  • For the week the ASX 200 is
  • Banks run hard. Miners up as metals gain.
  • Energy finds its mojo though Healthcare in the sick bay.
  • Staples ease as yields rise. Gold miners flop.
  • 10-year bond yields rally to 1.27%. Biggest rise in three years.
  • AUD strengthens 69.28c
  • US futures up points
  • Aussie gold down to $2118
  • Bitcoin steady to US$7219
  • Asian markets firms with Japan up 2.46% and China down 1.39%

STOCKS                                               

  • PNV 11.82 EU approvals.
  • PBH +10.63% bounce back on US appointment.
  • AVH +6.48% PNV announcement helps.
  • LYC +8.86% US DoD tender.
  • PDL +8.12% AGM statement.
  • APT -0.59% broker upgrade.
  • AD8 +6.50% bounce back from recent sell off.
  • VUK +7.71% Boris bounce.
  • JHG +3.81% UK exposed.
  • MIN +3.52% lithium price falls fail to curb enthusiasm.
  • SLR -9.20% GOR -7.02% NST -6.13% gold slips.
  • NIC +8.40% nickel rise.
  • CIM +2.57% another buyback.
  • WZR +6.67% Moelis says buy PT 20c.
  • PCK +13.89% good bounce.
  • SYR +6.82% rally resumes.
  • EOF +9.77% no trouble in US.
  • ERA – asks takeover panel to think again.
  • CLW -4.30% completes placement.
  • Speculative stock of the day: Nothing of interest today.
  • Biggest Risers: PNV, PAR, PBH, LYC, NIC and PDL
  • Biggest Falls: ZEL, SLR, RMS, EVN. GOR, RRL and NST.

TODAY

  • Ecofibre (EOF) +9.77% has been a volatile stock since we added to the MT Growth Portfolio. This morning the company has announced, in response to the US Food and Drug Administration issuing warning letters to 15 companies illegally selling products containing cannabidiol (CBD), that its wholly-owned subsidiary Ananda Health does not add CBD to food, does not make therapeutic claims on its products, has not received and is not aware of any adverse correspondence from the FDA regarding its product labelling, and it is fully compliant with the 2018 farm bill. There is, of course, the possibility that EOF will still receive a letter but it appears the company is aware of the situation has addressed the key concerns.
  • Sigma Healthcare (SIG) +3.94% Updates FY20 EBITDA guidance following an agreement with the My Chemist/Chemist Warehouse Group. Sales are expected to lift between $700-800m but due to the delay in certain project work, FY20 EBITDA of approximately $46-47m is anticipated vs prior guided A$55-60m.
  • CIMIC Group (CIM) +2.57% Announces further on-market share buy-back of up to 10% of shares.
  • Xero (XRO) +0.58% Chairman Graham Smith to retire, David Thodey appointed as successor.
  • Pengana Capital (PCG) +1.91% Reports FUM at 30-Nov of $3.17bn vs $3.13bn as at 31-Oct.
  • Polynovo (PNV) +11.82% Has received approval to sell its NovoSorb BTM product through the Europe and the UK.
  • Dexus Property Group (DXS) -1.43% Announces $656m increase in portfolio valuations at 31-Dec-19. 109 of 118 properties were externally valued. NTA expected to increase 60c.

NEWS

  • IMF says local banks have too much exposure to the housing sector. IMF noted Australia’s rebounding property market and warned rapid credit growth and high debt required banks and regulators to be ready.
  • The Australian securitisation market enjoyed a bumper year in 2019, with a rise in residential mortgage backed securities driving total issuance to $45.4bn.

BOND MARKET

ASIAN NEWS

  • Chinese Foreign Minister Wang Yi criticised the US for actions that have damaged ties between the two countries.
  • China has suffered its biggest dollar bond default by a state-owned company in twenty years as a major Chinese commodity trader has defaulted on a US$1.25bn debt.
  • Japanese Tankan survey lowest reading since Marcy 2013. So much for the stimulus and negative rates.

EUROPEAN AND US NEWS

  • Time for Frankie. When two tribes go to war. Frankie says relax. Trade deal looks agreed but hardly earth shattering. Details scant but revolves around pork and beans. Trump and Xi won’t even do the signing. Underlings to sign. No winners here.No real trumpeting of the deal.

  • Cheap holidays to UK now off the agenda. Pound rallies on Boris mandate. Corbyn steps down, Labour can’t work out what went wrong. One word. Corbyn. Unelectable. Let the autopsy begin. Get it done. Best result since 1987 for Tories.
  • Jan 31st is NOT the end it is only the beginning. Scotland and NI likley to pull out making it just the Kingodm.
  • QANTAS announces non -stop flights to London and New York using Airbus not Boeing.
  • This could be one of the big issues of 2020. Facebook and Google face a supercharged regulatory risk next year.
  • Here’s a worry, the Fed is set to double its repo market intervention after another jump in short term borrowing costs.
  • US lawmakers look to have done a deal to avert another government shutdown.
  • Christine Lagarde is not a dove or a hawk but an owl. Sounds upbeat at first meeting. They all do then it just grinds them down.

And finally…Joke of the day has to be Jez Corbyn

Who was the first person to look at a cow and say, “I think I’ll squeeze these dangly things here, and drink whatever comes out?”
Who was the first person to say, “See that chicken there? I’m gonna eat the next thing that comes outta its butt.”

 

Clarence

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