ASX 200 started so well and finished so badly, down 24 points at 5622 after the Chinese surprised everyone and raised rates. Big miners threw in the towel as iron ore prices sunk 3% too. Banks followed. Asian markets mixed with Japan up 0.04% and China down 0.61% . AUD 76.48c and US Futures down 16.
Not a great week for the ASX. Manic Monday gave way to Terrible Tuesday and has finished with flopback Friday for a weekly loss of 92 points down or 1.61% from 5714 to 5622.
STOCKS AND SECTORS
- Miners took a turn for the worst after falls in iron ore as China came back online. BHP -3.11%, RIO -3.96% and Fortescue Metals (FMG) -4.59%. Base metal stocks joined in the falls with Sandfire Resources (SFR) -2.12%, Oz Minerals (OZL) -2.97%, South 32 (S32) -2.86% and Sims Metal (SGM) -3.59%.
- Energy ran out of puff. Woodside (WPL) -1.49%, Origin Energy (ORG) -1.82% and Karoon Gas (KAR) -3.31%. Santos (STO) +0.00% finally found some friends and Senex Energy (SXY) +5.00% continued to revel in the attention of its new shareholder EIG.
- Golds heading for their sixth weekly gain for a near 6% rally in the last week on the All Ords Gold Index. Resolute (RSG) has the biggest gains since the bull run started in mid-December, soaring 64%. Next is Saracen (SAR), up 44%, while Australia’s largest gold miners, Newcrest, has added 33%. Action today was muted but Oceanagold Corp (OGC) +11.72% on a bounce from the Philippine news. Resolute Mining (RSG) +3.56% and St Barbara (SBM) +1.63%
- Banks and financials down again with the Big Bank Basket (BBB) -0.44% easing to $173.11. Insurers slipped with Insurance Australia (IAG) -0.68% and QBE Insurance (QBE) -0.64%. REITS though behaved themselves after losses yesterday. Goodman Group (GMG) +1.02% Mirvac Group (MGR) +0.98% and GPT Group (GPT) +1.08%
- Industrials mainly better after a week of losses. Brambles (BXB) +2.25% continued the climb back from the abyss though Downer (DOW) -2.97% slipped after the exuberance from the numbers. Consumer discretionary stocks are well out of favour with Kathmandu (KMD) -2.72%, Nick Scali (NCK) -0.76% and RCG Corp (RCG) -2.22%
- IT and telcos mixed with Telstra (TLS) +0.99% as defensive buying continues. Others fared less positively Vocus (VOC) -3.11% continues the skids joined by TPG Telecom (TPM) -2.05%. Some interest in the baby and dairy sector after the bid from Reckitts for Mead Johnson in the US/UK merger. A2Milk (A2M) +2.27%, though Blackmores (BLK) -1.94% and Freedom Foods (FNP) +1.78%. Yield stocks and defensives back in vogue at least today as utilities rose, APA Group (APA) +1.80% and AGL Energy (AGL) +1.34%. Transurban (TCL) +1.36% and Macquarie Atlas (MQA) +1.77% in the infrastructure stocks.
- Healthcare perked up led by CSL +0.23%, Ramsay Health Care (RHC) +1.56% and Cochlear (COH) +1.50%.
- Speculative stock of the day: Benitec Biopharma (BLT) +81.82% after an update on the ocular program. Data will be presented at a medical conference in Brisbane next week. The company has collaborated with 4D Molecular Therapeutics to identify viral vectors to deliver to the back of the eye through injections.
- Seven West Media (SWM) +2.42% today announced the review had found no evidence of wrong doings by CEO Tim Worner, just bad judgement.
- James Hardie Industries (JHX) -4.36% lowered its profit guidance, as its nine-month net profit rose by 8 % to $US232m, helped by higher volumes in its North American operations. The company has further trimmed its full-year guidance, with net operating profit now forecast to be in the $US245-$US255m range, down from its earlier estimate of $US250m- $US270m.
- Virgin Australia (VAH) -4.65% returned to profitability in the second quarter, posting a $13.1m net profit. Virgin said it had reduced net debt by $936.3m in the quarter and its cash balance at year end was $1.6bn, up $689.1m. The airline said subdued domestic demand continued to hurt revenue in the quarter.
- Maurice Blackburn has launched class action against Crown Resorts (CWN) -1.06% on behalf of shareholders following the detention of its employees. The lawyers said Crown should have notified shareholders of the risks associated with its strategy well before the detentions.
- The Australian Industry Group’s Performance of Services Index (PSI) dropped 3.2 pts to a level of 54.5 pts in January, but remained above the 50-point level signifying expansion.
- Housing affordability is a big issue in capital cities. The Canadians have found a solution. The government slapped a tax on foreign buyers. Result, Vancouver house prices have dropped by nearly 20% in a year whilst sales have fallen 39.5%. 15% tax on foreigners will do that.
- Vancouver topped a list of cities around the world that UBS had identified as most at risk of a housing bubble. Sydney placed fourth after London and Stockholm.
- The average benchmark price for detached properties in Vancouver has fallen 17.8% to $C1,474,800 ($1,475,000) from a record high of $C1.83 million in January 2016.
BOND AND CURRENCY CORNER
Good graphic from Westpac shows where the AUD is happiest to spend its time.
- Surprise. Happy New Year. The PBoC raised the interest rate on open market repos by 10bps. New year, new attitude. Should make life interesting in US Sino relations.
- The seven-day open market operations rate was raised to 2.35% from 2.25%, the rate for 14-day tenor to 2.50% from 2.40%, and the rate for 28-day tenor to 2.65% compared with the previous 2.55%, the PBOC said in a statement
EUROPE AND US
- More fallout from the Trump tirades as Uber chief has quit the business advisory forum due to pressure from drivers and passengers. Ivanka Trump’s brand will also be dropped from luxury US department store Nordstrom.
- Snap Inc IPO is on. The company has filed for an issue with an initial size of US$3bn but may increase that to as much as US$4bn giving a market value of US$25bn. The company posted a loss of US$515m which was up from US$382m the previous year. The company hopes new investors focus on the ‘future’ not the pile of losses. The words of Darryl Kerrigan spring to mind: ‘Tell him they’re dreaming’.
- The US has warned North Korea against a Nuclear Attack The US response would be ‘overwhelming’ according to the White House.
- The Bank of England has upgraded its growth forecasts for the next three years. Bank officials expect the UK economy will grow by 2% this year. The BOE also raised their forecasts for growth in 2018 and 2019 to 1.6% and 1.7% respectively, from 1.5% and 1.6% in November.
- And in Tesco in the UK customers are rationed to only three iceberg lettuces per visit as supply shortages start to bite. Morrisons has also limited shoppers to three heads of broccoli and three iceberg lettuces. Lucky them. Wet and cold in Spain are to blame. Last month it was zucchinis.
- Google has replaced Apple as the most ‘valuable’ brand in the world with Lego the most ‘Powerful’.
- US Jobs tonight. Expect Tweets.
A Muslim bloke I work with was bragging he had the entire Koran on DVD. Being interested, I asked him to burn me a copy.
Well, that’s when it all kicked off!
Paddy decides to take up boxing and goes for the required medical.
A few days later the doctor ‘phones and says:
“Paddy, you realise you’ve got sugar diabetes.”
“Nice one, when do I fight him?”
Have a great weekend