The Highlights

  • ASX 200 gains 41 points to 5756. Miners and financials rally.
  • Big Bank Index rallies to $170.68. Insurers and wealth mangers in demand.
  • Miners enjoy commodity rises though golds miss out.
  • Retail stocks rally. Industrials lag.
  • IAG upgrades numbers. Hits record high.
  • REA hits record after mortgage deal yesterday.
  • AUD breaches 76c to trade at 76.10c.
  • US Futures down 3.
  • Asian markets follow US, CSI 300 down 0.32%. Takata falls 69%.

Stock Stuff:

  • AOG +4.40% Strong rally as company answers questions raised by Fairfax and ABC.
  • LNKShortfall covered above the TERP. Stock to return tomorrow very positive.
  • SRX-17.12% Write-offs and staff cuts reset with sales better than expected.
  • NEC +4.49% after licence fee scrapped for Free to air.
  • SXL +7.11% media reforms and licence fee reduction.
  • BKL +4.50% Confidence return after Holgate’s departure.
  • SKC- 3.70% chair retires.
  • DOW -0.95%% now close to 60% of SPO. Pyrrhic victory.
  • SGM +5.43% on iron price rise.
  • SUL +3.47% as retailers shake off winter gloom.
  • RCG +6.88% MYR +5.95% on short covering and window dressing.
  • ALQ -3.71% after strong rise yesterday withers.
  • BAL -0.99% sold off as investors switch to BKL +4.50%.
  • NCM -2.67% update on Cadia operations. Partially restarts extraction on test basis.
  • UPD +6.47% after material uplift from moving pilot trial.
  • Biggest risers – SRX, CKF, SXL, IAG, MYR and ADH.
  • Biggest fallers – SKC, ALQ, WGX, NCM, SGF and CQG.

TODAY

  • Sirtex (SRX) +17.12% The company has announced a write-off of around $90m in 2HFY17 and has said the business is performing within guidance with FY17 sales growth of 5.5% in doses. EBITDA to be approximately $72m before one off items. Staff to be cut by around 15%.
  • Nine Entertainment (NEC) +4.49% The Federal government has made a change to the license fee structure today which will result in fees reducing from 3.375% to 0% in the FY17 period. This will boost the bottom line by $33m. The company has now updated guidance to between $200m-$210m from $158m – $187m. The license fee will be permanently abolished and a spectrum charge of $11.3m for a five-year period will replace it.
  • Southern Cross Media (SXL) +7.11% has also been informed that their license fee will be removed and this will save them $11.8m. The fee will be replaced by the new spectrum license.
  • Dexus (DXS) -0.10% The company has announced a JV with Commercial and General to establish a new healthcare fund. The new fund will be known as Australian Healthcare Property Fund and will be seeded with around $370m of properties including Adelaide’s Calvary Hospital. There is a further pipeline of $390m of assets.
  • Downer EDI (DOW) –0.95% Further share purchases in Spotless Group (SPO) +0.43% brings holding to 57.035%.
  • IAG -6.41% A positive announcement this morning as the company will be able to release 5% of its earned premium income. This compares with guidance of 2% of NEP. As a result, the margin guidance has been revised up to 13.5%-15.5%.
  • John Holland CEO Joe Barr says there is a massive oversupply of apartments in some areas of Australia but the rollout of billions of dollars of infrastructure will play a key role in managing that supply. Fingers crossed.

ECONOMIC NEWS

  • Ex-RBA board member John Edwards, has suggested that the RBA could raise rates 8 times in the next two years. If the RBA wants to normalise rates in the next two years of around 3.5% that would require four quarter-point increases each year, he said.
  • Edwards believes that markets can assume:
  • the RBA considers its current rate to be exceptionally
  • if the economy improves as it predicts, the next move will be up.
  • if the economy was operating, as the RBA predicts, at 3% output growth and 2.5% inflation, it would think of a sustainable or natural policy rate of at least 3.5%.
  • Most importantly, it will want the policy rate increase to match the forecast improvement in Australia’s economic performance, so rising to at least 3.5% by the end of 2019.

BOND MARKET UPDATE

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ASIAN NEWS

  • Toshiba is suing Western Digital for Y120bn.
  • Takata, the air bag maker, falls 69%.

EUROPE AND US MORNING Headlines

  • Activism does work as Nestle announce a US$21bn buyback after pressure from hedge fund Third Point (run by Dan Loeb) urged Nestle to sell its 23% stake in cosmetics maker L’Oreal SA, eject underperforming brands and take on more debt.
  • The BOE has ordered UK banks to set aside another GBP11.4bn over rising consumer credit fears.
  • Another day another European rescue deal as Co-op Bank set to announce a GBP700m deal with its US hedge fund owners. Looks like a debt for equity swap and a capital injection. Another tick in the Euro/UK story.
  • Fed has been warning on asset prices. ‘Running on fumes’ San Francisco President Williams warned.
  • New cyber-attack hits many corporates around the world. Have they never heard of Norton?
  • Head of the NYSE has called short sellers ‘icky and un-American’. Has he been to lunch with Gerry Harvey? He is calling for more transparency.

And finally…………..

A couple drove down a country road for several miles, not saying a word. An earlier discussion had led to an argument and neither of them wanted to concede their position. As they passed a barnyard of mules, goats and pigs, the husband asked sarcastically, “Relatives of yours?” “Yep,” the wife replied, “in-laws.”

 

A French policeman stops the Englishman’s car and asks if he has been drinking.

With great difficulty, the Englishman admits that he has been drinking all day, that his daughter got married that morning, and that he drank champagne and a few bottles of wine at the reception, and many single malts scotches thereafter.

Quite upset, the policeman proceeds to alcohol-test (breath test) the Englishman and verifies that he is indeed totally sloshed.

He asks the Englishman if he knows why, under French Law, he is going to be arrested.

The Englishman answers with a bit of humour,

“No sir, I do not! But while we’re asking questions, do you realise that this is a British car and that my wife is driving on the other side?”

Clarence

XXX

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NT Markets

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