End of Day

ASX 200 soars 60 points for another attempt at 5500 (coincidence?) as OPEC reaches agreement and energy and miners lead the charge. Weak capex shrugged off as China PMI better than expected. Bond proxies and REITs out in the cold. Asian markets very strong Japan up 2% and China up 0.62%. AUD 73.88c with US futures up 25

STOCKS AND SECTORS

Resources and energy the name of the game today. Great bounce from the iron ore stocks BHP +4.92%, RIO +1.65% and Fortescue Metals (FMG) +8.18%. Base metals also in demand again as oil and the USD rose. Iluka Resources (ILU) +7.19%, Galaxy Resources (GXY) +8.14% and South32 (S32) +6.27%.

In energy we saw across the board sighs of relief and buyers fighting to get exposure. Santos (STO) +6.27%, Woodside Petroleum (WPL) +6.48% and Beach Energy (BPT) +11.25%. Liquefied Natural Gas (LNG) +13.82% got some extra boost from the good news on its Magnolia project in the US.

Gold stocks missing out today Evolution Mining (EVN) -6.23%, Beadell Resources (BDR) -8.96% and Newcrest (NCM) -2.87%

Industrials mixed Qantas (QAN) -2.42% struggled as the fuel dividend unwinds thanks to OPEC. Other transport stocks also weaker with Aurizon Holdings (AZJ) -0.60% and IT stocks took their cue from the NASDAQ with Aconex (ACX) -5.91%, Nextdc (NXT) -3.16% Carsales (CAR) -1.33%.

Consumer stocks looking good. Aristocrat (ALL) +3.13% continue to come up cherries with Collins Food (CKF) +3.06% upgraded following the results and German acquisition yesterday.

REITs hurt again as yields rose as were other bond proxies with limited growth like Sydney Airport (SYD) -2.23%, Transurban (TCL) -3.89% and Telstra (TLS) -0.99%. Westfield (WFD) -3.17% and Vicinity Centres (VCX) -2.74%

Banks and financials enjoying the boost from Trump again and higher rates. The Big Bank Basket (BBB) rose to $169.24c with insurer QBE +4.21% also doing well on falling AUD and higher yields in the US.

New listing today Mayfield Childcare (MFD) -4.35% on pretty low volume.

Speculative stock of the day: Topbetta (TBN) +42.11% after Ladbrokes has signed to the Global Tote app that TBH has and is scheduled to integrate it into the Ladbrokes platform for a launch next month. Who needs Tabcorp (TAH) +0.85%

CORPORATE NEWS

• CSL +1.24% will begin human trials of three new therapies designed to treat rare inflammatory diseases, facial and gastro-intestinal swelling and diabetic kidney disease in Australia over the next 12 months. Three new projects in the pipeline from today’s investor R&D day. The first is CSL324, an antibody which could be used to treat rare and debilitating inflammatory diseases. The second is CSL312, an “anti-factor”. The third is CSL346 is an antibody that could be used to control glucose absorption.
• BHP +4.92% not happy Jan after yet another power outage in SA. Olympic Dam was without power for more than 4 hours overnight. Andrew McKenzie is blaming politicians.
• Dacian Gold (DCN) still in a trading halt having amended its capital raising with a 3 for 10 pro rata accelerated non-renounceable entitlement offer at 250c to raise $148m to fund expansion plans.
• Catapult (CAT) -1.83% is targeting 21-30% revenue growth in FY17.
• Virtus Health (VRT) +2.60% has announced the acquisition of a Danish fertility clinic for $16.5m.
• News Corp (NWS) +1.01% has bought Seven (SWM) +5.84% and Nine Entertainment (NEC) +2.70% out of their stake in the Australian News Channel which produces Sky News.

ECONOMIC NEWS

Honey, I shrunk the economy.

Whatever happened to jobs and growth?  GDP looks to have slowed dramatically and Morgan Stanley is now predicting negative growth in the third quarter. RBC Capital Markets now expecting third-quarter growth to come in at just 0.1%.

• Today’s capex figures show investment spending fell 4% in the third quarter.
• Companies spent a total $28.03bn, with $15.6bn going into building structures and $12.4bn for equipment, plants and machinery.
• Standard & Poor’s has warned that it will look past the rally in commodity prices when it evaluates Australia’s fiscal health as the nation’s prized triple-A credit rating remains at risk of a downgrade.
• Property consultant CoreLogic said its index of home prices for the combined capital cities rose 0.2% in November, a tempering from October’s 0.5% gain.
• CoreLogic data showed home prices in Sydney kept up their blistering run with a rise of 0.8% in November, from October.
• Melbourne saw a rare monthly decline of 1.5% in November.

BOND CORNER

• Locally 5 Year bonds rose 6bps to a yield of 2.30%
• 10-year bonds rose to a yield of 2.769% 7bps better.

The bond market rout continues

The Bloomberg Barclays Global Aggregate Total Return Index lost 4% in November, the deepest slump since the gauge’s inception in 1990.

The yield on 10-year U.S. notes jumped 56bps last month and was at 2.38%.

ASIAN NEWS

• The official Chinese Purchasing Managers’ Index (PMI) rose to 51.7 in November, compared with the previous month’s 51.2 and above the 50-point mark that separates growth from contraction on a monthly basis. The reading was the highest since July 2014.
• China’s economy expanded at a steady 6.7% in the third quarter and looks set to hit Beijing’s full-year target.
• The non-manufacturing, or services, PMI came in at 54.7, up from last month’s 54.0.

EUROPE AND THE US

• OPEC agreed to reduce collective production to 32.5m barrels a day. OPEC will reduce output by about 1.2m barrels a day by January.
• New Trumpeters are pro-business and are promising tax and regulation shake ups.
• The inventor of the Big Mac has died aged 98. Michael Delligatti was the creator who ate one of his burgers every week.
• The Bank of England has yielded to pressure from Vegans over the new five-pound note. Apparently the polymer uses animal fat so it has instructed the company that makes the notes to find an alternative. Yes, really.

Sorry off to a party so no joke!!!!!

 

Clarence

XXX