ASX 200 up a more modest 7 points to 5258 as the rally ran out of steam and caution prevailed. Resources driving performance as banks weigh. Asian markets treading water with Japan unchanged, China up 0.69% and Hong Kong up 0.36%. AUD at 77c and US Futures down 20.
STOCKS AND SECTORS
Banks had a soft day after the Commonwealth Bank (CBA) -0.63% result this morning but hardly surprising given the rise yesterday and the money flowing into resources. Macquarie Group (MQG) -2.51% as it went ex-dividend. Westpac (WBC) -0.82% suffered some broker downgrades and suffered accordingly. Big basket of banks traded at $155.62.
Resources bounded ahead in a single bound with OZ Minerals (OZL) +6.87%, the stand out as Macquarie upgraded its price target by 44%(!) following the Carapateena update yesterday. Western Areas (WSA) +11.24%, another superstar performer as commodity prices rose across the board. Syrah Resources (SYR) +7.96% jumped as did Sandfire (SFR) +6.81% and Independence Group (IGO) +8.49%. These stocks are the big ‘alpha’ producers at the moment. Likely to remain so.
Even golds were surprisingly firm despite the big falls in bullion as the Trump hedge unwound. Northern Star (NST) -1.41%, Gold Road (GOR) +9.52%, Perseus Mining (PRU) +2.44% and St Barbara (SBM) +1.88%.
Energy stocks also in demand as hopes of an OPEC supply agreement continue to swirl around the markets. Santos (STO) +6.29%, Sundance Energy (SEA) +9.68% and Oil Search (OSH) +1.35%. Coal stocks were hotter than an August night as Whitehaven (WHC) +1.28% piled on the points though Stanmore (SMR) -1.41% lost ground late.
In the industrials we saw media stocks spurred into life by REA Group (REA) +5.36% and APN Outdoor (APO) +17.06%. Ooh!Media(OML) +6.17% also had a day out in sympathy whilst Domino’s Pizza (DMP) +6.70% reversed recent falls on the better than expected AGM news yesterday. Broker upgrades helping and Don Meij on the media talking the internet of food.
Finally, some positive vibes in the IT sector with Wisetech Global (WTC) +2.36%, Class limited (CL1) +4.39%, Technology One (TNE) +1.83% and Nextdc (NXT) +7.44% as shorts covered in these oversold names.
Healthcare mixed although Mayne Pharma (MYX) +6.51% was again a stand out as a beneficiary of a Clinton n victory and no dismantling of the Obama legacy of Obamacare. Viralytics (VLA) +7.34% and Bionomics ((BNO) +5.56% both big winners too.
Speculative stock of the day: Techniche (TCN) +16.67% following news it had entered into a non-binding proposal to sell one of its businesses, Urgent Technology for US$8M.
- Commonwealth Bank (CBA) -0.63% on a subdued report with cash earnings of $2.4bn flat on first quarter earnings last year. Margins will remain under pressure. The bad debt charge was 18bps in the quarter which was lower than the 21bps consensus expectation. The core equity tier 1 ratio came in at 9.4%. Nothing to get excited about here as it was only a first quarter update.
- REA Group (REA) +5.36% warned of soft listings in the first quarter but revenue rose 16% to $170m as the dominant player in the space was able to take advantage of its pricing power. REA said it was able to achieve a 14% increase in its Australian residential business revenue in the first quarter despite an 8% decline in listing volumes, which were particularly weak in Sydney and Melbourne.
- APN Outdoor (APO) +17.06% only a month or so ago the company issued a profit warning. Today it upgraded forecasts. APN said it now expects earnings before interest, tax and other items to be in a range of $84m to $86m this year, up from a prior forecast of $79m to $84m. It estimated revenue growth for the year of 8.5% to 9.0%, up from 6.0% to 8.0% previously.
- News Corp (NWS) +1.32% reported a loss of $US15m in the quarter, compared with a profit of $US175 million in the period last year. EBITDA in its News and Information services business dropped 45%.
- Incitec Pivot (IPL) -1.00% warned it expects markets for its key products to remain weak in 2017, after reporting a 26% drop in annual underlying profit, in line with analysts’ forecasts. Analysts are forecasting 18% in underlying profit for the 2017 financial year.
- Surfstitch (SRF) in a trading halt following another takeover approach from Crown Financial (Coastal Watch) which owns 10.4%. The company had previously bid $55.4m in a non-binding offer last week. Coastalwatch /Crown proposed buying Surfstitch for 20c a share, just above the 30-day volume weighted average price of 19c.
- Dulux Group (DLX) -2.37% is optimistic about the outlook given the housing peak may be close and more people are renovating than moving. Dulux expects net profit after for the 12 months ended September 30, 2017, would be higher than the $130.4m in net profit after tax it announced today for the year ended September 30.
- A2Milk (A2M) +8.80% said revenue for the first three months of 2016-17 of $NZ112.5m was consistent with expectation, while Australia-New Zealand fresh milk sales were up 7% and demand for milk and formula was growing in China.
- National Australia Bank’s monthly survey of more than 500 firms showed its index of business conditions dipped 2 points to +6 in October, more than reversing September’s one-point gain.
- Iron ore futures in China are up more than 3% Coking coal futures are flat.
- China’s October exports fell 7.3% from a year earlier, while imports shrank 1.4%, both declining more than expected. That left the country with a trade surplus of $US49.06bn (325.25 billion yuan) for the month, the General Administration of Customs said.
- China imported 8 million tonnes of iron ore in October, the lowest since February and down 13 % from the previous month.
Trade troubles little in China
- China’s coal power generation capacity will grow as much as 19% over the next five years even as the world’s biggest energy consumer expands use of non-fossil fuels. China’s total power consumption may increase to between 6.8 trillion kilowatt hours to 7.2 trillion kilowatt hours by 2020, with an average annual increase of about 3.6% to 4.8% from 2016 to 2020.
- Retail sales of cars, sport utility and multipurpose vehicles increased 20% to 2.22m cars last month, according to the China Passenger Car Association. Industrywide deliveries increased 15% in first 10 months.
EUROPE AND THE US
There is only one game in town tonight. It’s the final countdown.