Friday 24th January – Australian Market Wrap

The ASX 200 rally peters out slightly ahead of the long Australia Day weekend. ASX 200 up only 2.5 to 7090.5. Dow Futures down points. A promising start but investors lost interest as the day wore on with a three-day weekend looming and a week-long Chinese holiday. Lunar New Year though is being scaled back dramatically in China as the Coronavirus forces city closures and potentially a closure of casinos in Macau. The banks were the strength today as defensive non-Asian exposed stocks. CBA up 0.5% and WBC up 0.5% after the new chair took to the media. Healthcare stocks rallied yet again with CSL pushing up 1.1% and SHL up 0.7%. In the mining sector, the iron ore miners were under pressure with BHP down 1.5% and RIO down 2.8% although FMG held firm down only 0.4% at the close. Consumer stocks firmed with industrials although SYD fell 2.4% as the virus spreads around the region effecting billions of travel plans. In corporate news, IAG issued a profit warning as the hailstorm took its toll, down 5.4%. SUN followed in its wake down 1.7%. In economic news, economists rushed to change interest rate cut forecasts following this week’s good jobs number. Meanwhile the 10-year yield continues to come under pressure down to 1.09%. The AUD trading around 68.49c and Asian markets closed as New Year kicks in. The year of the Rat. Japan up 0.1% though.

  • ASX 200 up 2.5 to 7090.5.
  • High 7123 Low 7086. Up 0.3% this week.
  • Banks show strength. Insurers hit with hail damage.
  • Miners under pressure on iron ore falls. Energy stocks shrug off lower oil prices.
  • Healthcare doing well as usual.
  • IAG gets hit with hail and margin pressure.
  • DOW and CIM bounce.
  • 10-year bond yields ease to 1.16%
  • AUD rises to 68.49c
  • Oil up 0.4% in Asian trade.
  • Dow futures down
  • Aussie gold steady at $2276.
  • Bitcoin slips to US$8303
  • Asian markets in holiday mode as Lunar New Year kicks off. Japan open and up 0.08%

STOCKS                                               

  • CIM +3.03% DOW +6.00% brokers turning positive.
  • VRL +4.42% another takeover bid
  • EOS +3.90% keeps on trucking.
  • NWL +5.13% broker upgrades.
  • IAG -5.44% hail Caesar. Not good.
  • M7T +12.50% back in favour.
  • TNE -4.99% Pinnacle selling down to 8%
  • WGX -4.24% quarterly update.
  • CVN -4.23% oil price hurts.
  • MSB -unchanged- rally runs out of steam.
  • SYD -2.43% coronavirus weighs.
  • SUN -1.67% IAG influence on hail damage.
  • APT +2.44% BNPL still going well.
  • CBA +0.5% cracks $85 for first time since July 17.
  • MVP +8.78% great rally continues.
  • PGL +4.00% management changes.
  • EHL +0.44% no bid for DOW business.
  • Speculative stock of the day: Imricor (IMR) +29.03% received CE mark approval for its Vision-MR Ablation Catheter and Vision-MR Dispersive Electrode.
  • IPO of the Day Cosol (COS) +% stunning debut with a 80% rise on decent volume. Small IT business focused on clients operating in asset-intensive industries. Enterprise Asset Management it is called EAM. On track to show 47% EBIT growth from $2.76m to $4.07%
  • Biggest Risers: MVP, DOW, NWL, VRL, PNI, PGH and PAR
  • Biggest Falls: RNC, IAG, TNE, COE, PRN and AGG

TODAY

  • Village Roadshow (VRL) +4.42% has been approached by BGH Capital for a takeover at 400c per share. The offer values the company at $781m, ahead of Pacific Equity Partners bid of 390c.
  • Virtus Health (VRT) +3.23% appoints Kate Munnings as Group CEO.
  • Prospa (PLG) +4.00% CFO Edoardo Bigazzi to leave the company to pursue other opportunities; Peter Loosmore appointed interim CFO effective 28-Jan.
  • Emeco Holdings (EHL) +0.44% responds to the report in The Australian regarding Downer Mining; Is NOT a bidder in the sales process for DOW.
  • Insurance Australia Group (IAG) -5.44% now expects FY20 reported insurance margin to be in the range of 14.5-16.5% vs previous guidance of 16-18%, following the hailstorm event.
  • Mount Gibson Iron reports (MGX) -3.57% raises FY20 guidance, now expects iron ore sales between 4.8-5.3 Mwmt vs prior 3.7-4.0 Mwmt.
  • Genworth Mortgage Insurance Australia (GMA) +0.26% appoints Pauline Blight-Johnston as CEO and MD. Blight-Johnston takes over from Duncan West who was appointed acting CEO on the first of January.

ECONOMIC NEWS

  • ‘Flash’ IHS Markit Purchasing Manager Indexes for January: Manufacturing 49.1 points vs prior 49.2 points. Services 48.9 points vs prior 49.8 points. Composite 48.6 points vs prior 49.6 points. A reading under 50 points to a contraction in activity.
  • Westpac and NAB have forecast annualised core inflation to reach 1.8% in December, up from 1.7% in September.
  • Brisbane based Morgans sees downside risk on earnings reports. We will look at some to surprise next week.
  • The odds of a February rate cut have tumbled to 17%. July is now looking strong. Westpac’s Bill Evans pushes his cut hope out to April.

BOND MARKET

ASIA NEWS

  • Coronavirus continues to grip Asia as Lunar New Year is being scaled down dramatically and cities closed off. Estimates that it could knock 1% off Chinese GDP growth although may be too early to say.

  • WHO says virus is local health emergency for now.
  • In Hong Kong, face masks are selling fast and at vastly inflated prices as the coronavirus spooks residents with long memories of 2003 and SARS.
  • Happy Year of the Rat.

EUROPEAN AND US NEWS

  • Atlassian delivers. Great result. 37% rise in revenue.
  • Steve Mnuchin has criticised Greta challenging her view onb climate change as she has not been to college.
  • ECB launches strategic review. It’s a yearlong review. Seems to be SOP these days. Keeps anyone from making decisions.
  • Intel shares surge as chip recovery continues. Always a good indicator of global growth and confidence.
  • Davos continues. Good to watch the former Lebanese Foreign Minister squirm as a journalist asked him how he afforded his private jet fare/ Davos ticket on $5000 a month. Maybe Afterpay?

The funnies!!!

While reading an article last night about fathers and sons, memories came flooding back to the time I took me son out for his first pint.

Off we went to our local pub only two miles from the cottage.

I got him a Guinness.

He didn’t like it, so I drank it.

Then I got him a Kilkenny’s, he didn’t like that either, so I drank it.

Finally, I thought he might like some Harp Lager.

He didn’t. I drank it.

I thought maybe he’d like whiskey better than beer so we tried a Jameson’s, nope!

In desperation, I had him try that rare Redbreast, Ireland’s finest.

He wouldn’t even smell it.

What could I do but drink it!

By the time I realised he just didn’t like to drink I was so shit-faced I could hardly

push his pram back home

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And finally….Have a good Australia Day long weekend. Double demerit points apply. Stay safe.

Clarence

XXX

 

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