ASX200, Australian Sharemarket, Ben Bernanke, BHP, Charlie aitken, CPU, diggers and dealers, essex Lion, fairfax, fmg, Fortescue mining, gold, iron ore, Mario Draghi, slater and gordon, Whitehaven Tinkler coal bid cash
ASX 200 up 29.7 points to 4976.2 after finding its feet, especially in resources. Positive corporate results from Credit Corp, Fortescue Mining and Newcrest helping sentiment. Asian markets tread water with US futures up 13.
- Another tentative start as the balance between banks and resources remains. After sliding to a low of 4909 around 11am, we found some renewed optimism and rallied hard into the Chinese open before trading sideways for the rest of the afternoon. The battle ground is resources v banks at the moment as far as the headline index goes. Volatility remains as we traded in a near 80-point range.
- With one day to go, the ASX 200 is down 6.1% for the month. Worst start since January 2010. However we have rallied four out of the last five sessions.
- The Forbes rich list is out and Gina has slipped from the number one spot as US born and part-owner of Cox Enterprises Blair Parry-Okeden takes the mantle with a net worth of US$8.8bn against Ms Rinehart’s measly US$8.5bn. Seems Twiggy is not the only one to have suffered this year on the lower iron ore price.
Stocks and Sectors
- The banking sector continues to lag resources as doubts continue about the sustainability of dividends in the face of larger capital requirements. Much is being made in the media about the new ANZ chief’s comments on cutting its Asian strategy and cuts to dividends. Banks staged a comeback from early losses with ANZ+1.52% the best of the bunch.
The progress so far on the Tier 1 ratios since 2014
- The team at Clydesdale were out and about today talking up the story following the vote from NAB +0.74% shareholders yesterday. NAB’s float range is £1.75 ($3.58) to £2.35 ($4.80) per Clydesdale share, a valuation of between 0.56 and 0.76 times book value. Clydesdale’s core equity tier 1 capital is 13.2% of assets.
- Resources seemed to be a happier place after the Fed statement last night unwound some of the strength of the USD. Commodity stocks rallied helped by the Fortescue Mining (FMG) +4.11% results. RIO +2.15%, BHP +0.6%, Sims Metal (SGM) +2.39% and Arrium (ARI)+20.75%. Gold stocks were in demand as the AUD bullion price hovers around $1600. St Barbara (SBM) +10.37% the stand out.
Gold price in AUD over the last year
- Industrials were positive, egged on by Qube’s (QUB) +3.81% move on Asciano (AIO) +4.00%. Aurizon (AZJ) +4.71% bounced after some steep losses recently, Macquarie Atlas Road (MQA) +5.83% rallied as Europe continues to talk stimulus and rates remain low for longer.
- Healthcare was a mixed bag, ResMed (RMD) -2.63%, Japara Healthcare (JHC) -2.09% to the dark side whilst CSL +1.24% and Sonic Healthcare (SHL) +0.86%.
- Telcos were in the green today as M2 Group (MTU) +2.72% voted on its merger with Vocus (VOC)+2.32%. Telstra (TLS) +1.08%, TPG (TPM) +1.02% and NZ’s Spark (SPK) +1.66%.
- Speculative stock of the day: Mining Projects (MPJ) +25% following news that it is to acquire a Pilbara lithium-gold asset formerly known as ‘Lynas Find Assets’. Lithium is shaping up as the new black in minerals this year. Last year it was Graphene.
- Credit Corp (CCP) +11.2% after reporting a strong performance 1H16.The purchase debt ledger acquisitions is up by 76% to $98.5m. Growth of NPAT of around 15-17%. They also updated the outlook with EPS growing to 95-97 cps rather than the 91-95 cps previously.
- Slater & Gordon (SGH) -14.29% once again as the self-imposed January deadline to update investors has slipped and it is “continuing to work with its auditors and advisors” to finalise the first half year result. Seems amazing that the CEO is still there.
- Newcrest (NCM) +2.66% produced 620,691 ounces of gold in the December quarter, despite the major mill at its biggest mine breaking down during October. The December quarter haul was about 6% better than the September production and means the company is producing at a fast enough rate to be on track for its full year guidance. Newcrest plans to produce 2.4-2.6 million ounces of gold in the 2016 financial year.
- Lovisa (LOV) -35.6% was all out of love, following a profit downgrade due to a squeeze in margins on the back of a stronger USD. This stock has been a huge corporate success story since listing and one of the few retailers to be doing well in this environment. All that ended today. The company is now predicting earnings expectations for the full year of $23.5-$25.5m, from the previous guidance of $28 million.
- John Holland, now Chinese owned by CCC International Holdings, is looking at establishing a $1.1bn budget to buy into residential investment and hotels in Australia.
- Fortescue Mining (FMG) +4.11% as it reportedly shipped 42.1mt of iron ore in the December quarter, which was narrowly better than the 41.9mt in the September quarter. It remains on track and ahead of schedule to ship 165mt in the 2016 financial year. Costs were lower again, with a “production cost” (excluding corporate costs like interest) of just $US15.90 per wet metric tonne. September’s discount of 9% rose to 13% in the December period. But Fortescue said the discount has always been in a range between 10-15%. Breakeven for FMG looks like $US35-38 per tonne.
- Asciano (AIO) +4.0% has finally had a binding offer tendered from Qube Logistics of 697 cents in cash and one Qube share. This sets up an old fashioned bidding war with Canadian Infrastructure company Brookfield who has slapped 694 cents in cash and 0.0387 shares in its NYSE listed stock in front of the board.
- M2 Group (MTU) +2.72% voted overwhelmingly to the takeover of Vocus creating a $3.75bn company at No 4 in telcos. The merged company is also expected to book revenue of around $1.8bn in fiscal 2016, and EBITDA of $370 million. The all-share deal will give M2 shareholders 1.625 Vocus shares for each security they own.
- Ten (TEN) -4.21% seriously hit a low today despite reporting a 13% jump in revenue in the December half. Big Bash League has really helped viewer numbers and the company is looking forward to the return of ‘I’m A Celebrity..Get Me Out Of Here”. At least someone is.
- The RBNZ left rates unchanged however Fonterra (FSF) -1.1% dropped its milk prices from $4.60 per kgMS to $4.15 per kgMS. Oversupply in the milk market is turning things sour for the world’s supplier of milk powder.
- China injects net 590 billion yuan this week, most since 2013.
- Malaysia has cut its growth forecast to 4-4.5% for 2016 from 5%.
- The Bank of Japan is expected to leave policy unchanged at the conclusion of its meeting tomorrow, even amid weak inflation and rising concern over gyrations in global markets. Thirty-six of 42 economists polled by Bloomberg expect the BOJ board to hold fire this week, yet 29 are predicting more easing in the foreseeable future.
- Samsung has seen its profits sink 19% in 2015 led by a 31% decline in profit for the IT and Mobile division.
- Steel prices in China continue to rise. Is this a New Year effect? Stocking up before the break.
Europe and US
- A UK jury has cleared five City brokers who were accused of helping to rig a key lending rate used between banks. The judge has asked the court to consider a majority verdict on the sixth defendant.
- It’s all about the Facebook.
- Revenue was up 44% to US$17.93 bn
- Net Income was US$3.69bn
- Net profit for the three months to December rose to US$1.56bn up from US$701m.
- Mobile advertising revenue was to 80% of total advertising revenue up from 69%.
Ahead in Europe
- FTSE -14.50 points.
- DAX +22 points.
- CAC +23.50 points.