ASX 200 slips 1.2 points to 4880 as the market regains early losses but finds it hard to hold gains. A very mixed day with banks still underwhelming and the big two materials stocks on the nose. Asian markets helped sentiment with some positive moves in China up 0.64% and Japan rising 1%. US futures up 6 points and the AUD is trading at 72.4 cents.

Another steady start followed by a dive at around 10.30am. It was almost on cue for some margin calls and book squaring following options expiry yesterday. Especially hard hit were the banks and Woolworths after its numbers and new CEO announcement. Having touched a low of 4838, the index bounced from there as Asian markets turned positive and the jury came back in from the Woolworths trial. An early guilty verdict was rethought on appeal and the market warmed to the new chief. For the day the Woolworths share price touched 2050 cents and a high of 2287 cents. Seems the jury is still out, closing at 2234 cents. Banks bounced but once again industrials were the place to be. The market turned positive with a small gain but slipped slightly into the close with a small loss for the day.

ASX 200 Index Today

                               

 Aussie Dollar Today US72.31c

A quietish end to the what has been a very long week with a bumper harvest of results. Mostly good.

For the week the index has slipped from 4952 to 4880, a loss of 1.4%. Monday is the final day of February and a leap day.

STOCKS AND SECTORS

  • Resources were weaker led by BHP -2.56% on further speculation on the Samarco situation where a settlement has not apparently been reached. Fortescue Metals (FMG) -2.9% eased back as did RIO -3.19%. Base metals stocks fell too as Oz Minerals (OZL) -4.97% slid away as did Sandfire (SFR) -6.14%, Independence Group (IGO) -4.56% and Iluka Resources (ILU) -1.81%.
  • Energy stocks failed to take much inspiration from the rise in oil last night. Woodside (WPL) -3.06% and Oil Search (OSH) -0.75%, though Santos (STO) +0.94% managed a small gain.
  • Banks were once again easier although not by much. Westpac Bank (WBC) -0.24%, National Bank (NAB) -0.57% and Commonwealth Bank (CBA) -0.39%, whilst ANZ +0.04% managed a small rise. Wealth managers took their cue from Platinum Asset Management (PTM) -4.21% following its numbers. Magellan Financial (MFG) +2.07% though were positive with Macquarie Group (MQG) -0.37% down.
  • Industrials looked like a fruit salad on the market map. Red and green everywhere. Results were the focus but some ‘clean and green’ came unstuck today. Huon Agriculture (HUO) -10.38% after results underwhelmed. Select Harvest (SHV) -3.93% continued on its merry way toward obscurity. Hard to believe that back in July 2015 the stock was over 1300 cents. Others in the sector were mixed as Blackmores (BKL) +0.07% has stabilised whilst Bellamy’s (BAL) -2.52% continues to be pressured after its stellar run. A2 milk (A2M) -0.92% also turned a little sour.
  • In the telcos, Telstra (TLS) +1.15% continued its recent bounce off the 515 cent level. Vocus (VOC) +4.85% following record half year results.
  • Gaming stocks still coming up 22 and bust as Crown Resorts (CWN) -1.84%, Tatts Group (TTS) -2.22% and Tabcorp (TAH) -0.23%. Donaco (DNA) +3.85% did manage a rise after the numbers yesterday but Surfstitchup (SRF) -6.14% continued its decline after numbers yesterday.
  • Speculative stock of the day: TFS Corp (TFC) + 23.6% following its results as the largest owner and manager of Indian sandalwood plantations. A multi-year agreement with Chinese and Indian buyers now meaning 2016 and 2017 harvests are forward sold at around $4500 per kg of oil. NPAT of $67.4m.

CORPORATE NEWS

  • Woolworths (WOW) +2.06% has plunged into the red to a $972m loss for the first time since 1993 as Brad Banducci was named as the new CEO. Banducci was the genius behind Dan Murphy’s and for the last year has been head of the food group. Sales for the six months fell 1.4% and they slashed their dividend by 34% to 44 cents. The company took a $1.9bn write down on the horror story that was Masters.
  • Super Retail (SUL) -17.21% were hit hard following an unexpected impairment on Ray’s Outdoor business of $20m. Profit for the first half was up 33% to $44.9m but normalised it fell 2.2% to $58.9m. The interim dividend was raised to 20 cents, a 8% rise on the year.
  • GrainCorp (GNC) -4.15% expects exports to fall in fiscal 2016 as the local agriculture sector faces challenging conditions. The increased availability of grain globally, and cheap ocean freight rates, have continued into 2016. Production estimates of wheat, barley, canola and sorghum in eastern Australia for fiscal 2016 are slightly higher than fiscal 2015 output. Underlying EBITDA is expected to be $240-270 million, compared to $235 million in fiscal 2015.
  • Billabong (BBG) -0.64% lost 1.6m in the last half as losses in North America continue and weaker than expected profits in the Asian region. Sales rose 4.5% to $565.4m The weaker dollar is putting pressure on gross margins. Expectation were for a profit of around $8.5m.
  • Harvey Norman (HVN) -1.74% reported a 30% rise in after tax profits to $185m. EPS beat estimates by 1.7 cents to 16.7 cents. Fully franked dividend of 13 cents.
  • Disaster of the Day was Benitec Biopharma (BLT) -51.85% having raised $18m with current cash at $27.8m after abandoning their hep c phase I/II trial. The cash value is now higher than the current share price.
  • Star resource performer Oz Minerals (OZL) -4.97% has revealed a $60m share buy-back. The company is now going to build a small high grade mine at Carrapateena at a cost of $770m which the company believes will pay for itself in five years. The stock has rallied 32% in February hitting a level not since 2013.
  • Cabcharge Australia (CAB) -1.95% after net profit dropped 21.7% to $24.4m after WA, VIC and NSW all cut taxi surcharges.
  • Vocus (VOC) +4.85% reported its underlying net profit for the six months ending December 2015 had risen to $27.4 million, while M2 Group’s had hit $55.1 million. Vocus revenues increased by 181% to $176.3 million while M2’s sales rose by 29 per cent to $707.4 million for the six-month period.

ECONOMIC NEWS

Sanity returns to the debate. The Australian Forecast Home Value Index, developed in partnership between CoreLogic RP Data and Moody’s Analytics, predicts Australia’s housing market will see a national rate of growth of 3.66% through 2016, with no individual market to see capital growth hit double figures.

Nationally housing values increased by 9.12% over 2015.

IN ASIA

The jury seems to be out on emerging markets this year with some high profile commentators calling them the trade of the decade whilst others like John Paul-Smith calling for major disappointment. So far looks like Paul-Smith is right

  • Japan has a record hoard of foreign exchange as it has cut its Treasuries holdings. Foreign exchange deposits in the vaults of overseas institutions ballooned to $124.1 billion as of January 31, from $14 billion at the end of 2014.
  • The G20 meeting of finance ministers kicks off today in China. The PBoC governor has stated that he has plenty of monetary tools at his disposal and there is no reason for yuan depreciation. Unfortunately, what they say in public does not seem to translate into actions as the occasional devaluation creeps in sending the market some mixed messages. Zhou said China’s economy remains strong and its economic structure and quality is improving. The PBOC separately published a statement defining current policy as “prudent with a slight easing bias.”

EUROPE AND THE US

  • The chance of a UK recession has spiked to 40% in the event of a ‘Yes’ vote. When Greenland left the EU in the 80s it took three years for their divorce from the EU. And that was just about fishing rights.

The FT in the UK leads with the worst trade numbers since the GFC. Weaker demand from emerging markets highlighting rising fears about the health of the global economy.

AHEAD IN EUROPE

  • FTSE  +36.50 points.
  • DAX  +178 points.
  • CAC +93 points.

MARKET STATS

  • Volume was $6.386bn (Daily average $4.656bn FYTD)
  • Dow Jones Futures up 6 point.
  • Dow Jones was up 212 points overnight.

 

Have a great weekend

Clarence

XXX

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NT Markets

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