Friday 28th January – Australian Market Wrap

The ASX 200 closed up 150 points (2.2%) after a strong start and then a flop before gathering and pushing up to 6988 as bargain hunters emerged with book squaring too. We finished the week down 2.6%.  Across the board gains with iron ore miners the standout. BHP up 2.7%, RIO up 4.1% and GRR up 4.0%. CIA had a good day rising 8.8% on broker upgrades. Resources back in favour in lithium stocks too as bargain hunters scooped up stocks ahead of the weekend. PLS up 2.0%, VUL up 4.4% and MCR doing well up 0.9% on a broker piece. Energy stocks managed to eke out a rise too given oil was slightly weaker, gold miners sloppy, in AUD terms gold was unchanged but damage done yesterday. RSG rose 7.3%, NCM slid 6.4% on its quarterly production issues. Industrials firmed led by CSL up 3.2% in the healthcare sector. RMD flat after some positive numbers for Q4 today. SHL and RHC up with industrials like TLS and SEK doing well. Consumer stocks saw gains, WOW up 3.5% and COL rising 5.0%. Banks too in demand with the Big Bank Basket at $171.42 (1.9%). MQG gained 4.0% and ASX is relishing the extra volatility and volumes for equities and derivatives. The stock up 2.9%. Tech rose although SQ2 fell into a hole of 1.0% as Apple iPhones look set to double as merchant payment platforms. Is there anything that an iPhone cannot do. The AllTech Index rose 2.4%. In company news today, more quarterlies, block trade in MYR thought to be Solly buying more and NCM having some production issues. In economic news, PPI rose 1.3%, to be up 3.7% over the year. Asian markets slightly better with Japan up 2.0%, China flat and HK down 0.8% and 10-year yields slip to 1.95%.

MAJOR MOVERS:

  • Winners: A4N, SM1, IMU, SDR, ABT, PNV, HT1, CUV, CIA.
  • Losers: ADO, RMS, EMR, NCM, DEG, SYA, WSA
  • Positive sectors: Everything.
  • Negative sectors: Gold miners.
  • Hi 7000 Lo 6838 Another huge volume day.
  • For the week the ASX 200 has fallen 2.6%
  • Big Bank Basket: Rallies to $171.42(+1.9%)
  • All-Tech index: Up 2.4%
  • Gold: Eases to $2558.
  • Bitcoin: Rallying to US$37278
  • Aussie Dollar:  Savaged to 70.31c 10-YEAR YIELD: Eases back to 1.95%
  • Asian markets slightly better with Japan up 2.0%, China flat and HK down 0.8%
  • US Futures: Dow up 98 points Nasdaq up 113.

STOCKS ON THE MOVE

  • A4N +11.11% quarterly report this week bringing buyers.
  • CIA +8.75% pays a surprise dividend yesterday. Iron ore price rise.
  • NMT +8.40% quarterly report cheers.
  • 360 +7.61% tech bounce back.
  • IMU +10.53% PD1-Vaxx clinical trial supply agreement.
  • IHL +5.81% first signs of a bounce.
  • IFL +7.90% broker upgrades.
  • ABR +9.22% US listing timetable.
  • DCC +5.33% Q4 results and new CEO Lisa Wade.
  • PH2 +28.77% H2X India JV to supply hydrogen powered products and vehicles.
  • ARR +42.86% letter to shareholders.
  • CBR +19.05% quarterly report.
  • PBH +0.80% GS still bullish.
  • DSK +17.37% the candle is burning bright.
  • AXE +11.58% tech bounce back.
  • TNT +10.00% quarterly report.
  • ADO -28.57% TGA wants more info.
  • NCM-6.36% quarterly issues with staffing and supply chain issues.
  • RMS -8.04% quarterly report.
  • IPO of the Day: Firebrick Pharma (FRE) +165.00% with a $100m plus valuation for its nasal spray for the common cold.
  • Speculative stock of the Day: American Rare Earths (ARR) +42.86% – Nice letter to shareholders today extolling their accomplishments.

IN THE NEWS

  • Newcrest Mining (NCM) gold production up 10% in the December quarter, added it was on track to deliver FY22 production guidance of between 1.8m and 2m oz of gold. Production expected to further increase in the March quarter.
  • Autosports Group (ASG) purchases 98 O’Riordan Street, Alexandria for $22.4m.
  • Panoramic Resources (PAN) reports Q2 Savannah Nickel Production of 779t of nickel, 559t of copper and 53t of cobalt in 11,115dmt of concentrate in the quarter as ramp up commences. Production guidance for FY23 will be provided in mid-2022.
  • PointsBet (PBH) Q2 operating loss of $51.8m, revenue of $90.4m and turnover $1.33bn vs year-ago $1.20bn. Gross win margin 10.1% vs year-ago 7.0%. Active clients in Australia 232.9k, +63% vs year ago. In the US 211.1K, +210% vs a year ago.
  • ResMed (RMD) Q2 EPS US$1.47 vs year-ago US$1.41. Revenue US$894.9m vs year-ago US$800m and consensus of US$921.9m.
  • MYR – Block trade of 3.9% at 45c through Shaw and Partners. Maybe Solly increasing his holding.
  • Speculation Santos (STO) is in talks with Total for PNG LNG stake sale.

ECONOMIC NEWS/ BOND MARKETS

  • Producer price index (business inflation) for the December quarter rose 1.3%, to be up 3.7% over the year. The main contributors to quarterly growth according to the ABS were building construction and motor vehicle costs. Costs associated with building construction rose due to ongoing strong demand for housing and builders passing on rising material and labour costs. Motor vehicle and motor vehicle part manufacturing increased, due to ongoing shortages of semi-conductors and other components limiting production.
  • Regional house prices went from strength to strength in 2021 as the pandemic made regions more attractive. 24 regional local government areas had median house price rises of at least 20%, some higher than 40% like the Surf coast located south of Melbourne.
  • UBS have named its best and worse for the reporting season. The hoped for winners include ADH, BRG, BWZ, EML and SFR. IEL, MP1 , NXT and APE also make the cut for as positive surprise. Negative risk stocks include AD8, DUB, KGN and NHC. Some of those have already either confessed or had quarterlies so UBS may be a little behind with their picks.

CV19 NEWS

  • Globally, the latest vaccination rate is 30,997,719 doses per day, which includes 8,730,299 people people getting their first shot. At this pace, it will take another 4 months until 75% of the population has received at least one dose.

ASIAN MARKETS

  • China’s December industrial profits recorded the smallest level of growth in more than a year and a half. The reading strengthens the case for PBoC support.
  • Singapore home prices climbed the most in more than a decade last year. Prices grew 10.6% in 2021.
  • Zinc is the word as Mitsui Mining is increasing zinc prices this year in annual contracts by at least 35% for the Japanese company’s customers in Asia.
  • The IMF has suggested that Japan keeps stimulating despite global tightening.
  • Hyundai Motors has pulled plans for a US$1bn float as markets have fallen.
  • Travel in China over Lunar New Year forecast to rise 36% from 2021.

US AND EUROPEAN NEWS

  • Warren Buffett is once again richer than Mark Zuckerberg. And a shout out to poor old Elon who saw his wealth plunge US$26bn after the results. He is down around US$54bn this year. I believe he has launched a GoFundMe page.
  • The world’s 500 richest people have lost a combined $635 billion since Jan. 1. Been a tough year for the roses.
  • Apple is set to launch a new service for merchants that will be able to use an ordinary iPhone to accept customer payments. No wonder Block is worried.
  • Google has invested US$700m in Bharti Airtel to boost its presence in India.

And finally…

Clarence

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