ASX 200 started the week with a 22-point fall to 5408.5 after some bargain hunters emerged below 5400. Good rally from the low of the day, 5377. Healthcare and Coke did most of the damage with REITS continuing to unravel. Asian markets firmer with China up 1.48% to a nine month high, Tokyo up 0.23%. AUD modestly higher at 76.18c and US futures up 20.

Volume was not too bad for a Monday with around $4bn on the ASX.

STOCKS AND SECTORS

  • Resources tried hard to fight the negativity with Bluescope (BSL) +4.76%, Alumina (AWC) +2.3% together with Perseus Mining (PRU) +13.33% following a good quarterly report. Both BHP +0.22% and RIO +0.55% were solid as a rock.
  • Energy stocks weaker though Yancoal (YAL) +15.38% bucked the trend. Whitehaven (WHC) -1.97% and New Hope (NHC) -2.01% gave back some recent gains.
  • Healthcare stock were once again sold down heavily led by Healthscope (HSO) -5.88% and Ramsay Health Care (RHC) -4.55% as brokers started to re-evaluate the outlook for the sector. Sonic Healthcare (SHL) -1.03% and Cochlear (COH) -4.25% also saw selling as investors moved money out.
  • Banks were a relative calm today with small losses for the big four ahead of the upcoming reporting season. Westpac (WBC) +0.46% and ANZ +0.28% even managed a small gain today. Macquarie Group (MQG) +0.54% remained in demand with numbers on Friday to come. Another volatile day with K2 Asset Management (KAM) +17.65%.
  • Gambling stocks were once again a busted flush with Crown Resorts (CWN) -2.93%, The Star Entertainment (SGR) -2.74% with merger stocks Tabcorp (TAH) -1.40% and Tatts Group (TTS) -0.95% feeling unloved too.
  • In the industrials CocaCola Amatil (CCL) -6.44% suffered following the investor day Friday. Vitaco (VIT) +4.83% announce FIRB and PRC regulatory approval for the scheme from SIIC Medical Science and PV Zeus to acquire all the shares of VIT.
  • Speculative stock of the day: Metals Australia (MLS) +50.00% after a bullish investor presentation today. Good volume too for the move higher.

CORPORATE NEWS

  • Santos (STO) -2.86% has sold its Victorian gas assets to Cooper Energy (COE) in a $82m deal. Cooper is raising $62m to fund the initial cash leg of the deal. The assets include a 50 per cent stake in the producing Casino-Henry gas project in the Otway Basin off the coast of Victoria, and a half-share in the Orbost gas processing plant onshore.
  • An all-Australian consortium of grazier families has bid $386m for all the shares of Kidman & Co, trumping an offer from billionaire Gina Rinehart and her Chinese business partner.
  • Coca-Cola Amatil (CCL) -6.44% after an investor day on Friday did not live up to broker expectations with Deutsche downgrading and some scepticism on further cost cutting and the SPC Ardmona business. The launch of a ginger flavoured Coke also weighed as did rising sugar prices. There are also rumours about the cost of the Syrup from the US parent too with changes to the formula discussed.
  • Gemworth Mortgage (GMA) +2.73% after a Chinese company China Oceanwide has entered into an agreement to acquire Gemworth Financial which is the parent company for US$2.7bn.
  • Bendigo and Adelaide Bank (BEN) -% is the latest bank to crack down on housing buyers with a tougher valuation policy and bigger deposit requirements. Especially in apartment lending.
  • In AGM news Super Retail (SUL) -3.02% has warned shareholders that sales performance for the first quarter of the year is ‘behind expectations’ although all three divisions reported sales growth at least. Amart Sports and Rebel reported sales growth of 7% as the stand out.

ECONOMIC NEWS

UBS has updated its housing crane count with 528 in use on the Australian east coast, more than in the major urban centres in the US at 419. Cranes are up 300% in three years.

Iron ore is being piled high in Chinese ports with the first back to back increase in tonnes to 106.5m metric tonnes.

ASIAN NEWS

Japanese exports sank 6.9% YOY in September an improvement on the 9.6% in August. It also beat expectations from economists at 10.8% average.

EUROPE AND THE US

  • Seems the internet of things is causing a few headaches for cyber security as all the connected devices make hacking attacks far easier.
  • Globally China is flexing her muscles in the M&A space with a record US$207bn worth of deals.
  • More M&A on the cards with British American Tobacco set to merge with US partner Reynolds in a US$47bn deal.
  • The effects of the fall in the value of sterling is starting to bite. Last week we had ‘Marmitegate’ and the battle to raise the price of a jar of the black stuff. This week it is Microsoft set to raise prices by up to 22% as the pound has fallen so much. There’s that inflation we have all been looking for. It was there all the time. Computer software up 13% and cloud hosting up 22%. The UK Government spends around $100m a year with Microsoft.
  • Looks like the massive AT&T / Time Warner deal is already coming under scrutiny in Washington with lawmakers and both Trump and Clinton suggesting there are a numbers of questions that need to be answered although Trump just said ‘No way Jose’.

And finally….

While sitting at a table in the clubhouse after a round, Bob remarked to a fellow club member, “I’m not going to play golf with Jim Lawler anymore. He cheats.”

“Why do you say that?” asked his friend.

“Well, he found his lost ball two feet from the green,” replied Bob indignantly.

“That’s entirely possible,” commented his friend.

“Not when I had his golf ball in my pocket,” said Bob with finality.

Clarence 

XXXX

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NT Markets

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