End of Day
ASX 200 hits 5606 but again fails to hold the line. Index closes up 29 points at 5591 as banks and industrials lead the way although off their tops. Asian markets mixed with Japan up 0.30% and China down 0.55%. AUD 72.54c and US Futures up 8 points.
Santa is back with his buying boots on. Ho!Ho!Ho! From here there is an 88% chance the market will rally into the new year. 60% of the time I am right every time.
The ASX 200 is up 5.8% year-to-date, although more fund managers will benchmark against the ASX 200 accumulation index, which is up 9.8%
STOCKS AND SECTORS
- Resources back to being the ugly sisters today with BHP -0.72%, RIO -0.49% and Fortescue Metals (FMG) -1.00%. Lithium stocks also slumped led by Orocobre (ORE) -4.69% and Galaxy Resources (GXY) -4.90%. Base metal stocks were on the nose too as Metals Ex (MLX) -4.50%, Oz Minerals (OZL) -3.89% and Syrah Resources (SYR) -6.35%.
- Energy ran out with Origin Energy (ORG) -1.08%, Santos (STO) -0.25% and Woodside (WPL) -0.51%.
- Gold miners were back in demand following tragic events in Europe and Turkey last night. It was enough to remind investors why they held gold shares and the geared attractions of the sector. Newcrest (NCM) +4.59%, Regis Resources (RRL) +7.69% and Evolution Mining (EVN) +4.01%. Question is will it last?
- Banks and finance better across the board though BT Investment (BTT) -4.95% stood out as a failure after a broker downgrade. The big bank basket (BBB) +1.1% to $175.28 with REITS doing extremely well with many going ex-dividend before Auld Lang Syne is sung. Insurers pushed ahead with Steadfast Group (SDF) +0.48%, Suncorp (SUN) +0.75% and IAG +1.19%
- Industrials were a sea of green with solid gains in consumer stocks both staples and discretionary and packaging and healthcare stocks. Wesfarmers (WES) +1.12%, Woolworths (WOW) +1.76%, Aristocrat leisure (ALL) +1.65%, Orora Limited (ORA) +2.39% and CSL +0.84%, Regis Healthcare (REG) +3.62%. Telcos tried to rally with Telstra (TLS) +1.01% though TPG (TPM) -1.20% and Vocus Comms (VOC) -0.80%. Capitol Health (CAJ) +13.04% had a very good day after the MYEFO announced changes to bulk billing on diagnostic imagining
- Speculative stock of the day: Tempo Australia (TPP) +24,32% after a cornerstone investor came on board with a placement at 25c raising $9.5m. Angophora Capital took 15.8% of the company. The new investor is backed by Guido Belgiomo-Nettis who is joint MD of Transfield.
- Sydney Airport (SYD) -2.14% will be forced to bear the costs of developing a second airport in western Sydney in return for a 99-year lease if it takes up the option to develop it. The government wants construction in Badgerys Creek to start in late 2018 and for the airport to be operating by 2026. Sydney Airport’s “right of refusal” agreement entitles it to nine months to evaluate the notice unless it is already “substantially familiar” with its terms, in which case it is only entitled to four months.
- Fortescue Metals (FMG) -1.00% had its corporate credit rating upgraded to BB+ by S&P Global ratings.
- AGL Energy (AGL) +1.83% has replaced an expiring contract for gas transportation on APA Group’s Moomba-Sydney pipeline with an all-encompassing, $120m contract that covers all of APA’s pipelines in the region. The new three-year contract, is worth about $40m a year in revenues for APA +%.
- REA Group (REA) +0.59% National Bank (NAB) +1.06% after announcing a strategic partnership yesterday which will see REA offer a digital integrated home loan experience. REA will receive funding from NAB to offer the home loan experience.
RBA Minutes today.
- Over recent years the Board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets. Members recognised that this balance would need to be kept under review.
- The board has sought to balance the benefits of lower rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets
- RBA also warned of significant adverse impacts on the global economy if US President-elect Donald Trump enacts policies to restrict global trade, citing uncertainty about spill over impacts of the proposed policies of the incoming US administration.
- Domestic wage growth was still undershooting its expectations despite Australia’s low unemployment rate of 5.6%.
- Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments. Housing credit growth had picked up a little, particularly for investors.
- The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing. International financial markets had interpreted the outcome of the US election, specifically the implications for infrastructure spending, as being positive for growth and inflation in the United States.
The government has emerged as a big loser after an Auditor General’s report into the VET education loophole that has deprived Turnbull and ScoMo of $2.2bn in revenue due to a tax file rort. The age of entitlement?
- 2-year bonds rose 1 bps to yield 1.86%
- 5-year bonds up1 bps to yield 2.37%
- 10-year bonds fell 1 bps to yield 2.85%
- The Bank of Japan upgraded its assessment of the economy on Tuesday while keeping monetary policy unchanged. Real gross domestic product will rise 1.5% in the next fiscal year starting April 1, nominal growth will increase to 2.5% and overall consumer prices will advance 1.1%, it said.
The government’s initial budget for next year will be 97.5 trillion yen (US$830 billion), an increase of 0.8%.
- The fastest growing airline market is in India and despite the rise of oil the Indian airlines are slashing prices. Market leader IndiGo slashes fares by 30% on busiest route. Excess capacity combined with tickets offering base fares as low as 2 cents to first-time fliers have constrained the ability of Indian carriers to translate an increase in passenger traffic to profits.
- China is also keeping the pressure on fares. International air routes in China rose 35% to 660 last year
EUROPE AND THE US
- All eyes will be on Italy tonight as the world’s oldest Bank Monte dei Paschi continues to try to raise emergency funding this side of the Xmas break. EUR5bn is required with others also holding their hands out for some Xmas cheer. The Italian government will seek approval from parliament for up to EUR20bn to bail out the bankers.
- The IMF has decided to back the chief Christine Lagarde despite a court finding her guilty of negligence.
- Apple is not happy with Brussels as it has rejected the EU claims it owes EUR13bn in back taxes. The EU argued the sweetheart deal with the Irish government on taxes amounted to state aid.
- BP busy again taking a US$1bn stake in a African gas project off the North West. The company has signed deals with Kosmos Energy to take a 62pc stake in the company’s exploration blocks of gas fields off Mauritania and a 33.5% holding in those off Senegal. BP will also operate the Mauritania.
I once bought my kids batteries for Christmas with a note saying, toys not included.
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