ASX 200 Index Today Aussie Dollar Today US69.65c.
ASX 200 drops 78 points at 4909 to test critical support again. Yuan ‘fixed’ again as China slips 0.61% and Japan drops substantially by 4.11%. Banks and energy stocks heavily sold off. BHP rallies. US futures up 25.
Once again yesterday is looking like a suckers rally after big falls on Wall Street last night. The good news as we head for another day of losses is once again we have managed a bounce off the significant 4900 level. Broad based losses with remarkably BHP +0.74%, bucking the trend, as a number of high profile brokers slapped a buy recommendation on them. Heavy falls initially were tempered by once again surprisingly good local jobs numbers. The ASX200 rallied into the number and the Chinese yuan fix and market open. However, despite the yuan being fixed at similar levels to yesterday, the PBoC announced they would be injecting 160 billion yuan (US$24 billion) into the seven-day reverse-repurchase agreements in its open-market operations on Thursday, up from 70 billion yuan a week ago. Next week the government is due to report 6.9% GDP growth not that anyone believes that anymore. This was enough to send the index back into its box clinging to 4900 as it meandered around for the rest of the session on lower volumes of around $4.5bn.
The session tomorrow will be crucial and we expect the line in the sand to continue to hold at least in the next day or so.
Hopefully this is one reason why our market should outperform its global peers.
Our own VIX or Aussie fear index rallied 10% today to 24.03. Recent highs of 31 and an average of around 17/18 over the last year.
Stocks and Sectors
- Financials were hit hard with banks again the villains, Commonwealth Bank (CBA) -1.95% and National Bank (NAB) -2.06% the worse affected. But losses across the board. AMP -2.93% and other wealth managers like Platinum (PTM) -4.98%, Magellan Financial (MFG) -3.96% and Challenger (CGF) -3.26%
- Energy stocks gave back all of yesterday’s gains and then some. Santos (STO) -8.04% plunged to all-time lows again, AWE Limited (AWE) -4.65% and Whitehaven Coal (WHC) -3.77% not far behind. So much for the strategy of local LNG producers. China’s LNG demand dropped 2% last year, the first ever decline after years of double-digit growth.
- Resources were once again on the nose although BHP +0.74% managed to eke out some gains although considering the recent falls it was an anaemic bounce at best. RIO-1.77% and Fortescue Metals (FMG) -3.18% heading south but Bluescope (BSL) +3.17% managed some gains. Oz Minerals (OZL) -2.24%, Sandfire (SFR) -3.51% and Independence Group (IGO) -3.21%
- Gold sector the only positive sector as the flight to safety continues especially in AUD bullion price terms. Newcrest (NCM) +3.98% Northern Star (NST) +5.56% and Evolution Mining (EVN) +5.73% the star children.
- Industrials and consumer stocks badly mauled, Harvey Norman (HVN)-4.35%, Myer (MYR)6.79-% and Super retail (SUL)-4.84% all posting big falls.
- Technology and Telcos were hit as were defensive healthcare stocks. Mesoblast (MSB) +8.97% presented at a US conference but did not seem to help.
- A huge turnaround in TEN (TENDA) +6.87% as the stock has been at an all-time low with an hour to go at 116.5 closing at 140 cents. Something afoot?
- Speculative stock of the day: Aguia Resources (AGR) +10% a Brazilian Phosphate project bouncing back from a large fall yesterday.
- Wesfarmers(WES) -1.38% today announced they had made an offer for a UK home/hardware business, Home Retail for GBP340. Homebase has revenue of £1.46 billion with 265 stores across the UK and Ireland. It is the second largest player in the sector.
- Dick Smith (DSH) held its first creditors meeting. Good luck with that. Not much to report. No one even asked a question it seems.
- South32 (S32) +1.12% were one of the few bright spots as they look at buying Anglo American’s niobium assets in a $1bn deal.
- Northern Star (NST) +5.56% on track to make its full year production target of full-year production guidance of between 535,000 and 570,000 ounces at an average price at $1480 an ounce against a $1000 an ounce production cost.
- As the price of Crude continues to fall. Standard and Poors has put a number of energy stocks on negative credit watch as they downgraded their forecasts for Crude from $55 to $40 in 2016.
- ABS numbers showed an unchanged unemployment rate of 5.8% for December as we lost a mere 1000 jobs for the month. Importantly full time jobs were up nearly 18,000.
The Participation rate of 65.1% reflected a robust employment position due to a pick-up in service sector jobs.
Good chart of the disconnect of oil prices to the price at the bowser. Refiners will be rubbing their hands in glee at the moment. Caltex (CTX) the only locally listed winner here.
- In a series of explosions Jakarta has been rocked, sending the local index down 1.3%.
- China keeps yuan fix unchanged but injects 160bn into repo market.
South Korea has cut its growth and inflation forecasts.
- GDP forecast for 2016 cut to 3% from 3.2%.
- Prices to rise 1.4% this year, below 2% target.
Europe and the US
- Notorious “uber bear” Albert Edwards from Societe General warns that the world is about to “reap the whirlwind” of the US Fed’s quantitative easing. Brace for a 2008-style crash and US stocks to fall by 75pc. He has said this once or twice before but it is good for his profile.
- More US earnings to come but GoPro falls 27% after hours on warning.
- According to Bloomberg, on a share-weighted basis, S&P 500 profits are expected to have dropped by 7.2% in 4Q, while revenues are expected to fall by 3.1%. In the S&P, only 4 are now expected to post earnings growth.
- FTSE -83.50 points.
- DAX -45 points.
- CAC +13 points.
US Powerball Numbers **8, 27, 34, 4, 19, and 10**. Looks like I didn’t win. Surprising really given the odds of 292,000,000 to 1. Probably easier to win than trading this current market though. More than 700,000 Australians entered the draw through Lottoland.
Back tomorrow then!!!