Flesh wound?

ASX 200 slips again. Nine from nine closing down 12 points at 5712 after touching 5756 earlier. Big exit at the close driving prices lower. Lacklustre trading as reporting season draws to a close. Banks give up gains with WorleyParsons dominating trade with gold miners significantly weaker as hedges unwind. Asian markets mixed with Japan up 0.74% and China down 0.17%. AUD 76.86c and US Futures up 8 points.

STOCKS AND SECTORS

• Miners gave up gains in the iron ore sector as BHP +0.04%, RIO -0.80% and Fortescue Metals (FMG) -0.45% but base metals fared even worse as Syrah Resources (SYR) -6.11%, Metals X (MLX) -4.60% and Independence Group (IGO) -3.18%. Lithium stocks ran out of juice as Orocobre (ORE) -15.15% disappointed and weakness spread. Galaxy Resources (GXY) -1.96%
• Gold stocks suffered from the grim reaper despite a relatively calm day in bullion. Worst day since Mid-December with a 5% fall in All Ords gold index. Looked like computers had large sell orders across the sector following big drops in Canadian gold miners in the last few days. Newcrest (NCM) -4.03%, Evolution Mining (EVN) -6.49%, Northern Star (NST) -4.99%, Perseus Mining (PRU) -12.68%
• Energy stocks dominated by moves in WorleyParsons (WOR) +31.97% with oil stocks recovering from yesterday’s sell off. Santos (STO) +1.33%, Origin Energy (ORG) +0.46% though Woodside (WPL) -0.38% treading water.
• Industrials mixed with consumer stocks weaker as Corporate Travel (CTD) -1.00%, Navitas (NVT) -2.57%, Event Hospitality (EVT) -1.34% and Retail Food Group (RFG) -2.97%. Discretionary consumer stocks though going well JB Hi-Fi (JBH) +2.17%, Vita Group (VTG) +6.73%, Kathmandu Holdings (KMD) +3.85% and Breville Group (BRG) +3.72%.
• Healthcare mostly positive today with CSL -0.06%, Fisher and Paykel (FPH) +3.25%, Viralytics (VLA) +7.06% and Clinuvel Pharma (CUV) +4.34%. Losses though for Capitol Health (CAJ) -6.06%, Healthscope (HSO) -1.75% and Sigma Pharma (SIP) -1.67%
• IT and Telcos another mixed bag with Speedcast (SDA) -6.28%, Hutchison (HTA) -7.06%, Altium (ALU) -3.21% and Urbanise (UBN) -24.64%. Macquarie Telecom (MAQ) +7.14% had a great day but no volume to speak of with Telstra (TLS) -0.00% drifting sideways still.
• Banks and financials mostly firmer with the Big Bank Basket unchanged at $178.91. Commonwealth Bank (CBA) +0.10% the biggest winner although AMP Limited (AMP) +2.74% had a strong day. Both Challenger Limited (CGF) -2.47% and QBE Insurance (QBE) -2.30% slid on specific stories. Wealth managers modestly higher.

CORPORATE NEWS

• Appen Limited (APX) -5.96% after reporti8ng NPAT of $10.6m up 25% from the previous year. Final dividend of 3c up 19% for the full year. Outlook positive but earnings were slightly down on a % of revenue basis due to volume discounts.
• Australia Wide Exploration (AWE) +2.13% announced an improvement of 95% to the net loss to $12.5m. No dividend was declared and revenue fell 55% to $54.9m following the sale of Tui.
• Bellamy’s Australia (BAL) +4.22% chairman Rob Wooley has resigned before an EGM called by the Black Prince Foundation and Jan Cameron. New directors appointed Chan Wai-Chan and Rodd Peters. Jan Cameron was not elected as a director.
• Challenger Financial (CGF) -2.47% is marketing a $350m Capital note 2 with redemption due in six years at a margin of 4.4% -4.5% over bank rate. Based on a rate of 1.8% the new note will yield 6.2% to 6.4%.
• Emeco Holdings (EHL) +2.67% announced a net loss of $31.3m from $107.2m with EBITDA up 45% to $33.6m. No dividend declared.
• Fortescue Metals (FMG) -0.45% has rejected media speculation that the company was interested in buying the Curragh coal assets from Wesfarmers (WES) -%. FMG remains focussed on debt reduction and capital flexibility.
• Harvey Norman (HVN) +0.59% has posted a record first-half result after $76m in property revaluations combined with strong sales at franchised stores fuelled a 39% increase in net profit to $257.3m. Excluding property revaluations the underlying net profit was $215m up slightly on estimates of $212m.
• Lynas Corp (LYC) unchanged reported it is now achieving forecast production and an improving trend in prices for NdPr. Revenue was up from $93.2m to $114.6m resulting in an operational loss of $18.9m
• Orocobre (ORE) -15.15% disappointed the market with production up 309% to 6,542 tonnes of lithium carbonate although recently declining lithium concentrates in the final ponds have been noticed and issues with distribution.
• National Australia Bank (NAB) +0.03% announced Mike Baird, former NSW premier, will be joining the company.
• QBE Insurance (QBE) -2.30% reported the UK Ogden discount rate from 2.5% to – 0.75% resulting in a $160m one off increase in the net central estimate of outstanding claims.
• Resolute Mining (RSG) -12.26% strong first half profit of $46m with net cash and bullion including net debt improved from $75m to $269m AISC of $999 ahead of guidance.
• Select Harvest (SHV) -4.23% revealed that after-tax profits fell 51.4% to $11.6m. EBIT fell $15.6m from $25m and the company announced the acquisition of Jubilee Almond Orchards in SA. %c interim dividend.
• Shine Corp (SHJ) -6.47% NPAT up to $3.9m from $1.3m. Interim dividend of 0.6c
• Speciality Fashion Group (SFH) -2.34% following a 37% rebound in profits to $12.1m though the Middle East bidder Al Aifia Holdings which has bid 70c cash is now in doubt after the unforeseen death of the father of the largest shareholder throwing funding into disarray.
• Speedcast (SDA) -6.28%revenue up 30% to $218m with profit $10.2m up from 6.6m
• Spotless Group (SPO) -13.68% net loss increased from $48m to $358.1m due to a non-cash impairment. Dividend of 1.35c down 61% from 3.5c.
• Surfstitch (SRF) +2.78% reported a net loss of $8.3m down from $14.5m a year ago. Revenue fell 13% to $106.3m.
• WorleyParsons (WOR) +31.97% after Dar Group from Dubai had approached the company last year in a highly conditional, indicative proposal with a 1180c scheme of arrangement. Dar has now acquired 13% of the company and says it has no plans to bid for the remainder although ASIC may well look at the board’s decision not to inform shareholders last year.

BOND CORNER

ECONOMIC NEWS

• The current account deficit has narrowed sharply to $3.85bn in the December quarter, thanks to soaring commodity prices. The deficit came in line with expectations and was down from a deficit of $10.2bn the previous quarter.

• In volume terms exports grew faster than imports this quarter and so international trade is expected to contribute 0.2%to growth in the December quarter 2016 Gross Domestic Product.

ANZ-Roy Morgan Consumer Confidence

• Consumer confidence jumped sharply (up 4.7%) this week following a disappointing performance the previous week (down 2.3%)). The increase in confidence was broadly based with all fives sub-indices posting gains.

ASIAN NEWS

Japan’s industrial production fell for the first time in six months in January.

Key Points

• Industrial production fell 0.8% in January from a month earlier (forecast +0.4%).
• Output is forecast to rise 3.5% in February and drop 5% in March.
• Retail sales rose 0.5% from a month ago (forecast +0.3%).

• VietJet Aviation opened 20% higher in its first day of trading on the Ho Chi Minh City Stock Exchange. This is Vietnams first listed airline and valued the company at US$1.4bn.
• US infrastructure is not the only area requiring significant spending as the Asian Development Bank (ADB) has warned that Asia needs to spend US$26 trillion or double the present spend on transport, power and sanitation.

• Philippine President Duterte has promised US$160bn to sustain 7% growth.
• The Indian government estimates it needs US$1.5 trillion spent in the next ten years.

EUROPE AND US

• Trump wants to spend US$54bn on an increase in military spending.
• Elon Musk’s SpaceX is expected to fly private passengers around the moon by the end of 2018. Get saving.
• Netflix is looking to introduce a ‘pay as you go ‘opt5ion for smartphones. Netflix is looking at ways to charge for individual episodes and movies, much like Apple TV.

And finally…..turn away children

An Australian bloke walks into a bar with a crocodile under his arm.

He asks the bartender if he will give him free drinks if he shows he can put his penis inside the crocs mouth for 15 seconds without it getting bit off.

The bartender agrees. The guy opens the crocs mouth and puts his penis inside it; the croc gently closes his mouth and after 15 seconds the Australian hits him over the head with a bottle, causing the croc to open his mouth and let the guy withdraw his penis.

The bartender starts serving the free drinks to the Australian and then tells everyone in the bar “If anyone else can do that then I will give them free drinks also”.

There is a pause and then a blonde woman calls out “ok, I will do it but please don’t hit me so hard over my head with the bottle”.

Clarence

XXX