ASX 200 down another 12 points to 5284 as we limped into another weekend. Materials again outperform as industrials and consumer stocks continue to sell off. Asian markets better with Japan up 0.58% and China up 0.15%. AUD strengthens to 75.98c and US futures up 19.

For the week the ASX 200 has fallen 2.7% from 5430 to 5284. Seems an offshore seller may have been getting out of our market. Volumes inflated today by last nights’ option expiry.

Performance over the last three months makes disappointing reading too:

The ASX has fallen 5% whilst he REITs are down just a little more than the ASX (-5.4%), while other yield-sensitive sectors such as telcos (-17%), health (-13%) and utilities (-13.3%) have been hit much harder over the past three months. Seems that defensives have been taking battering as the resource stocks have gained traction. Higher oil, coal and iron ore prices have given a new lease of life to the miners sucking money from the past favourites. BHP virtually unchanged for the week. Fortescue Metals (FMG) up 10% and RIO up 5.4%.

STOCKS AND SECTORS

In financials AMP -9.13% shocked the market this morning and we saw selling in other counters, ANZ -1.71% on more write offs and Challenger (CGF) -1.83% and Clearview Wealth (CVW) -3.59%. National Bank (NAB) +1.16% continued to bask in the warm sunshine after the numbers yesterday.

REITS struggled again as bond yields moved higher. Westfield (WFD) -0.90%, Vicinity Centres (VCX) -2.09% and GPT Group (GPT) -0.65%.

Once again industrials on the nose. Qantas (QAN) -3.61% belly landed today, with Sydney Airport (SYD) -2.09% and Auckland Airport (AIA) -0.81% also following down the same runway. In IT, Carsales.Com (CAR) -4.33% disappointed on AGM comments. SG Fleet (SGF) -6.49% continued to be walloped.

Resources still the place to be BHP +2.09%, South32 (S32) +5.42%, Western Areas (WSA) +7.85% and Independence Group (IGO) +4.11%. Fortescue Metals (FMG) +3.18% continues to be a stand out performer and is heading for 600c.

Energy shares also better as Whitehaven (WHC) +5.86% resumes the advance with Oil Search (OSH) +2.72% though Yancoal (YAL) -10.00% continued with volatility.

Healthcare stocks still in A&E with CSL -0.68% now below $100.Viralytics (VLA) -2.16% and Healthscope (HSO) -2.20%. Mayne Pharma (MYX) -2.05% though Medical Developments (MVP) +9.67% and Pacific Smiles (PSQ) +3.14%.

In telecoms, Vocus (VOC) +2.17% bounced hard though Telstra (TLS) -0.60% continued weaker and TPG (TPM) -0.41%.

Speculative stock of the day: Activistic (ACU) +33.33% after agreeing in principle to develop a range of online lottery style products with Collingwood Football Club.

CORPORATE NEWS

  • Woolworths (WOW) -2.30% has posted better than expected sales figures showing the turnaround strategy is starting to work. Sales rose 0.7% higher than the 0.4% forecast. Overall, sales at the company’s Australian Food, the supermarket division, grew by 1.7% to $9.3bn in the 14 weeks to October 2. Big W sales down 5.5%. Masters is history.
  • Macquarie Group (MQG) +1.69% posting better than expected results of $1.05bn for the half down 2% and said that 2017 results would be broadly in line with the record $2.06bn.
  • AMP -9.13% will take a $565m hit on its life insurance business with losses of around $44m in the third quarter. Goodwill attributable to AMP’s Australian wealth protection business will be “fully impaired” by $668m. AMP also announced a new reinsurance agreement with European giant Munich Re which will help release as much as $500m in capital from AMP Life.
  • More woes for ANZ -1.71% after announcing another $360m hit to the balance sheet with new charges for at-risk debts and restructuring costs. Seems the recent $700m write offs were not so one off after all. Maybe two off.
  • Canaccord Genuity has closed the books on Dreamscape Networks in its IPO offering of $25m at 25c valuing the old Crazy Domains business at $86m including cash. Dreamscape Networks is seeking to list on the Australian Securities Exchange on December 1.
  • Murray Goulburn (MGC) +3.29% is ‘deeply sorry’ for the surprise farmgate milk price cut in April. There are signs the imbalance between global dairy demand and supply may be correcting, but it was too early to be definitive, the chairman said at the AGM today. International dairy commodity prices were also looking positive and seasonal conditions looked favourable.
  • PMP +37.01% announced that IPMG has entered into a scheme to merge the two companies in an all-scrip $120m tie up. The deal would create a listed printer and printing services group with $112.2m earnings before interest, tax, depreciation and amortisation, including a forecast $40m in synergies, and pro forma profit of about $40m a year based on 2016 financial year numbers.

ECONOMIC NEWS

  • Total sales of new homes were up by 2.7% in September, after a 6.1% recovery in August, according to the Housing Industry Association.
  • CoreLogic’s preliminary capital city figures show that house prices rose another 0.3% in October, with rises across most of the major capital states. Good to see that he RBA rate cuts are slowing the property market. Sydney, Melbourne and Canberra, though soared by 2.7%, 3.0% and 2.3% respectively in the September.
  • Gina Rinehart looks like emerging as the winner in the bidding war for S. Kidman as the Melbourne family money has pulled out of the race after Gina bid $386.5m together with her Chinese partners.
  • ‘Bondnado’ is continuing as Australian 10-year yields rose to their highest since May. 10-years climbed to a yield of 2.373%. Not just here but across the globe we are seeing the sell-off.

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ASIAN NEWS

  • China’s Communist Party declared President Xi Jinping as its “core.” The designation gives Xi an elevated status lacked by his predecessor.
  • Japanese core inflation has hit a three year low of zero in a fresh blow to the economy. Japan’s inflation slowdown is no longer just a matter of weak commodity prices but has spread across the domestic economy.
  • Headline inflation was unchanged with a year-on-year fall of 0.5%. However, the fall in energy prices has begun to moderate: they were down by 8.4% year-on-year, compared with 10.2% a month earlier.
  • The Japanese unemployment rate fell by 0.1% to 3.0%.
  • The great Asian tourist boom from China to Australia looks less impressive on this chart.

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EUROPE AND THE US

  • Seems that the US health costs are rising very quickly. Especially given the introduction of Obamacare and significant changes in 2013.

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  • US GDP tonight. Amazon numbers disappoint. Rising expenses are weighing on the results.
  • EU’s Canada free-trade CETA deal could be back on as Walloons agree to last-minute deal.
  • And finally Philippine President Duterte has said he will stop swearing after God gave him an ultimatum.

And finally………………

Three blokes were working on a high rise building project, Macca, Chook and Simmo. Chook falls off and is killed instantly. As the ambulance takes the body away, Simmo says,”Someone should go and tell his wife.” Macca says, “OK, I`m pretty good at that sensitive stuff, I’ll do it.”
Two hours later, Macca comes back carrying a slab of VB. Simmo says,”Where did you get that, Macca?”
“Chook’s missus gave it to me.”

“That’s unbelievable, you told the lady her husband was dead and she gave you beer?” Macca says, “Well not exactly. When she answered the door, I said to her, “You must be Chook`s widow.”
She said, “No, I’m not a widow.”
And I said, “Wanna bet me a slab”

An Aussie and a little man were sitting at a bar in Sydney when this huge, burly American guy walks in. As he passes the Aussie, he hits him on the neck knocking him to the floor.The big, burly Yank says,”That’s a karate chop from Korea.” Well, the Aussie gets back on his barstool and resumes drinking his beer.
The burly Yank then gets up to go to the bathroom and, as he walks by the Aussie, he hits him on the other side of the neck and knocks him to the floor.”That’s a judo chop from Japan”, he says.
The Aussie decides he’s had enough and leaves.A half hour later he comes back and sees the burly Yank bastard sitting at the bar. He walks up behind him and smacks him on the head, knocking
him out.
The Aussie says to the bartender, “When he wakes up mate, tell him that was a crowbar from Bunnings.”

Bonus weekend joke!!!

A bunch of blokes are in the changing room of a golf club. A mobile phone on a bench rings and a man engages the hands free speaker-function and began to talk. Everyone else in the room stops to listen.
BLOKE: “Hello”
WOMAN: “Darling, it’s me. Are you at the club?”
BLOKE: “Yes”
WOMAN: “I am at the shopping centre and found this beautiful leather coat.
It’s only £1,000. Is it OK if I buy it?”
BLOKE: “Sure,..go ahead if you like it that much.”
WOMAN: “I also stopped by the Mercedes dealership and saw the new 2016 models. I saw one I really liked.”
BLOKE: “How much?”
WOMAN: “$170,000”
BLOKE: “OK, but for that price I want it with all the options.”
WOMAN: “Great! Oh, and one more thing … The house I wanted last year is back on the market. They’re asking $1,950,000”
BLOKE: “Well, then go ahead and give them an offer of 1,900,000. They will probably take it. If not, we can go the extra 50 thousand. It really is a pretty good price.”
WOMAN: “OK. I’ll see you later! I love you so much!!”
BLOKE: “Bye! I love you, too.” The bloke hangs up. The other blokes in the changing room are staring at him in astonishment, mouths agape….. He smiles and asks: “Anyone know who this phone belongs to?”

Clarence

XXXX

NT Markets

Get a Global take on things at http://www.ntmarkets.com

 

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