ASX 200 rises 78.2 points to 4843.5 after positive leads on Friday and strength in local Asian markets. Resources, energy and banks shine. Japan releases disappointing GDP numbers and China has disappointing trade data, doing nothing to derail the relief rally. Japan up 7%, China only down 1.44%. Presidents’ Day in US tonight. CBA ex-dividend tomorrow.
After a very positive lead from overseas the market was relatively calm, at least after the early near 90-point rise. The index sank back as a combination of disappointing results and a steep fall in Telstra weighed on traders’ minds. Banks gave up their early 3% gains but the index stayed stable, as Japan showed a big gain, China fell less than some had predicted and the economic data from Asia was below estimates. After falling back to a low of 4783 the market rallied as the afternoon wore on, closing near its highs. Tokyo was pushing up towards a 1000-point rally as thought of bad news means more stimulus, helping equities. They have had more stimulus that Pavlov’s dog and still the dial is not moving, so it’s possible the BOJ will go to even more negative rates.
ASX 200 Index Today Aussie Dollar Today US71.62c.
Telstra and the Telcos were a bleak house today. Telstra (TLS) -2.33% after a free data day yesterday to make up for the outage last week. The Telstra numbers are due Thursday.
STOCKS AND SECTORS
- Good gains across the board. Materials were the superstars with BHP +5.9%, RIO +4.32% and South32 (S32) +7.91%. Fortescue Metals (FMG) +5.25% also put in a strong performance with Bluescope (BSL) +2.40% continuing its run after the numbers Friday.
- Gold stocks were mixed. Newcrest (NCM) -0.55% following results today, Evolution Mining (EVN)-2.28% and Regis Resources(RRL)-6.52% whilst Oceana Gold Corp (OGC) +6.15%.
- Base miners were significantly better. Western Areas (WSA) +9.32%, Independence Group (IGO) +2.09% and Oz Minerals (OZL) +4.92%.
- Energy shares were also better with Woodside (WPL) +5.04%, Oil Search (OSH) +4.05% and AWE +8.86%.
- In the financials, banks were well sought although early 3% gains slid away slightly, improving as the day wore on. National Bank (NAB) +2.53% and Australia and New Zealand (ANZ) +2.98% the best of the bunch. Bendigo and Adelaide (BEN) -4.01% revealed its profits today. Wealth advisers rallied after heavy falls last week. Platinum Assets (PTM) +3.4%, BTT Investment (BTT) +6.27% and Magellan Financial (MFG) +2.76% although Henderson Group (HGG) -4.14% continuing to fall.
- Industrials were better, picking up on the stronger USD theme that has been driving Amcor (AMC) +9.57%, Brambles (BXB) +4.71%, CIMIC (CIM) +3.06% and Boral (BLD) +3.92%.
- Consumer Discretionary stocks were better with Flight Centre (FLT) +3.62%, Mantra Group (MTR) +4.1% and Myer (MYR) +4.59% all in the winners enclosure.
- Speculative Stock of the Day: 88 Energy (88E) +162.5% following an update on its exploration well Icewine#1.
- Amcor (AMC) +9.57% produced a very positive result due to the strengthening US dollar. On a constant currency basis profit after tax rose 6.6% to US$342.6m. The outlook statement was also positive. Tobacco packaging and rigid plastic s big areas of growth. 19 cent dividend in USD
- Crown Resorts (CWN) +2.5% has been hit with a $250m tax bill. This follows the doomed Cannery Casino Resorts portfolio that included casinos in Nevada and Pittsburgh.
- Commonwealth Bank (CBA) +1.32% is widely expected to launch a new offer of hybrid debt to refinance a $583 million deal that is due to be called in April.
- Newcrest (NCM) -0.55%. Profits 55% lower on weaker copper and gold price, ensuring the company’s dividend drought will be extended for a third year. The miner posted a profit of $US81m for the six months to December 31, which was well below last years $US180m and slightly below analyst forecasts. Revenue fell 13% to US$1.55bn. The miner’s gearing was 28.1% at December 31, meaning there is still work to do to reach the Newcrest’s gearing target of 25%. The company did not pay an interim dividend, and the jury is out on whether they will pay a final.
- In a shout out to BHP, Standard and Poor’s has removed RIO +4.32% from its negative watch list following the company moving to the new flexible dividend policy.
- Aurizon (AZJ) -11.17% suffered a $426m write-off with its underlying EBIT down 17% to $403m, within Aurizon’s revised guidance range of $390m to $410m. Cost cutting announced of $380m over the next two years with volumes down and customer spending down. They announced $240m of impairments in December and have now written off an additional $186m, mostly related to plans for its proposed West Pilbara Iron Ore Project in Western Australia. A first half dividend of 11.3c, up 12% on a year ago.
- Broadspectrum (BRS) +7.04% trebled its profits to $25.1m, announcing a buy back as it fights off Ferrovial from Spain and its takeover offer. A 10% buyback with EBITDA up 11.1% and upgraded guidance, forecasting EBITDA of $280-300m for the full year.
- Bendigo and Adelaide Bank (BEN) -4.01% following a slight beat of expectation0s, although they were pretty low expectations. The quality of the earnings seem to have upset the market. Margins were down and bad debts are down but their ‘Homesafe’ product seems to be carrying the bank and that is not always sustainable. Bendigo is shielded from wholesale funding cost as it gets 81% of its funding from its deposit base against the larger banks around 60%.
- More talk about negative gearing and the need to cut government spending.
- New car sales rose 5.1% over the last twelve months. In January new vehicle sales rose 0.5% to 98,055 cars.
- PBoC strengthens the yuan fix the most in 3 months. The yuan rose the most against the dollar since it scrapped the peg back in July 2005. +0.9% to 6.5170 after coming back online following the Lunar New Year break.
- Chinese imports down 14.4% and exports down 6.6% in yuan trades.
- Signs continue that the HK property market is slowing significantly. A parcel of land sold by the government in the New Territories sold for 70% less per square foot than a similar piece of land back in September. The 405,756 square foot (37,696 square meter) parcel of land in Tai Po sold for HK$2.13 billion ($274 million) or HK$1,904 per square foot.
- The median home in Hong Kong costs 19 times the median annual pre-tax household income, the highest multiple Demographia has measured, and up from 17 in last year’s report.
- The Japanese economy is showing absolutely no sign of recovery. The GDP measure fell 1.4% annualised in the final three months of 2015 before the rates went full NIRP and the yen went on a charge.
So much for the ‘Three Arrows’ policy. Looks like it is missing the bullseye. Still equities took it in its stride with a1000 point rally on hopes of more stimulus.
- HSBC has committed to stay domiciled in London rather than move to Hong Kong. The decision is seen as having the best of both worlds. Strategic focus on Asia from the world leading financial service centre seems to be unanimously agreed on after 10 months of discussion and pressure on the UK government to give then some incentives to stay.
Europe and US
- Vive la difference!
Red tape and lack of reform leading to a bloated bureaucracy and stagnation.
US markets closed for President’s day tonight.
Ahead in Europe
- FTSE +589 point.
- DAX +169 points.
- CAC +98.50 point.