ASX 200 hits the years’ high as materials and financials fire up. Up 22 points to 5613. Asian markets slightly positive with Japan up 0.18% and China up 0.80%. AUD72.60c and US Futures up 10 points.
STOCKS AND SECTORS
- Resources back in vogue. BHP +1.04%, RIO +1.45% though Fortescue Metals (FMG) +0.17%. Base metal stock also benefitting from higher commodity prices and a lower AUD as Metals Ex (MLX) +7.55%, Independence Group (IGO) +5.25% and South32 (S32) +1.91%
- Energy stocks tried hard with Woodside Petroleum (WPL) +0.32%, Santos (STO) +0.00% and coal miner Whitehaven (WHC) +3.02%. Mining services stocks picked up with WorleyParsons (WOR) +1.89%.
- Gold miners had a surprisingly good day, Dacian Gold (DCN) +4.08%, Silver Lake (SLR) +7.69%, Westgold (WGX) +2.80% and Newcrest (NCM) +1.25%
- Industrials in demand in places with Service Stream (SSM) +13.61%, Seek (SEK) +0.88% and PWR Holdings (PWH) -6.72%
- Consumer stocks in demand for Xmas stockings. Harvey Norman (HVN) +2.42%, Myer (MYR) +0.37%, JB Hi-Fi (JBH) +2.22%. Gaming too with Crown Resorts (CWN) +1.97%, Tatts Group (TTS) +1.12% even Oroton Group (ORL) +3.60%
- Healthcare stocks pushed higher as the shorts covered in Mayne Pharma (MYX) +7.06% and we saw some buying for the leaders in Cochlear (COH) +0.79% and CSL +0.69%. Capitol Health (CAJ) +7.69% tried to build on the gains from yesterday but seem to be running into some sellers here.
- IT and Telcos were once again the black sheep of the ASX family. News from Touchcorp (TCH)-34.13% did not help, Telstra (TLS) +0.40 eked out some gains but TPG (TPM) -1.66% though Vocus (VOC)+1.07% continue to be on the nose. Superloop (SLC) -2.14% also struggled with IT stocks Codan (CDA) -6.67%, Data#3 (DTL) -3.29% Freelancer (FLN) -1.43% and Praemium (PPS) -4.55% also weaker.
- Banking and finance stronger with the Big Bank Basket $175.43 although some profit taking starting to creep in. Commonwealth Bank (CBA) -0.22% continuing to push ahead although more of a grind than a whoosh. AMP +2.42% drew strength from a rumour that Macquarie (MQG) -0.57% is casting its slide rule over the business. REITs also putting in a good show ahead of the ex-dividends.
- Speculative stock of the day: Nuheara (NUH) +18.29% after Apple approved its IQbuds app for release on the App store.
- Bellamy’s Australia (BAL) has extended its suspended sentence as it seeks to discuss its position with suppliers including Bega Cheese (BGA) and Murray Goulbourn (MGC). It is going to be a long Xmas break with the stock not set to return until January 13th.
- Bega Cheese (BGA)+3.87% said the force was strong for baby formula in China and reaffirmed its guidance for the year.
- A2Milk (A2M) +6.15% has reiterated its profit numbers in the light of the Bellamy’s announcement. The CEO stated “the business continues to trade very strongly reflecting, in particular, significant year-on-year growth in its infant formula business.” The near doubling of revenue in the first four months of fiscal 2017 was due to the strong growth in baby formula and milk products
- Slater and Gordon (SGH) -7.55% has been ordered by the corporate watchdog to hand over documents for a new investigation into whether the company’s financial accounts were doctored. The documents relate to financial records and accounts from the period December 1, 2014 to September 29, 2015.
- BHP +1.04% has taken a small step in the reopening of the tragic Samarco mine in Brazil. It has signed a preliminary agreement with Vale to use one of their tailings dams in the future.
- Mayne Pharma (MYX) +7.06% following a change in substantial holding announcement from CBA raising its holding to 6.54% from 5.42%
- REA Group (REA) +2.53% following the sale of its Italian business to a UK private equity group for nearly $190m The sale will result in a profit of $168.4m. REA will sell at Home Group S.a r.l. and REA Italia S.r.l. which operate in Luxembourg, France, Germany and Italy.
- Cabcharge (CAB) +0.52% has agreed to sell its 49% in Australia’s largest private bus company ComfortDelGro Cabcharge, for $186m to joint venture partner ComfortDelGro. The company in considering a return of capital to shareholders.
- Touchcorp (TCH) -34.13% after providing a disappointing update on its profits. PBT in now expected to be in the range of $14m-$16m which includes a one off $14m gain from Afterpay.
AllianceBernstein Fund Managers has released its key themes for 2017.
- The global debt overhang continues to provide a headwind to world GDP growth, forecasted by AB to be 2.8% next year compared to an estimated 2.6%for 2016.
- Political populism could cause further upheavals.
- An increase in fiscal stimulus, as more countries follow Japan’s lead.
- The likelihood that global inflation has bottomed and is about to rise
Capital economics have increased its forecast for US GDP from 2% to 2.7% next year as eth Trump stimulus kicks in.
- 5-Year bonds up 2bps to yield 2.37%
- 10-year bonds down 1bps to yield 2.83%
Seems it is a growing trend. Japan is stepping up a drug price review in an effort to cut health spending.
EUROPE AND THE US
- The London Stock Exchange is in exclusive talks to sell its French clearing house to rival Euronext as it tries to persuade regulators to approve the merger with Deutsche Boerse. The LSE has spent almost a year working on its £21bn merger with its German rival.
- Good graphic from Charlie Bello at Pension Partners in the US showing the winners from Trump….get your magnifying glass out..but you get the idea!
- Bank of America up 34%
- Goldman Sachs up 34%
- Morgan Stanley up 28%
- JP Morgan up 24%
Facebook down 4% and Amazon down 2%.
- No wonder Wall Street is celebrating and putting all the executive bonuses to work in the market.
- We may get some news in the next few days on the Deutsche Bank settlement with the US Justice Department on its sale of mortgage backed securities pre GFC.
- Noted UK economist Roger Bootle from Capital is now forecasting UK rates could hit 3% by the end of 2019.
What is Santa’s favourite pizza?
One that’s deep pan, crisp and even.