Monday 18th January – Australian Market Wrap

The ASX 200 loses 52 to 6663 (0.8%). Back to pre-Xmas levels. Chinese economic numbers failed to sir the juices. Resources stocks led the market down despite higher iron ore process and a lower AUD. BHP dropped 2.9%, RIO off 1.4% and FMG down 1.4%. Gold miners also in the doghouse with NCM off 1.7% and EVN down 1.5%. Energy stocks fell on oil price falls, WPL down % and STO off %. Banks were another big loser today with the Big Bank Basket dropping to $153.79 as CBA bled 0.8% and WBC fell 0.7%. Industrials were mixed though as CSL flat lined for a change, RHC bounced 4.3% and COH up 0.2% as the lower AUD helped buyers regroup. Tech stocks mixed as APT turned from positive to negative falling 0.9% and XRO bucked the trend rising 2.1%. Retail was a place to be following updates from JBH, PMV and GLB all showing good online sales. In corporate news, JBH rose 3.8%, expects to see first-half profit up 86%. PMV down 2.3% on management changes. SUL down 1.0% on its sales update. Z1P up 2.1%, SPP, raised $56.7m at 529c vs $30 target. Chinese data showed a strong bounce continues, up 6.5% from a year ago. Unemployment anticipated to remain steady at 5.2%. 10-year yields slipped to 1.06%

Dow Futures down 37. US markets closed tonight for Martin Luther King Holiday.

Today’s Highlights

  • ASX 200 falls 52 to 6663.
  • High 6702 Low 6652.
  • Big Bank Basket slips to $155.53.
  • All Tech romps 1.5% higher on APT. Now bigger than TLS.
  • Dow Futures down 37. US markets closed for Martin Luther King Day.
  • Gold steady at AUD$2377
  • 10-year yield slips to 1.06%
  • AUD falls to 76.93c
  • Bitcoin drops to US$35,419.
  • In Asia markets mixed, Japan down 0.9% and China up 0.8%

STOCKS

  • VUL +40.06% fires up again.
  • WBT +9.60% well off intra-day highs.
  • PME +11.02% broker upgrades continue.
  • DTL +6.84% optimistic business update.
  • JBH +3.80% online sales soaring.
  • QBE -5.72% UK court case.
  • ASM -7.28% SYR -6.03% Chinese moves dampen enthusiasm.
  • DJW -3.50% profit drops 66% on dividend slump.
  • HVN +3.70% takes its cue from JBH.
  • SLX -9.06% GLE deal restructured.
  • LLC -1.17% MS calls a soft half.
  • ILU -2.79% GS reiterates buy rating. PT 720c.
  • SO4 +15.38% Lakeway project nearing completion.
  • GLB +34.33% Trading update. 60% jump in sales.
  • SYA +22.22% positive vibes continue.
  • A2M -1.18% loses another executive.
  • HUO unchanged stock anomalies at Ingelburn.
  • IPO of the Day: Chimeric Therapeutics (CHM) +% solid first day evaporates for CA-T Cancer treatment company.
  • Speculative Stock of the Day: Anson Resources (ASN) +75.00% % good volume following Li Battery Cell performance testing. Lithium Hydroxide and carbonate produced from Paradox Brine in Utah to be tested by Novonix. Novonix testing program expected to take 4-5 months with first results due mid-March
  • Biggest Winners: VUL, PME, DTL, ARB, GUD and RHC.
  • Biggest Losers: YAL, BET, AVZ, ASM, PDN and SYR.

TODAY

  • Transurban Group (TCL) -0.39% TCL consortium among three bidders on shortlist for $14bn American Legion Bridge project. TCL with partner Macquarie infrastructure are reportedly competing with a consortium led by Itinera Infrastructure and another led by Cintra and John Laing Investments.Pact (PGH) -0.75% Sydney-based private equity group thought to be in talks with Pact in regard to its manufacturing division, which was estimated to be worth $120m-$140m a year ago.
  • VGI Partners (VGI) +1.22% Funds under management at the end of December $3.1bn vs $2.9bn quarter ago. Estimates ~$21m in performance fee revenue (pre-tax) for the period ended December 2020.
  • New Century Resources (NCZ) -6.25% Expects a material increase in December quarter adjusted EBITDA with quarterly average zinc price up +12% to US119c/lb.Money3 Corp. (MNY) +3.66% To acquire General Motors Financial Company subsidiary GMF Australia. Upgrades full-year profit guidance to $36m vs prior $34m. Portfolio consists of ~700 automotive loans for new vehicles and Increases the group’s automotive loan book by $23m.
  • Premier Investments (PMV) -2.30% CEO of Premier Retail Mark McInnes announces intention to step down. Chairman comments, “At this time, it is business as usual. The Board has commenced a process to ensure an orderly transition, including a comprehensive search.”
  • JB Hi-Fi (JBH) +3.80% Preliminary unaudited first half profit (post AASB 16) $317.7m vs year-ago $170.6m. Online sales rose 161.7% to $678.8m, representing 13.7% of total sales.
  • Super Retail Group (SUL) -1.02% First half sales +23% vs year ago. Like-for-like sales +24%, online sales $237m, +87% vs year ago. Provisional revenue $1.78bn. Provisional segment EBIT $253-256m (pre-AASB 16). Provisional normalised profit $174-177m (pre-AASB 16).Woodside Petroleum (WPL) -0.41% Expands long term LNG supply agreement with Uniper. The quantity of Woodside LNG to be supplied under the amended sale and purchase agreement has doubled. Initial supply commencing in 2021 is now for a volume of up to 1Mtpa, increasing to ~2Mtpa from 2026. The majority of LNG supply from 2025 is conditional upon a final investment decision on the development of the Scarborough gas resource offshore Western Australia.
  • amaysim Australia (AYS) – The results of the business review and management’s relinquishment of Performance Rights has enabled AYS to revise its estimated Distribution by $0.005 to $0.67-$0.73 per share with a mid-point of $0.70 per share. Adds major holder Langfrist (19.19% stake) intends to vote in favour of the WAM Offer.

ECONOMIC NEWS

  • UBS said that the Australian economy in the last month was materially stronger than expected, even relative to the bank’s above-consensus view. The bank has lowered its estimate for 2020 economic contraction to 2.7% from 2.8% though.
  • UBS says, with GDP at 4.2% compared to the bank’s prior forecast of 3.8%.

International Travel Numbers

Key statistics:

  • Of the 35,100 estimated arrival trips, 17,800 were by Australian citizens.
  • Arrival trips show a 17.9% increase compared to the previous month.
  • Of the 49,900 estimated departure trips, 12,100 were by Australian citizens.
  • Departure trips shows a 9.8% increase compared to the previous month.

BONDS

COVID – 19 NEWS

  • New York state reported 13,842 new cases Sunday, the second daily drop after infections climbed to a record of just below 20,000 on Friday.
  • France reported 16,642 new cases on Sunday, the lowest daily increase in six days and less than the previous seven-day rolling average of infections of 18,148.
  • Italy reported 12,545 new cases Sunday, down from 16,310 a day earlier.
  • The U.K. reported another 38,598 cases on Sunday, the fewest since Dec. 27.
  • Dr Fauci says 100m does in 100 days is very doable.

ASIAN NEWS

Chinese GDP rose 6.5% in fourth quarter, beating expectations.

  • Industrial output rose 7.3% in December from a year earlier, and 2.8% in 2020.
  • Retail sales growth slowed to 4.6% in December from 5% in November. For the whole of 2020 it shrank 3.9%, led by an almost 17% drop in catering and restaurants.
  • Fixed-asset investment was 2.9% bigger in 2020 than in 2019.
  • The economy expanded 2.6% on a quarter-on-quarter basis in the final three months of the year, down from a revised 3% in the July-September period
  • The jobless rate was 5.2% at the end of December.
  • China set to expand regulations and control over the rare earths industrial chain and supervision.

EUROPEAN AND US HEADLINES

  • Goldman Sachs predicted the economy would expand 6.6% this year, faster than the 6.4% previously expected. Goldman’s estimate for 2021 economic growth is the second highest in a Bloomberg survey of 84 economists; the median estimate is 4.1%.
  • The Trump administration continues to target Huawei to the last after several suppliers to the Chinese company have had their licences rejected. The administration has targeted China’s three biggest telecom firms, its top chipmaker, its biggest social media and gaming players, its top two smartphone makers, its main deepwater energy explorer, its premier military aerospace contractor, its leading drone manufacturer and its primary commercial planemaker. Now all eyes on Biden to see what changes he will bring in if at all.

And finally….

An old teacher asked her student, “If I say, ‘I am beautiful,’ which tense is that?” The student replied, “It is obviously past.”

Clarence

XXXX