ASX 200 bounces 22 points to 5411 as bargain hunters return on takeover action and RBA comments. Banks and REITS doing well. M&A activity continues with Tabcorp and Tatts joining the fun. Low volume again though. Asian markets barely changed although China was up 0.47% AUD firms on RBA minutes and speech to 76.75c with US Futures up 34.

STOCKS AND SECTORS

  • Another solid performance from the banking sector with the big four up around 0.5% on average with wealth manager Challenger (CGF) +6.20% sparking some life into the sector with Blue Sky (BLA) +3.21% and Macquarie Group (MQG) +0.47%.
  • REITs also recovered very well following the drubbing yesterday. GPT Group (GPT) +1.27%, Mirvac Group (MGR) +1.91% and Scentre Group (SCG) +1.61%. Property developer Lend Lease (LLC) +1.67% also recovered as fears for the Barangaroo development and Crowns casino receded slightly.
  • Resources were back in favour with BHP +1.12% and Fortescue Metals (FMG) +2.40%. Gold stocks also found the love again today after stronger bullion prices overseas. Evolution Mining (EVN) +2.36%, Oceanagold Corp (OGC) +7.69% and St Barbara (SBM) +3.23%.
  • Energy shares mixed as Yancoal (YAL) +39.24% went for another run although Whitehaven (WHC) -0.00% stalled after some broker downgrades. Caltex (CTX) -4.20% fell after confirming it was interested in the Woolies petrol stations at around $1.6bn.
  • In Industrials telecom stocks saw some buying with Vocus (VOC) +2.16%, TPG (TPM) +0.80% and Superloop (SLC) +2.11%. Nextdc (NXT) +2.86% also saw some bottom picking.
  • Infrastructure stocks still suffering from apathy as Qube Holdings (QUB) -1.75%, Transurban (TCL) -0.19% and Aurizon Holdings (AZJ) -1.64% weakened. No bounce either in IT stocks although the worst of the selling appears to be over. Nearmap (NEA) +28.87% jumped after a US and trading update, with Xero (XRO) +3.00% also doing well. No such luck for Aconex (ACX) -2.90% or iSentia Group (ISD) -2.95%.
  • Speculative stock of the day: Core Exploration (CXO) +22.45% following news of a large scale pegmatite targets at Finnis Lithium project. Next batch of assays are due next week from the project.

CORPORATE NEWS

  • Crown Resorts (CWN) +1.70% rallied a little after yesterday’s savage reaction to the events in China. James Packer has said he is deeply concerned for the welfare of detained staff.
  • Tabcorp (TAH) and Tatts Group (TTS) both in trading halts as the long awaited merger seems on the cards. Suspect the ACCC may take a good long look at this one.
  • Caltex (CTX) -4.20% has confirmed that it is in talks and has made an offer to Woolworths for its petrol station business.
  • Mortgage Choice (MOC) +0.49% had its AGM today. Nothing earth shattering but steady as she goes and a positive start to 2017.
  • Oil Search (OSH) -1.13% Oil Search has posted a 16% increase in quarterly revenue on the back of an increase in LNG and gas prices and higher production from the PNG liquefied natural gas project. The company has reported total revenue of $US309.5m for the three months to September 30, up from $US267.7m in the June quarter.
  • Cochlear (COH) +0.17% AGM today with the Chairman waring that R&D could shift overseas following tax concession cuts in the budget savings bill recently. Cochlear spent $143m, or 12% of its sales revenue, a year on R&D. It currently gets around $10m from the government.
  • Challenger (CGF) +6.20% announced a good jump in FUM of $62bn up 3% with annuity sales up 46% on PCP and net inflows of $0.9bn. The stock hit a near all-time high.

ECONOMIC NEWS

Lots of action from the RBA today with new governor Philip speaking at a Citi function together with the release of the RBA minutes from the last board meeting.

  • “We have never thought of our job as keeping the year-ended rate of inflation between 2 and 3% at all times.”
  • Lowe described the current environment as a “complex picture”.
  • The CPI number next week is crucial in deciding whether the RBA needs to cut rates or not.abacacac.png

Consumer Confidence rose again.

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  • Meanwhile over the ditch New Zealand consumer price growth slowed less than economists forecast in the third quarter. Consumer prices rose 0.2% down from 0.4% in the previous three months but more than the zero growth economists were predicting. Over the year, prices rose up just 0.2% too, double the forecast of 0.1%.

ASIAN NEWS

  • The yuan erased early gains to trade near a six-year low amid concern that uncertainty around elections in the U.S. and a potential Federal Reserve interest-rate increase will pressure the currency lower.

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Once you have seen the yuan you have seen them all.

  • The overnight repurchase rate, a gauge of interbank funding availability, rose for a sixth day, adding six basis points to 2.21%.
  • Seems we are not the only country experiencing a property boom/bubble. Official data in China shows property prices rose by the most in six years in August. Gains have been most pronounced in large cities such as Shenzhen, where home prices are up about 60% in the past year.

Bright lights big cities are in favour.

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EUROPE AND THE US

  • British hair straightener company GHD which makes the ceramic hair irons (apparently these are the only ones to buy so I found out) is being sold to a US group for GBP420m. The company Good Hair Day was started in 2001 with a GBP15,000 capital injection.
  • Shane Smith started the VICE TV channel, now worth around US$4.5bn was speaking at a UK conference where he said he thought there would be some serious mergers and takeovers in the global media space. Fox to bid for Time Warner and Apple looking at Netflix and Time Warner.
  • In a sign of the times Saudi Arabia is set to launch its first international bond sale with hopes of raising US$15bn.

And finally………….

When NASA first started sending up astronauts, they quickly discovered that ballpoint pens would not work in zero gravity. To combat the problem, NASA scientists spent a decade and $12 billion to develop a pen that writes in zero gravity, upside down, underwater, on almost any surface including glass and at temperatures ranging from below freezing to 300°C. The Russians used a pencil.

A man goes to the doctor and says: ‘Doctor, there’s a piece of lettuce sticking out of my bottom.’ The doctor asks him to drop his trousers and examines him.

The man asks: ‘Is it serious, doctor?’ and the doctor replies: ‘I’m sorry to tell you, but this is just the tip of the iceberg.’
Q: Why didn’t Harry Kane vote for Britain to stay or leave?

A: He can’t put a cross in the Box!

Clarence

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