ASX 200 down 4 points to 4976 as once again corporate results disappoint but resources try to stem the losses as the squeeze continues. Gold and materials the standouts. China limps into New Year celebrations as Year of the Monkey beckons. Japan slips 1.5% with US futures down 12. AUD 71.87.Once again we started the day with a lacklustre response to solid results from Realestate.com.au (REA) which although good seemed unable to satisfy the baying masses.
Resources once again the big winners today as the lower US dollar is ensuring a few emergency strategy meetings are taking place in hedge funds around the world. The shorts found no respite today with gold stocks in demand as the price pushed to AUD1608.
Insert Gold chart here
Iron ore stocks have finally woken up to the recent push in iron ore and are being squeezed higher as sellers lack conviction. Meanwhile in industrials it was another disappointing day with some former high flyers tripping slightly. Banks too were weaker across the board except for the new kid on the block, Clydesdale (CYB)+%. The early falls accelerated during the day to be down 40 point at a low of 4932 before a late afternoon rally turned energy stocks around and with it the market rebounded to finish 10 points off its high.
US payroll numbers this evening and lower volume as some traders rested on their laurels, hardly a surprise given the gyrations of the last few days.
For the week the market was down 45 points with some wild moves on individual stocks.
The big bet has been long USD exposure and short AUD. That thinking has been challenged this week and will continue to drive short term traders.
Stocks and Sectors
• Miners were once again the stars of the show. It has been a while but positive moves overseas fed through to our market. BHP+%, RIO+%, Fortescue Mining (FMG)+% and South32 (S32 )+%. Golds were strong as the AUD price blipped above $1608. Newcrest (NCM)+%, Evolution Mining (EVN)+% and Oceana Gold (OGC)+% the best of the bunch.
• Base metal stocks also ran, OZ Minerals (OZL)+%, Syrah Resources (SYR)+% and Sandfire Resources*(SFR)+%
• Energy stocks recovered from early losses with Oil Search (OSH)+%, Santos (STO)+% and Beach Energy (BPT)+%
• Banks were weaker down around 1% but new entrant Clydesdale Bank (CYB)+% with wealth managers continuing to struggle. Many of them have been bought as a stronger USD proxy and this may explain the big falls recently. Macquarie Group(MQG)-% and Perpetual Group (MFG)-%.
• In Industrials APN News & Media(APN)-% fell the most after rival News Corp reported a drop in quarterly earnings for the fourth quarter in a row. High flying consumer stocks were also sold off as Dominio’s Pizza (DMP) continue to unwind with Mantra (MTR)-% and Aristocrat(ALL)-%
• Speculative stock of the day: International Goldfields(IGS)+% on news that the reverse takeover of WinterGarden Biosciences is on track for completion. Wintergarden is an emerging agriculture bioscience and biotechnology company based in Uruguay.
• Gemworth Mortgage Insurance (GMA)+% posted a 5% dive in underlying net profits to $264.7 million for the year to December and expects to write fewer new policies amid a tightening property market this year. They reported a statutory net profit of $228 million, a 30 % fall from last year, due to mark-to-market losses during the period. The company though did announce a special dividend of 5.3 cents on top of the 14 cents for the final.
• Bellamy’s(BAL) +% updated the market this afternoon following a 9% slump in the stock price earlier in the day. The company is expecting a better 2nd half together with guidance for the first half of EBIT of $19m on revenue of $105m.
• Asciano (AIO)-% following news that the ACCC is pushing out its ruling on the takeover to March 24th as it needs more time to analyse the two proposals. So does the board.
• Whitehaven Coal (WHC)-% reported a net profit of $7.8m compared with a near $80m loss last year. Increased production levels of a record 7.1m tonnes drove a 54% sales increase to $574.3m.
• News Corporation (NWS)-% has reported a drop in earnings in the second quarter of financial 2016 as strong results from its digital real estate businesses unable to offset challenges in newspapers and cable television. EBITDA slumped 20 % in the quarter to $US280 million ($389 million) from $US352 million in the year-earlier period. In the half-year, EBITDA dropped 18 % to $US445 million.
• Plenty of news today with retail data showing a 1 % fall in household goods spending offset a 1.1 % rise in clothing sales. Total retail spending was $24.76 billion in December, up only slightly from $24.75 billion in November.
• Separately the RBA monetary policy statement showed they expected accelerating growth after rate cuts worked their way through the economy. GDP of 2.5% in 2016 and 3% in 2017. They also trimmed their inflation forecast citing ‘significant uncertainty’ relating to China. However, the report was pretty upbeat and shows why the RBA is happy to stay their hand although they did imply they do not totally believe the ABS jobs numbers but then who does.
• They are implying an unemployment rate of 5.3% though they have no true forecasts in the statement.
Good to see some markets improving year on year. Singaporean BBQ Pork on the rise as Lunar New Year approaches.
A good reminder from the gentlemen at Bloomberg of the relative value in regional markets.
Europe and US
Super stars Atlassian released their numbers today.
• Revenue was $US109.7 million ($154.2 million), up 45 % on the same period last year, and beating estimates for $US102.5 million
• Net income was $US5.1 million, ahead of forecasts for a loss of $US7.9 million.
• The company is forecasting revenue next quarter to be between $US113 million and $115 million. And the for the full financial year (ending in June next year) it expects revenue to be between $US443 million to $US447 million.
Following Macquarie Groups results yesterday and the market negative reaction, it is an interesting comparison to have a look at their peers in Europe.
Here we have Macquarie Group(MQG) getting punished for the second biggest profit on record and a ‘satisfactory’ outlook yet Credit Suisse has booked its first loss since 2008 of US$2.92bn. You would have been forgiven if you thought MQG has been harshly treated, they do appear to be.
Early Euro calls
Big weekend as US payroll numbers tonight will set the scene for further currency gyrations and China goes home next week for the start of the year of the Monkey.
More fun next week as the long USDollar trade unwinds some more !