ASX200, Australian Sharemarket, Ben Bernanke, BHP, Charlie aitken, diggers and dealers, essex Lion, Fortescue mining, Interest Rates, iron ore, Mario Draghi, spi, Whitehaven Tinkler coal bid cash, writedown
ASX 200 Index Today Aussie Dollar Today US69.43c.
Disappointed. ASX 200 drops 16.6points to close on 4892.8 on thinish volume. Resources try to hold the line but banks and industrials throw in the towel after the index touches 4997 early 120-point range today. China slides in morning trade down 1.52% as Japan unchanged as rally goes up in smoke. US Futures down 136. AUD slips to 69.49.
For a moment it looked as if all was right with the world. At least better anyway. The ASX 200 started off with a leap out of the blocks this morning following good leads from commodities and overseas equity markets. But then like a mirage, it was gone. China coming back on line upset the bulls yet again. From the moment we touched 4997 it was all downhill from there with banks coming under pressure as the exuberance evaporated as fast as it appeared. News from BHP early this morning on a shock US$4.95bn write down of the value of its US onshore assets, was hardly a surprise given they bought those assets at the top of the market and have seen the environment deteriorate dramatically. Confidence has been seriously dented this week and no one wants to get sucked into another false start, and as we head into more US earnings and Chinese GDP, it was time to get the money off the table and back where it is safe.
Volume was absent today after a big week and the slip below 4900 was a worry given its growing significance. The Public holiday in the US is keeping buyers sidelined. Next week will be again hostage to events overseas. If we cannot hold 4900 next stop is 4750.
Stocks and sectors
- Banks and financials popped early and then collapsed as the day wore on. Australia and New Zealand Bank (ANZ) -0.56% grabbed the headlines this morning, with two traders suing them for unfair dismissal and salacious revelations of a ‘sex and drugs’ culture. The insurance sector also capitulated with Suncorp (SUN) -1.21%, QBE Insurance (QBE) -3.24% and AMP -1.13%. REITS also slipped away led by Stockland (SGP) -1.96% and Goodman Group (GMG) -1.98%.
- Resources, where do you start. BHP +1.28% following a massive impairment of US$4.95bn. It was up strongly early following a 6% rise in UK but finally ended only just above 1500 cents. RIO +1.7% was the better of the two with Fortescue Metals (FMG) +0.99%. In other miners Independence Group (IGO) +2.37%, Sandfire (SFR) +4.7%, Iluka Resources (ILU) +2.79% and Lynas Corp (LYC) +2.06%.
- Energy stocks withered on the vine, Santos (STO) +0.35% after seeing bigger gains early. Same for most of the sector. Woodside (WPL) +0.45% topped out at 2764c before closing well off this level. Whitehaven Coal (WHC) -3.92% continues to slide into a pit.
- Gold stocks eased on bullion losses although Northern Star (NST) +3.76% after an update on funding for the ERJ project on its Junee mine.
- Gaming stocks fell as the US Lotto went off and sucked some of the discretionary money out of the sector. Ainsworth Game (AGI) -3.76%, Tabcorp (TAH) -2.68%, Tatts Group (TTS) -1.48% and Aristocrat (ALL) -1.68%.
- Consumer stocks were weaker with Wesfarmers (WES) -0.2% and Woolworths (WOW) -1.18% and Metcash (MTS) -4.11%. Retailers were mixed Myer (MYR) -5.34% against Harvey Norman (HVN) +1.20%.
- In media stocks TEN (TENDA) -5.36% continues to be very volatile following their consolidation by 10-1. Seven West Media (SWM) -6.33%, Nine Entertainment (NEC) -1.49%.
- Speculative stock of the day: REECE (RCE) +50% after announcing an equal if not better efficacy of its new antibiotic treatment. 10 mice were treated with a superbug. With REECE treatment, 6 survived. With traditional antibiotics, six survived. Four died who were given saline.
- Industrial dog of the day again, Austal (ASB) -7.17% as the shipbuilder is looking like it has set its course for the nearest iceberg.
- Looks like Clive Palmer is going the way of his Coollum friends, the dinosaurs as job losses were announced at the Queensland Nickel project. MD Clive Mensink, Mr Palmer’s nephew, put the blame for the 237 job losses firmly on the state government. He would.
- BHP +1.28% A massive $US4.9 billion ($7 billion) after-tax write-down of its controversial US shale division. The impairment charge amounts to $US7.2 billion before tax, and takes the total impairments against the division past $US10 billion over the past three years.
- National Bank (NAB) -0.37% following more details and the outlook and demerger of its Clydesdale Business in the UK. 6.6% annualised growth in mortgages with good growth in owner occupied. Net interest margin steady at 2.2% as for guidance.
- US oil giant Chevron advised on Friday that an LNG cargo had arrived at the plant on Barrow Island off the WA coast to be used to cool down the infrastructure ahead of the first shipment. Chevron Australia managing director described the moment as “a significant milestone” for the venture, which was originally scheduled to begin production in late 2014.
- Annual growth in investor lending was 13% in November, still above APRA’s guide of 10% per annum, but analysts pointed out that it continued to trend down after a prolonged period of exceptionally high growth. Over November investment housing loans totalled $11.54 billion compared with $11.46 billion in October, a rise of 0.7% on a seasonally adjusted basis, but down 7.7% from a year ago.
- The Chinese central bank said broad M2 money supply grew 13.3% from a year earlier, missing forecasts for a 13.5% increase and down from 13.7 percent in November. More yuan weakness to come?
- China is set to release fourth quarter and full-year GDP data on Jan. 19
- Retail investors who piled into the Chinese market on the ‘ok’ from the authorities are now in denial and are selling every rally as they watch their savings disappear into the Beijing smog.
- There is also a flight of capital from the country which is more worrying for the authorities.
Europe and the US
- Goldman Sachs has said it agreed to settle a US probe into its handling of mortgage-backed securities for about $US5.1 billion. That will cut its fourth-quarter profit by about $1.5 billion and closing out a year of record legal and litigation costs.
- As Davos kicks off again and the forecasts come thick and fast, no one saw this coming.
- These are the calls from the experts last year. Sheikh Ahmed Bin Jassim Al Thani, the economy and commerce minister of Qatar, said oil should rise to $60 by the end of the year. Doh! Former Russian Finance Miniser Alexei Kudrin said oil may average around $60 over the next two years. Doh! Abdalla El-Badri, the secretary general of the Organization of the Petroleum Exporting Countries, predicted oil would stabilize around $45 to $50 a barrel. Doh!
- The oil-pipeline monopoly Transneft said Russian companies are likely to cut crude shipments by 6.4pc over the course of 2016, based on applications submitted so far by Lukoil, Rosneft, Gazprom and other producers. This amounts to a drop of 460,000 barrels a day (b/d), enough to eliminate a third of the excess supply flooding the market.
- FTSE -17.50 points.
- DAX -132.00 points.
- CAC -78.50 points.
Enjoy the weekend. Next week, ’Jump in, buckle up and hang on’.