ASX 200 rises another 49.2 points to 5168.2 as banks join the St Patrick’s day parade. Resources and gold shine as energy stocks are pumping. We topped out in relatively heavy volume at 5193 with a low of 5130. AUD nudges through 76 cents briefly with Asia mixed, Japan down 0.55% and China up 1.05%. Index futures expiry adds to volume with US futures up 17.
A very solid day with good overseas leads, no rate increase from an increasingly dovish Fed and a benign jobs number adding to the positives. Once again though the market has failed to push through 5200. The stronger AUD helped too as international investors seem to be discovering the joys of a AAA rated economy growing at 3% GDP. After a staggered and disjointed start, due to index futures expiry, the market kicked from up around 40 points to push up towards the 5200 level again as the banks joined in the fun. Late profit taking this afternoon took the gloss off things, Japan slipped and the weekend approaches.
ASX 200 Index Today Aussie Dollar Today US74.85c
Seems hard to fathom how the market got into such a negative spiral of house price crashes when the economy is so strong. Those two researchers were last seen roaming around the Western Suburbs scratching their heads and looking for a cab.
A tale of two banks.
Index changes take place at the close of business tomorrow. More information.
Stocks and Sectors
- Resources enjoyed a good day as commodity rises fed through to shares. BHP +2.43%, RIO +2.44% and Fortescue Metals (FMG) +9.05%. Base metals stocks were also in demand with Alumina (AWC) +1.89%, Oz Minerals (OZL) +3.15%, Independence Group (IGO) +3.53% and South32 (S32) +0.64%.
- Gold back again as the US gold price shone on fading Fed rate rises in 2016. Newcrest Mining (NCM) +6.45%, Evolution Mining (EVN) +6.25% and Northern Star (NST) +2.93% after a Kanowna Belle update.
- Energy as expected powered ahead on higher crude prices. Strangely the price of petrol here has increased by 25 cents at some servos from under a dollar to 125 cents a litre. Should have filled up last night. No real reason for the rise as the AUD has strengthened too. Origin Energy (ORG) +4.99%, Santos (STO) +5.0% and Worley Parsons (WOR) +6.23%. Caltex (CTX) -0.77% dropped despite the petrol price rise.
- Banks and Financials were better, Commonwealth Bank (CBA) +1.76% and Australia and New Zealand Bank (ANZ) +1.06% well off their highs for the day. REITS were firm as were wealth managers and insurers. AMP +2.12%, Macquarie Group (MQG) +1.9% and IOOF (IFL) +2.63% after a big fall yesterday.
- Industrials were mixed with consumer stocks a tad better with Myer (MYR) +12.73% and Oroton Group (ORL) +27.32% both announcing good numbers. Others were less so positive with Wesfarmers (WES) +1.27% and Woolworths (WOW) -1.07% on news they were going to double the time they pay suppliers. A move guaranteed to tick them off and leave the consumer worst off. We saw some interest in mining services and contractors as the big miners improved. Cimic (CIM)+2.53%, Seven Group (SVW) +4.9%, Decmill Group (DCG) +5.39% and Ausdrill (ASL) +1.11+%.
- Healthcare stocks were generally easier with Resmed (RMD) -3.75% falling hard as the dollar goes up, Ramsay Health (RHC) -1.28% and Regis Health (REG) -2.26% after a broker downgrade.
- Telcos went nowhere Telstra (TLS) -0.75% and Spark New Zealand (SPK) -2.56%. Seems it was all about risk on and banks and resources.
- Speculative stock of the day: 99 Wuxian (NNW) +37.04%: An ASX listed Chinese mobile payment and online market place. Today the company reported its 2016 general meeting had passed all the resolutions including the loan agreement and issue of conversion CDI’s.
- Myer (MYR) +12.73% announced its strongest sales growth in six years as sales of the personalised Nutella jars helped foot traffic and sales overall. Sales were up 1.8% to nearly $1.8bn as aggressive discounting in women’s fashion and new brands and the strategic direction taken by CEO Umbers start to gain traction. Earnings before interest and tax fell 6.4% to $93.8 million and EBIT margins slipped by 46 basis points to 5.22%. Revenue from Myer’s online business is growing strongly, increasing by 70% on the previous year, according to the department store.
- Oroton Group (ORL) +27.32% lifted net profits by 73 % to $3.8 million in the January-half. Sales across the group rose 12 % to $74.5 million, beating market forecasts around $70 million, underpinned by solid same-store sales growth of 10 % – 11 % at the key Oroton brand and 6% at Gap.
- Qube Holdings (QUB) +4.32% back on the bourse today and a strong rally following a very positive reception from institutions on the $250 capital raise with the retail component to come to raise a further $244m.
- Fairfax (FXJ) +2.6% has announced yet more jobs cuts to editorial staff who predictably are to strike until Monday. Surprised they have any journalists left to cut as the once mighty masthead seems to be high profile commentators these days and little actual news. Unless it is sourced from Reuters or AAP.
- Surfstitch (SRF) unchanged, has announced a joint CEO in Lex Pedersen and Justin Stone.
- Telstra (TLS) -0.75% is considering selling off their 50% interest in Foxtel as Peter Tonagh is appointed the new CEO. All well and good but the English Premier League will be heading to SBS next season as they have done a deal with Optus. Yet another reason not to subscribe to Foxtel.
- Reserve Bank Deputy Guy Debelle was out and about his morning and virtually threw in the towel trying to talk the AUD down. His words ’We would welcome a lower exchange rate, like everyone else, in helping re-balancing our economy, but not everyone can have that’. He went on to acknowledge the issue with negative rates elsewhere. The problem is in a world of negative rates 2% sticks out as the proverbial. It is all about relatives and at the moment we are losing the currency war. Domestic demand is keeping the RBA on hold as money flows to the AAA rated AUD. Unlikely to see that change any time soon.
How Bloomberg and our international investors will see it.
Today the ABS once again surprised the markets with good jobs numbers again.
- Employment increased 11,400 to 11,903,100.
- Unemployment decreased 700 to 736,600.
- Unemployment rate remained steady at 5.8%.
- Participation rate remained steady at 65.1% from a revised January 2016 estimate.
- Monthly hours worked in all jobs increased 2.5 million hours to 1,653.6 million hours.
- Over the ditch the NZ economy also picked up as gross domestic product rose a seasonally adjusted 0.9% in the fourth quarter versus the prior quarter and 2.3 %on the year. Economists had been expecting the economy to expand 0.6% on quarter and 2.0% on year
- The PBoC strengthened its reference rate by 0.32% to 6.4961 a dollar, ending a three-day weakening run. Currency estimated to decline further 4.1% by end-2016
- China will seek to start a stock-trading link between Hong Kong and Shenzhen this year, Premier Li Keqiang said. The government “will try our best” to begin the connect in 2016. The exchange link will expand an existing program between Shanghai and Hong Kong and enable offshore investors to access many of the nation’s technology and high-growth shares.
- In Japan Toshiba, -9%, has been poleaxed as it is under investigation in the US over allegations that it hid US$1.3bn in losses at its nuclear power operations.
Oops! Toshiba. As so the Nikkei.
Europe and the US
Looks like the London Stock Exchange is finally getting into bed with their German equivalent, the Deutsche Börse. There is a possibility for the US ICE to come over the top and of course Brexit may well have some ramifications but the merger is one of equals apparently.
UK Budget last night and a number of key announcement including a sugar tax.
- Growth forecast cut for the next five years and £3.5bn in extra public spending cuts by 2020.
- Mr Osborne has missed his target of cutting debt as a share of GDP.
- A 2% increase in tax on cigarettes and 3% on rolling tobacco from 18:00 GMT, but beer and cider duty will be frozen as will the levy on whisky and other spirits.
- Plans for a longer school day in England.
- The rate at which workers start paying the top rate tax is to be raised from £42,385 to £45,000, with the tax-free personal allowance raised to £11,500 and corporation tax to be cut to 17% by April 2020.
- On savings, the ISA limit will be increased to £20,000 a year for all savers, and lifetime ISAs with a 25% bonus will be introduced for young people.
- An extra £700m for flood defences – to be paid with a 0.5 percentage point increase on the tax on insurance premiums
- The higher rate of Capital Gains Tax is being cut from 28% to 20%.
- A new sugar tax on the soft drinks industry to be introduced in two years’ time, raising £520m a year to be spent on doubling funding for primary school sport in England.
A few ideas for Malcolm and Scott to put on the table.
FINANCE SUMMARY TABLE
SECTOR PERFORMANCE 52 WEEK HIGHS / LOWS