ASX 200 hits the skids down 39 points to 5435.5 after bad Chinese data and resource and bank selling. A ‘Risk Off’ day. Asian stocks slip with Japan down 0.45% on a rising yen but China off a mere 0.01% AUD mostly stable at 0.7535 and US Futures down 102 points though off the lows.

STOCKS AND SECTORS

  • It’s all about the banks again today as the tepid opening gave way to sustained weakness. The big four basket slipped to $160.60 with insurers also joining the selloff led by QBE Insurance (QBE) -1.76% and AMP -1.66%. Other wealth managers suffering too. BT Investment Management (BTT) -1.90% and Platinum Asset (PTM) -1.98%
  • Resources downgraded across the board as brokers believe the recent run is well and truly over. BHP -2.94%, RIO -2.70% and South32 (S32) -2.81%, Iluka Resources (ILU) -2.33% announced its quarterly.
  • Gold stocks were one of the few bright spots today led by Evolution Mining (EVN) +4.65% Northern Star (NST) +3.02% and Newcrest (NCM) +4.64% seem the fat lady is not quite singing in the sector.
  • Energy stocks gave back some of the recent gains on the falling crude price. Santos (STO) -3.12% after some broker downgrades and coal stocks Whitehaven (WHC) -1.43% and New Hope (NHC) -1.53% as the red hot coking coal market cools.
  • Industrials sold off again with IT stocks continuing to feel the hate. Link Admin (LNK) -7.21% fell hard after the ACCC expressed some concerns on their possible acquisition of Pillar from the Government. Nextdc (NXT) -3.32% slid again as the issues with the telcos seem to now be spilling over to the data darlings. Technology One (TNE) -2.36% and Xero (XRO) -3.47% also falling under the knife. Vocus (VOC) +5.46% though bounced after the board room bloodletting seems to have been reasonably amicable given the circumstances.
  • Healthcare stocks took their cue from CSL -1.47% and the fallout from their AGM yesterday Primary Healthcare (PRY) -2.20% and Sonic Health (SHL) -1.10% with a couple of biotechs bucking the trend. Viralytics (VLA) +12.05% and Polynovo Limited (PNV) +3.17% in demand.
  • Some buying though crept in to utilities after the recent heavy falls. Transurban (TCL) +0.38% cheered after the AGM, Sydney Airport (SYD) +1.54% also finding some support at last. Consumer stocks also finding buyers with Wesfarmers (WES) +0.71%, Blackmores (BKL) +3.80% and Sky Dive the Beach (SKB) +7.44% defying gravity.
  • Speculative stock of the day: LBT Innovators (LBT) +31.03% once again in the hot seat for the second time this week with another stellar rise although it comes after a stellar fall yesterday. Expect more trading action in this one as the punters continue to push it around following the positive announcement on it APAS technology in the US this week.

CORPORATE NEWS

  • Transurban (TCL) -0.38% first-quarter revenue has increased by 12.3%, with Melbourne’s Citylink again the company’s biggest earner. It reported a 8% rise in proportional toll revenues with Sydney jumping 7.9% but Melbourne up just 2.6%.
  • Magellan Financial (MFG) -2.28% conceded that ‘key man risk’ was a major vulnerability at its AGM today. Chief Exec and co-founder Hamish Douglass is proving a headache given the aborted $10m termination package and his crucial role in the company which will take some years to ameliorate.
  • Slater and Gordon (SGH) -0.00% following official confirmation that rival lawyer Maurice Blackburn had launched a $250m class action.
  • Qantas ((QAN) -0.96% has resumed direct flight to Beijing after a seven-year hiatus.

ECONOMIC NEWS

  • QBE reckons that Sydney’s housing boom is really in its final stages as restrictions on loans to property investors and a raft of new property developments combine to depress prices. The median house price in Sydney will remain broadly flat in the next three years, QBE said. The survey from QBE suggests that lending curbs are having the desired effect.
  • The market is still coming to terms with the huge demand for the new 30 year bond the government issued yesterday. Looking at comparative yields in the developed world though it is easy to see why $13bn of demand stampeded the issue.

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Overseas buyers snapped up 65% of the $7.6bn issue.

ASIAN NEWS

Export numbers from China showed a drop to a six year low

  • Exports fell 10% from a year earlier in September, the customs administration said Thursday
  • Imports declined 1.9%
  • In yuan terms, shipments declined 5.6%, imports rose 2.2%
  • Trade surplus fell to US$42bn

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  • The data is “consistent with a significant slowdown in global trade volumes,” according to one analyst.

EUROPE AND THE US

  • HSBC technical analyst has warned that the US markets could experience a big dip. He believes that a thing called the Traders Index which measures the intensity of the selling pressure combining both breadth and volume of advancing stocks against declining stocks. More fundamental reasons for caution according to HSBC include earnings expectations, economic-policy uncertainty as well as the upcoming U.S. election and the Italian referendum.
  • Wells Fargo has lost its chief executive John Stumpf following the product sales scandal that is gulfing the company. The company has recently been fined US$185m after the unauthorised creation of up to two million fake credit card accounts.
  • Snapchat hires Morgan Stanley and Goldman for IPO. The Popular messaging app expected to seek US$20bn-$25bn valuation.
  • Spare a thought for lovers of Ben and Jerry’s ice cream in the UK where Tesco is having to pull product from its shelves due to the falling pound. Marmite also suffering as Unilever and others are trying to pass on the increased costs due to the collapsing currency. Will consumers stomach rising prices if the supermarkets pass them on?

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  • And finally we seem to have a new index of relative value and currency. The Louis Vuitton handbag Index. A Speedy30 (see above for those who do not know these things) costs US$802 in London. US$850 in Paris, US$970 in New York and in China US$1115. Seems that luxury goods have yet to experience the same price pressures as a jar of Marmite.

And finally………………………..

Six Irish men were playing poker when one of them played a bad hand and died.

The rest drew straws to see who would tell his wife. One man draws the shortest straw and goes to his friend’s house to tell the wife.

The man says to her, “Your husband lost some money in the poker game and is afraid to come home.”

The wife says, “Tell him to drop dead!” The man responds, “I’ll go tell him.”

I swear, the other day I bought a packet of peanuts, and on the packet it said ”may contain nuts.” Well, YES! That’s what I bought the buggers for! You’d be annoyed if you opened it and a socket set fell out!”

What’s orange and sounds like a parrot? A carrot.

Clarence

XXXX

 

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