ASX 200 rises 29 points to 5005.5, closing on a high after a roller coaster day. Energy stocks the standout as resources again outperform. Japan has unexpectedly moved to negative interest rates ensuring a huge range on the Nikkei today. China up 3.18% as US futures up 124.AUD 71.05.
The market once again opened tentatively with the resource stocks outperforming – energy stocks gained ground and even BHP rallied. The big winner first thing was Fortescue Metals (FMG) +13.82% basking in positive broker comments following the results yesterday. The market tried really hard to break back to 5000 but “missed it by that much”, hitting 4999.9 before falling into the Chinese opening at midday. Stocks stocks were given a shot of adrenaline mid-afternoon with the long anticipated Bank of Japan stimulus package. Negative interest rates now on the cards and the market jumped in the match out to beat its previous high and close at 5005 as the BOJ brought out the big guns.
Central Banks are back in da house.
Stocks and Sectors
- Resources were the stand-outs today with Fortescue Metals (FMG) +13.82% leading the charge after the results yesterday. BHP +1.66%, RIO +0.51% also benefited as Brazilian iron ore major Vale moved to suspend its dividend program for 2016.
- Gold stocks were due for some profit taking as the bullion price fell overnight. Newcrest (NCM)-7.2% had a shocker as analysts re-evaluated the numbers from yesterday. Northern Star (NST)-10.3% was also struggling following its production report yesterday.
- Wealth managers were under serious pressure with Magellan Financial (MFG) -7.75% and Platinum Asset Management (PTM) -5.97% the biggest casualties.
- The banks were unable to make up their minds today but eventually finished in the green with National Bank (NAB) +2.07% and Westpac (WBC) +1.21% the best of the four. Macquarie (MQG)-2.55% fared worst as a number of brokers are talking down the forthcoming profits in 2017 on weaker investment markets.
- In the industrials, healthcare stocks fell heavily led by CSL -2.93%, Telcos had a better day as did gaming stocks like Crown Resorts (CWN) +3.02% and Aristocrat Leisure(ALL) +1.49%
- Building stocks were better with CSR +4.94%, Adelaide Brighton (ABC) +3.5% and Boral (BLD) +2.19%.
- Takeover battles continue at Asciano (AIO) +0.68% with Qube Logistics (QUB) +4.13%
- Speculative stock of the Day: Kula Gold (KGD) +78.95% following a broker recommendation for stock of the year for the brave. Kula is developing a gold project in Papua New Guinea and is ranked at the top of the charts with a total return of 362% anticipated by Credit Suisse.
- Shine (SHJ) -73.25% No more. The company today returned from a 10-day suspension with some very bad news for investors. Not sure allowing lawyers to run companies is such a good thing as the whole model is now being put into question. SHJ announced it had revised its earnings guidance to between $24 million to $28 million, from the original $54 million figure it issued in August last year. The decline in earnings is a result of a one-off provision of $17.5 million after the company reviewed existing personal injury cases.
- SHJ also said income had declined as a result of “sub-optimal fee-earner to file” ratios, greater than expected write-offs and competition in Queensland, leading to a further $10.5 million revision in guidance.
- Origin (ORG) +5.94% has labelled the performance of the company under the former CEO ’unacceptable’. There was no further clarification on the FY16 guidance from November as it was too early but they mentioned ‘challenging conditions’. Revenues for the second quarter fell by 6% due to the low oil price, while ORG will advise investors of write-downs at its interim results in February. Origin’s oil and gas output surged by 14% in the December quarter from the September quarter, to the equivalent of 54.4 petajoules, but revenues fell by 6% to $212.2 million due to plunging prices. Compared with the same quarter a year earlier, revenues fell 12% from $242.1 million in December 2014.
- Commonwealth Bank (CBA) +1.08% despite some management reshuffling with chief risk officer Alden Toevs retiring at the end of the 2016 FY.
- Freelancer (FLN) +9.09% announced record cash receipts for the final quarter of 2015 at $11.9m.
- The pool of credit sloshing around in the Australian economy grew $14 billion deeper in December, reaching $2.502 trillion. The figures from the RBA also showed loans to home buyers rose by $9 billion to $1.524 trillion in December, with annual growth picking up from 6.5% to 6.8%.
- The component of housing credit expanded only 0.4% in December, the slowest monthly rise in over four years, cutting the annual growth rate from 9.1% to 8.5%, below the 10% guideline for individual lenders set by Australian Prudential Regulation Authority a little over a year ago.
- The Peter Costello run Future Fund is taking a cautious approach to the global markets with a move to 20% cash recently its highest level since July 2008.
- The Future Fund has been named sovereign investor of the year by the Central Banking Journal.
- The Japanese market went on a scary roller coaster ride following the BOJ’s move to set interest rates at -0.1%. The Nikkei lost nearly 1000 points as it fell from the day’s high.
- The BOJ pledged to keep increasing the monetary base at an annual pace of 80 trillion yen (US$666 billion), primarily by continuing to purchase Japanese government bonds, exchange-traded funds and real estate investment trusts.
After the massive stimulus that the BOJ has already injected it seems the answer is more of the same although it does not actually seem to be working.
Europe and US
The big news in the financial world will be the ‘shock’ move by the BOJ to negative interest rates and the effect that will have on global markets.
Ahead in Europe
- FTSE +31.50 points.
- DAX -233.50 points.
- CAC -57.50 points.
- Volume was $7.20bn (Daily average $4.656bn FYTD)
- Dow Jones Futures +124 points.
- Dow Jones was +125 overnight.
Have a great weekend