ASX 200 recovers to close up 6 to 6669 as big four banks take a hit. US futures up points. MQG the latest to report and underwhelmed although the conference call calmed some nerves and the stock closed up 0.3% following early losses. The sell off in the big four though continued as downgrades flowed for ANZ following the shock Halloween franking cut. ANZ finished down 2.1% with WBC down 1.2% and CBA down 0.5%. NAB and WBC out next week. In the miners BHP continued to slip on weaker iron ore pricing and copper, dropping 0.7% though RIO fared better down only 0.4% and FMG bucked the trend up 1%. Gold stocks shone as bullion emerged from its recent weakness with NCM up 2.7% and EVN up 2.7%. Healthcare stocks continued to higher ground with CSL the standout rising 1% with RHC up 1.4% and SHL up 1.6%. Consumer stocks are attracting buyers with WOW up 0.9% and WES rising 0.5%. Bond proxies also in the spotlight led by TCL enjoying a toll freeday up 2%. TLS even joined the party rising 0.9%. In corporate news CSR results helped sentiment up 4.6%, BAP lost 1.5% after an acquisition and PBH returned from a capital raising to thunderous applause, jumping 7.2%. CoreLogic data on hous prices helped sentiment and some end of week book squaring and 1^st of the mont capital allocations helped steer the ship around.  The 10-year bond yield fell to 1.10% whilst the AUD dipped to 69.03c. Asian shares were mixed ahead of the traditional HK protests  and petrol bomb throwing. Japan down 0.5% and China up 1.3%.

Todays Highlights

• ASX 200 up 6 points to 6669 despite bank falls.
• High 6672 Low 6635. Average volumes.
• Banks slump on downgrades. MQG finds friends eventually.
• Healthcare looking healthy.
• Miners mixed as gold shines.
• Consumer stocks rally. TLS up too.
• 10-year bonds at 1.10%
• AUD better down to 1.10%
• Aussie gold up to $2187
• Bitcoin lower at US$9087
• US futures down 26
• Asian markets better with Japan up 0.3% and  China 0.1% as four day communist love in finishes.

INSIGHTS FROM MARCUSTODAY TEAM

IDEA OF THE DAY – A Smorgasbord of ideas – the main ones being that ANZ’s results yesterday will have brokers recommending you all switch to the other banks because they won’t cut their franking from 100% to 70% as ANZ did, because 100% of their earnings are from Australia whereas ANZ’s are only 68% domestic. The other idea is that the Aged Care sector is going to bottom one day and yesterday’s interim report from the Royal Commission is all part of that bottoming process. If only we knew when.

HENRY’S TAKE – A solid day for the SCP yesterday with some good moves higher despite ASX 200 weakness. A look at OCC after some promising results in nerve regeneration technology. Risks are clearing but seems to be no rush as banks struggle and an options trade update with Ask the Analyst at 12:30 pm today.

STOCKS

• PLS +6.15% rally continues.
• AVH +8.40% foreign documents filed.
• NHC +6.57% court decision.
• PME -7.58% unwind continues.
• JIN -7.97% heading for support.
• APT -4.89% sell off continues.
• PBH +7.18% successful capital raising.
• SYR +2.50% bounce continues.
• TNY -11.56% profit taking.
• STX -6.25% capital raising.
• TLS +0.86% stirring.
• MNF – raising $52.1m
• CWY -0.27% acquisition completed.
• QAN +0.62% more cracks with fleet checks to come.
• KMD +0.69% new head of outdoor retail.
• Speculative stock of the day: Novita Health (NHL) +53.45% big volume on US reimbursement codes fro its TAli Train.
• Biggest Risers: AVH, NHC, PRU, PLS, SIG, WFX and CSR
• Biggest Falls: JIN, PME, PET, MP1, CGC, APT and ILU

TODAY

• CSR Limited (CSR) +4.59% Reports H1 NPAT $71.6m ex-items vs $70.7m expected. Revenue $1.15bn vs $1.13bn expected. EBIT $113.1m ex-items vs $101.9m. Interim dividend 14 cps (50% franked); record 11-Nov; Payable 10-Dec. Confirmed sale of the second tranche of surplus land at Horsley Park, NSW for total sale proceeds of ~$140m. FY Guidance (Mar 2021): NPAT $107-133m ex-items vs $128m. Given the subdued immediate outlook for the housing construction sector, it is difficult to predict activity over the near term. As per previous years, the results in H2 are expected to be lower than H1 due to the seasonality in volumes. The numbers are a slight beat but on lowered expectations. Guidance soft.
• Macquarie Group (MQG) +0.34% reports H1 net profit of $1.46bn, just shy of the expected 1.47bn, with net operating income of $6.32bn also below the expected $6.41bn. EPS is up 11% on last year’s number at $4.30, while annualised ROE came in at 16.4%. An 40% franked interim ordinary dividend of 250c has been declared, up on the 45% franked 215c dividend last year. The company continues to expect FY20 result to be slightly below that of FY19. Numbers a little dissapointing, as is the franking reduction and vague guidance. Increased dividend a positive.
• Orica (ORI)+3.62% report FY underlying NPAY of $371.9m, ahead of the $361.7m expected. Revenue came in just ahead of expectations at $5.88bn (vs $5.84bn), while underlying EBITDA of $941.1m was below the expected $952.1m. A 15% franked final dividend of 33c has been declared. The company expects higher earnings in FY20 attributed to increased demand and product mix across all regions, although it is expected earnings will be skewed to H2. Decent set of results although H2 skew isn’t ideal.
• Qantas (QAN) +0.62% has confirmed there are cracks in 3 of their planes after completing inspections of 33 of its Boeing 737 aircrafts. After complex repair work all 3 aircraft are expected to return to the sky this year.

ECONOMIC NEWS

• Strong price growth in housing according to data  from CoreLogic with Melbourne recording a 2.3% increase in housing values over the month of October – its strongest rate since 2009 – followed by Sydney with a rise of 1.7%. CoreLogic’s Home Value Index showed another month of recovering real estate values, with its five capital city aggregate recording a rise of 1.4%

BOND MARKET

• 2 – year bond yields down 2bps to 0.80%
• 3 – year bond yields down 2bps to 0.82%
• 10 – year bond yields down 4bps to 1.10%

ASIAN NEWS

• Chinese manufacturing activity expanded at its fastest pace in two-and-a-half years during October, a private survey showed.
• Japan’s manufacturing activity slumped to a more than three-year low in October
• China will start instituting ‘patirotic education’ in HK as it looks to strengthen protections against foreign interference. Expect a weekend of un Molotov cocktails to celebrate.

EUROPEAN AND US NEWS

• Pinterest down 20% as US revenue disappoints.
• US authorities have grounded Chinese drones on security fears.
• Nancy Pelosi will allow a vote on the NAFTA revamp.
• England by 20. Go England. ‘It’s coming home’.

And finally………….

Warren Gatland takes Wales out for training and tells everyone to assume their normal position. So they all go and stand behind the goalposts and wait for the conversion.

Snow White was returning from town to the cottage in the forest where she lived with the 7 dwarfs. In the distance she could see smoke, then as she got nearer she realised that her cottage had burnt down. Frantically, Snow White searched the forest for the dwarfs, then she heard a a lone voice saying, “England for the World Cup, England for the World Cup, South Africa for the World Cup.”

On hearing this chant, Snow White gave a gasp of relief as she knew that at least Dopey was safe.

 

Q. What do you call an South African holding a bottle of champagne after the Rugby World Cup Final?
A. Waiter.

 

There’s a man sitting in the front row at the Rugby World Cup Finals, but amazingly, there’s an empty seat beside him. Another man spots it, goes up to him and says: “Do you mind if I sit here?”
“No, not at all,” replies the first man. “It’s my wife’s seat, but she died recently..”

“So why didn’t you get one of your family to come,” asks the second man out of curiosity.

“They’re all at the funeral.”

Clarence

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