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A snapshot of today:
What happened today?
ASX 200 up 3.1 points at 5125.7 as good jobs numbers lift the gloom for the banks. BHP continues to struggle as it flirts with $20. Santos back and smashed and China slips 1.6%. AUD kicks higher on jobs.
After a negative start from BHP and Santos, we saw the market recover its poise after better than expected jobs numbers. In fact they were so much better than expected that no one really believed them to begin with. It does take any rate cut talk off the table but the banks rallied hard as the lack of bad debts and jobs growth, will help profits going forward. As the day wore on confidence increased although it was mainly driven by the oversold banking sector. In the last 20 minutes though enthusiasm waned and we closed flat for the day at 5126 after a low of 5083.
The yield on 10-year notes jumped nine basis points to 2.96% following two days of declines. It rose as high as 2.99% on the jobs data.
The big four rallied hard with Westpac (WBC) +1.57% and Commonwealth Bank (CBA) +1.87% the best performers being the most exposed to local economic conditions. Other financials were a little less enthusiastic and continued to tread water with a positive bias. Insurers slightly better led by Insurance Australia (IAG) +0.8% and Suncorp (SUN) +0.3%.
- Energy stocks were weighed down by the disappointing Santos (STO) -16.4% rights issue, but the lower oil price also kept the pressure on the sector as we head into a December OPEC meeting. Woodside (WPL) -1.12%, AWE -5.19% and Beach Energy(BPT) -3.76%.
- Resource stocks remained under pressure following a downgrade from Sims Metal(SGM) -19% and the continuing issues with BHP-1.62%. Other miners slipped slightly with Oz Minerals (OZL) -1.34%, Lynas Corp (LYC) -%1.27, Iluka Resources (ILU) -1.29% and Western Areas (WSA)-2.94%. Fortescue Metals (FMG) -0.84% slipped slightly on news of a Chinese shareholder facing corruption inquiries. Meanwhile RIO+0.2% held up well as traders switched out of BHP.
- In the industrials things were mixed with Aurizon (AZJ) +3.99% after announcing an extension of the buy back,Computershare (CPU) +5% following a re-rating after the AGM yesterday. Meetings and outlook statements continue to dominate.
- The speculative stock of the day is Velpic (VPC)+140% after re-listing and back-dooring a cloud based eLearning business into the old International Coal shell.Kazakstan Potash Corp (KPC)-31.4% the biggest loser today on news of a new CEO and Executive Director.
- Santos (STO) -16.46 and the Santos Rights -17% from the opening price. STO returned to trade today and probably wished they hadn’t. A disappointing outcome as the shares fell from the open to close near their lows as institutions bailed out. In a grand piece of self-delusion, chairman Peter Coates described the issue as a success and said it gave “a clear sign of confidence” in the $3.5 billion package of measures that would the company’s debt load. Then the stock collapsed.
- And the hits keep on coming for BHP -1.62% as the Queensland Government has slapped them with a $288 million bill over what it claims are unpaid royalties that the group sidestepped by selling coal through its overseas marketing hub.The latest hit takes the total bill in tax and royalties assessments on BHP’s marketing arm to $810m.
- Talking capital raisings TPG Telecom (TPM) -3.88% had more luck than Santos as they raised $300m in an underwritten placement at a mere 3.9% discount. Of 1040c. Naturally the price went straight to the offer price as traders took profits.
- BWX +0.44% continued their run after the successful listing and a 50% rise yesterday. The skin care products company is riding the clean and green wave with cosmetics with brands such as Sukin and Renew Skincare. The company prospectus points to a Euromonitor survey that showed the Asia-Pacific region’s skincare segment is expected to grow by $US15.9 billion in revenue between 2014 and 2019. It is expected that around 70% of the growth will be driven by China. The company’s forecast gross margin – an impressive 59.9% – underlines just how profitable the “all natural” sector can be.
- Westfield Corp (WFD) -1.93% as they issued their 3rd quarter update. The Strong operating performance with high sales productivity with annual specialty retail sales of $722 psf, up 6.7% for the three months and up 7.1% for the 12 months to Sep 15. $1.4bn Westfield World Trade Centre now 100% leased
- Sims Group (SGM) -19% held their AGM today and updated the market on the outlook. According to the company ’a sharp deterioration in market conditions in 1HFY16 has placed significant downward pressure on EBIT’. No sign of any respite in the short term.
- Seven West Media (SWM) -3.7% has warned at its AGM today that its profits for 2016 will be at the lower end of its guidance, which was for a fall of between 5 per cent and 10 per cent in underlying earnings before interest and tax.
- Graincorp (GNC) -1.23% as net profit dived 36.2 % to $32.1m in the year ending September 30 after dry weather hit Australian grain volumes and competition intensified. Analysts are expecting the company’s net profit this financial year to rise to $85.3 million and revenue to $4.17 billion. Final dividend of 2.5 cents compared with 5 cents last year.
- Goodbye rate cuts as the ABS announced stunning jobs numbers,best since 2010 and credits the ‘Turnbull effect’. Apparently Malcolm single handedly created 40,000 full time jobs and 18,000 part time jobs for a massive 58,000 in September. Seems the man can do no wrong as Bill Shorten choked on his morning coffee. Not only but also the participation rate increased slightly to 65%.
- Is there nothing Malcolm cannot do?
- Data showed the southeastern state of Victoria added 26,100 jobs in October and its unemployment rate fell by 0.7 points to 5.6 %. New South Wales added 18,700 in the month as its jobless rate fell to 5.5 % from 5.8%.
- The Bank of Korea kept its benchmark interest rate unchanged for a fifth consecutive month as the economy grew at the fastest pace in more than five years while global uncertainties clouded the outlook . The decision to hold the seven-day repurchase rate at 1.5 % as forecast.
- Alibaba Group Holding logged a record 91.2 billion yuan ($14.3 billion) in sales on Singles’ Day, turning a sweethearts’ holiday dreamed up two decades ago into a major online shopping event.
- The Lenovo Group posted a second-quarter operating loss that was smaller than analyst estimates.The operating loss was $784 million in the second quarter ended September, compared with the $798 million average expected by analysts. The net loss for the quarter was $714 million compared with estimates for a loss of $803 million.
Ahead in European Markets
OPEC is not a happy place as the Vienna meeting on December 4th looms. There is plenty of talk from smaller members on the policy of the Saudis to continue to flood the world with oil. 2m barrels a day are superfluous to requirements. The International Energy Agency (IEA) estimates that the oil price crash has cut OPEC revenues from $1 trillion a year to $550bn.
The IEA says oil demand will be just 103m b/d in 2040 even under modest carbon curbs. It will collapse to 83.4m b/d if global leaders grasp the nettle any time soon.
In this atmosphere M&A activity continues despite low oil prices. Plenty of money around too for big deals as Anadarko withdraws its bid for Apache as they could not agree on access to non public available information.
- FTSE +4.50 points.
- DAX +78 points.
- CAC +40 points.