ASX 200 Index Today Aussie Dollar Today US69.65c.
ASX rallies 62.3 points to 4987.4 for its first rise this year. Overseas leads kick us off with Chinese data keeping some momentum up. Resources still a drag. China flat lines as Tokyo reverses yesterday’s losses up 2.7%. US futures up 135. AUD back above 70 cents at 70.36.
A mildly positive start built momentum as the market cheered the lunchtime Chinese Trade numbers and the fixing of the yuan. Once again the yuan peg was virtually unchanged with much better trade numbers bringing the buyers back. The index topped out at 4989 after the numbers and then eased back before a late surge to near session highs on nearly$5bn of trade. Again resources were the unloved with banks back in favour as were consumer stocks and energy stocks surprisingly.
Stockbrokers Morgan’s has done the numbers and they reveal that short positions have fallen dramatically since the start of the year. Hardly a surprise given the massive falls we have seen in 2016.
Woolworths (WOW) +1.53% remains the most shorted stock by value with $2.8bn of bear bets. JB Hi Fi remains one of the highest at around 20% despite strong Xmas sales and the demise of Dick Smith. Tomorrow we see the local jobs numbers which are recently somewhat erratic and unreliable it seems so maybe we will get some sense in the December numbers. Westpac is tipping the rate to fall to 5.8% unemployment. 10,000 job loss the consensus though.
Stocks and Sectors.
- Resources were always going to struggle given the movements in commodities. BHP-1.6% continues to be completely unloved. RIO +1.02% and Fortescue Metals (FMG) -0.95% going in opposite directions. However other resources though fared slightly better with Oz Minerals (OZL) +3.48%, Orocobr e(ORE) +3.03%, Bluescope (BSL) +4.86% and Alumina (AWC) +11.17% after some broker upgrades. Gold stocks came in for profit taking as bullion eased and the AUD rose. Evolution Mining (EVN) -6.09%, Regis Resources (RRL) -5.15% and OceanaGold Corp (OGC) -4.7% the worst of the bunch.
- Energy stocks were surprisingly strong as analysts start talking consolidation and mergers. Santos (STO) +5.42% bounced hard but is still around 300cents and at a two-decade low. Beach Petroleum (BPT) +12.99% was another big winner after yesterday’s mauling.
- Banks are back. Strong gains across the board of between 1-2% as good jobs vacancy numbers help the case for continued low bad debt charges. Westpac (WBC) +2.17% the best of the four. Other financials also found buyers, REITs were in demand with Westfield Corp (WFD)+3.03% and Stockland (SGP)+2.22% the standouts.
- Healthcare and tech stocks were firm again with Cochlear (COH) +3.99% and Resmed (RMD) +2.41% picking up, together with Mesoblast (MSB) +7.6%.
- Telstra(TLS) +1.12% also gaining some friends as did TPG Telecom (TPM) +2.46%.
- Industrials were well bid with Brambles (BXB) +2.12%, Spotless Group (SPO) +15.26% and CIMIC(CIM) +3.43%
- Speculative stock of the day: Have to love this one. Megastar Millionaire (MSM) +42.19%commenced trading today after raising $7m at 6c and running hard to 9.1c. The company is a digital technology and entertainment company launching the first global online talent discovery contest. Yes, really. Who said the bull market was over?
- Another Private Equity bargain joins the corporate casualty list as vacuum cleaner retailer Godfreys(GFY) -28.3% loses suction and downgrades numbers as CEO resigns. The company has cut its full-year profit forecast from $12.9 million to between $8.5 million and $9.2 million. CEO Tom Krulis has made way for former Woolworths executive Kathy Cocovski.
- CIMIC (CIM) +3.43% has made a $243 million hostile takeover bid for Sedgman (SDM) +35.44% after the Queensland engineering group rejected the construction group’s demands to change its board. CIMIC, which already owns 37 % of Sedgman is offering $1.07 per share in cash for the Queensland group, a 35 % premium to its closing share price of 79¢ on Tuesday.
- Dulux (DLX) +1.13% announced that its employees will go on strike after it announces a loss of 60 jobs and a mere 3% pay rise with no removal of a cap on redundancies or sick leave.
- Job advertisements in newspapers and on the Internet were barely changed in December after four straight months of growth, held back in part by the timing of the Christmas day holiday. A monthly survey by ANZ showed total job ads dipped 0.1 % to 155,704 per week on average in December, from November when they rose 1.1 %.
- Internet ads eased 0.1 % in December, while newspaper ads fell 1.2 %.
- Iron ore fell for a fourth straight session in Asia today with May contracts down 1% on the Dalian Commodity Exchange.
- China’s exports rose 2.3% from a year earlier in December in yuan-denominated terms, while imports dropped 4.0%. That left a trade surplus of 382.1 billion yuan for the month, well above the predicted 338 billion yuan, and above the previous month’s 343.1 billion. China’s 2015 exports fell 1.8 % year on year, while 2015 imports tumbled 13.2 %. That left a 2015 trade surplus of 3.69 trillion yuan.
- The overnight CNH-Hibor rate has fallen heavily back to 8.31%. This is the rate for overnight borrowing between banks for offshore renminbi in HK. It did jump to a record of 13.4% on Monday before going through the stratosphere on Tuesday to 67%. The six-month average is 3.82%
- President Xi Jinping said his signature anti-corruption campaign will not be eased and he’s determined to make China this year a place where “nobody dares to be corrupt.”
Ahead in Europe and US
- It was Obama’s last State of the Union address this afternoon. Not a bad report card at least on the measures that he wanted to trumpet.
It seems everyone is jumping on the oil is over bandwagon. As we suggested last night we saw the WTI price dip below $30. Tonight expect some strength. Chinese numbers will help but it is very oversold and due a decent bounce to punish the Johnny come lately bears.
- FTSE +49.50 points.
- DAX +137.50 points.
- CAC +66.50 points.
And finally expect some respite tonight for commodities after the Chinese numbers today. We shall see.