ASX 200 down 7 to 5457.5 points after a cautious start as banks nearly saved the day. Telcos in the dog house following Vocus downgrade. Asian markets muted with Japan down 0.20% and China up 0.98%. AUD 74.77c and US Futures down 1.

STOCKS AND SECTORS

  • Banks were in demand today and were the winners with the Big Four Basket (BFB) +92 c to $165.81. REITs were also better with GPT Group (GPT) +1.50%, Stockland (SGP) +1.66% and Mirvac Group (MGR) +% after an investor day.
  • Resources a mixed bag, BHP -1.36%, RIO -1.08% and Fortescue Metals (FMG) -0.80%. Gold stocks were weighed down by the Dacian Gold (DCN) $150m placement with some selling to pay for allocations. Silver Lake (SLR) +3.70% was one of the winners (SLR) +3.70% but base metals consolidated.
  • Energy shares watched and waited for any positive news to come from OPEC meeting. Generally, the sector was weaker led by Liquefied Natural Gas (LNG) -6.11%, Beach Energy (BPT) -3.47% and Santos (STO) -0.74%.
  • In the industrials it was nothing but disappointment. Vocus (VOC) -24.48% set the scene this morning and it spilled into TPG (TPM) -7.28% and Telstra (TLS) -0.00%. Packaging companies were benefitting from some broker upgrades as Pact Group (PGH) +5.52%, Amcor (AMC) +0.83% and Orora (ORA) +1.44%. Healthcare stocks saw some buying with Primary Health Care (PRY) +3.90%, Sonic Healthcare (SHL) +1.59% and Resmed (RMD) +2.65%
  • IT stocks again sold off as high PE stocks continued to unwind their premium rating. Grays EComm (GEG) -4.35%, Aconex (ACX) -2.30%, Nearmap (NEA) -5.84% and Future Fibre (FFT) -13.04%
  • Speculative stock of the day: BluGlass (BLG) +21.88% after announcing a strategic partnership to develop a range of electronic applications with IQE a AIM listed company which specialises in design and manufacture of advanced semiconductor wafers.

CORPORATE NEWS

  • ALS Limited (ALQ) -6.77% The company reported half-year net profit of $51.4m, within the guidance the company gave in July. There was a drop in revenue of $672m. ALS will pay an interim dividend of 5.5c, it also said it plans to sell oil and gas operations, excluding lab ops.
  • Vocus Comm (VOC) -24.48% revenue was expected to be about $1.9bn, underlying EBITDA was forecast between $430m and $450m, while underlying net profit after tax was expected to be between $205m m and $215m. Seems that former directors James Spencely and Tony Grist were right to sell a large part of their holdings before the over 40% fall from its highs. Nextgen seems to be under delivering as a contributor as the business seems to have deteriorated.
  • AMP -0.00% has shaken up its management team with the forced departure of a quarter of the company’s top management team. Clearly not that top following the recent numbers. CEO Craig Meller has been put on notice by the chairman of AMP, Catherine Brenner, that the company needs to lift its financial performance in the short and long term.
  • Vmoto (VMT) -3.61% has been questioned by ASX over the timing of a trading update which downgraded its 2016 earnings guidance from an underlying profit to a net loss. The company would suffer an underlying net loss of $1m to $1.2m in the financial year, instead of a net profit of $1.8m to $2m as previously stated.
  • Dacian Gold (DCN) has launched a $150m capital raising to fund development of Mt Morgans gold project. The issue comprises of a placement to raise $50m at 275c and an accelerated non-renounceable entitlement offer for $100m.
  • CIMIC (CIM) +2.04% has won a $215m project in Qatar for a twin 25 storey residential tower consisting of 480 apartments.
  • Metals Ex (MLX) -55.84% as the company is splitting into two. One a gold stock under the name of Westgold (WGX) and the other a base metal company MLX. Westgold will begin trading on2nd December.

ECONOMIC NEWS

ANZ – Roy Morgan has stabilised at 115.4.

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  • The OECD believes the next move in Reserve Bank interest rates will be up, sometime before the end of 2017. The OECD expects economic growth to strengthen to an annual rate of about 3% by 2018 as LNG production ramps up and mining investment stops sliding.
  • Sales of new homes are at a 27-month low after falling 8.5% in October, Housing Industry Association figures show.  Detached house sales are down by 15.9% and multi-unit sales are down 19.4% in that time.

BOND CORNER

  • Government 5-year bonds are up 1bps to yield 2.24%
  • 10-year bonds unchanged at 2.69%

ASIAN NEWS

  • Dalian iron ore futures have just turned red. The most traded future is currently down 1.5% at 638.5 yuan ($US92.65), after earlier in the session jumping as much as 3.4%.

Scoreboard from China on commodities at the lunch time break. Looks like margin requirements are taking the steam out of the speculators.

  • SHFE Copper -3.21%
  • SHFE Aluminium -2.69%
  • SHFE Zinc -0.29%
  • SHFE Nickel -2.58%
  • SHFE Rebar -2.83%
  • DCE Iron Ore -3.82%
  • DCE Coking Coal -4.84%
  • DCE Coke -4.40%

Shanghai has raised the minimum required down payment and tightened eligibility for buyers of first homes in its latest move to cool a red-hot property market, state media reports. Buyers of first homes in Shanghai would have to put a minimum down payment of 35%, up from 30%. 50% for second time buyers.

  • In China, the New Economy Index, which expresses the amount of that activity such as air traffic, employment ads and venture capital investments as a ratio compared with the broader economy, decreased to 2 in October from 30.1 in the previous month.
  • Japan ordered the culling of 326,500 poultry after confirming bird flu in two northern Japanese farms, marking the worst outbreak of the disease since 2011, according to the Agriculture Ministry.
  • In Japan, the seasonally adjusted unemployment rate in October was 3%, unchanged from the previous month. Household spending fell 0.4% in October from a year earlier, less than the median estimate for a 0.6% annual decline.
  • Samsung Electronics said in a statement that it will boost dividends by 30% from 2015 to about 4 trillion won (US$3.4 billion) for the full year of 2016. It is also considering splitting the company into two.

EUROPE AND THE US

Euro stocks expected to open weaker with Stoxx 50 Futures down around 1% on the open.

  • You have to feel sorry for Rupert Murdoch as he looks to have ripped up most of the $100m he invested in troubled blood-testing start up Theranos. Some of the earliest investors in Theranos, originally called Real Time Cures Inc., paid about 15 cents a share for their stakes, company filings show. Investors who bought stock in the most recent funding round, paid about US$17 a share, making Theranos worth more than US$9bn on paper.
  • Italian banking is shaping up as a significant risk and may require a EUR40bn bailout.

And finally…………….

A blonde is overweight, so her doctor puts her on a diet.

“I want you to eat regularly for two days, then skip a day, and repeat the procedure for two weeks. The next time I see you, you’ll have lost at least five pounds.”

When the blonde returns, she’s lost nearly 20 pounds. “Wow, that’s amazing!” the doctor says. “Did you follow my instructions?”

The blonde nods… “I’ll tell you, though, I thought I was going to drop dead that third day.” “From hunger, you mean?” said the doctor. “No, from all that skipping,” replied the blonde.

Clarence

XXXXX

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NT Markets

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