The ASX 200 bounced 76 points to 6683 as trade war outlook improved. US futures rose points. A solid lead from the US coupled with some better news on capital requirements from NZ for our big four banks, helped fuel the rally after two traumatic days. WBC rose 1.2% and ANZ up 2.1% after all four quantifyied the extent of the CET1 changes. New capital raisings not required it seems. Other financials rose with MQG up 0.8% and insurer QBE higher by 1.4%. Miners were back in demand as commodities rose and the outlook brightened. BHP up 1.6% and FMG up 2.3% although gold stocks lost some of their lustre as bullion weakened. NCM fell 1.6% although RSG ran 9.6% on good drill results in Senegal. Ahead of the OPEC meeting and Aramco pricing tonight, energy stocks rallied, WPL up 1.9% and STO up 4.2% in a very positive day as brokers warmed to the production upgrades. Consumer staples were back in demand despite COL being fined for not passing on milk price rise to the farmers and copping a $5m fine. In corporate news, WHC dropped 10.3% after an earnings downgrade as an unexpected casualty of the drought. Somewhat ironic really for a coal stock. MTS fell 0.36% on its results, and PAN rebutted IGO advances and is raising money. On the economic front, a flat reading on retail sales was below forecasts but APT cheered the market with a very positive Black Friday update showing impressive growth again. The stock was up 2.3%. 10- year bond yields rose to 1.09%, whilst the AUD slipped a little on the BOP and retail numbers. In Asia we saw a firmer footing with Japan up 0.8% and China up 0.4% on trade deal hopes.

• ASX 200 bounces 76 points to 6683.
• High 6684 Low 6622. Volumes average.
• Banks bounce on RBNZ capital rules.
• Broad rally in big caps.
• Energy stocks rally ahead of OPEC and ARAMCO.
• CSL flat on broker report.
• 10-year bond yields rally to 1.09%.
• AUD firms to 68.39c
• US futures up 42 points.
• Aussie gold steady at $2158
• Bitcoin big rally to US$7221
• Asian markets better to start the month with Japan up 0.8% and China up 0.4%

STOCKS                                               

• RSG +9.57% drilling update.
• PBH 4.18 back in green.
• STO +4.23% broker updates.
• ISX still suspended but now suing the ASX.
• JIN +2.48% contract with Deaf Society
• WHC -10.33% earnings downgrade. Unlikely drought victim.
• NUF -1.58% AGM presentation.
• NCM -1.65% gold sell off as risk on back.
• AAC +4.09% beef is back in fashion it seems.
• ADT +23.11% SFR takes stake higher.
• DNA -CEO gone in sixty seconds (well just about)
• CYP +13.24% treatment effective.
• PPK -0.88% rally continues to unwind.
• OCL -2.16% profit taking on thin volume.
• AWC -0.45% remain upbeat on medium term outlook.
• SYR +6.10% short position reduced by around 1%.
• Speculative stock of the day: Appsvill (APV) +52.63% after upping its revenue guidance for Q4 FY19 to be up over 50% on previous quarter.
• Biggest Risers: RSG, PRU, CIA, PRN, BWX, ABC and IMD.
• Biggest Falls: WHC, AMA, SGF, OCL. ELO, OCL and EHL

TODAY

• Bubs Australia (BUB) – In a trading halt pending a capital raising of $30m at 95c. A separate SPP will raise a further $5m
• ASX +1.22% reports November activity; volatility 0.5% vs prior month 0.6%, expected future volatility decreased to an average of 11.1 vs year-ago 16.2. Total capital raised $9.64bn vs year-ago $23.24bn. Average daily number of trades +17% y/y. Average daily value $5.10bn vs year-ago A$4.66bn.
• Magellan Financial (MFG) +3.60% Reports total FUM at 30-Nov of $97.72bn vs previous month $93.54bn. In November, Magellan recorded net inflows of $410m, which included, retail inflows $305m and institutional inflows of $105m.
• Nufarm (NUF) -1.58% Earnings lower in all regions for the first quarter, the slow start is expected to result in first-half EBITDA being significantly lower than the prior year. Severe drought conditions, lower demand and competitive pricing all hurting. Management said it is looking for further opportunities to reduce costs, however, in the short term, the biggest leverage is to an improvement in weather.
• Panoramic Resources (PAN) – Board unanimously recommends rejection of IGO takeover offer.
• Whitehaven Coal (WHC) -10.33% Lowers FY20 guidance due to challenging conditions following skilled worker shortages and impacts arising from weather events in NSW. ROM coal production now expected to be between 20.0–22mt vs prior 22.0-23.5mt. Cost of coal expected to be in the range of $73–75 per ton vs prior $70 per ton.
• Afterpay (APT) +2.30% Business update for November; achieved $1bn in underlying sales, added 500k new customers. Black Friday / Cyber Monday; achieved underlying sales of more than $160m for the 2 days, up 160% on the equivalent days in 2018.
• Bellamy’s (BAL) +0.61% Proposed acquisition by China’s Mengniu Dairy approved by shareholders at Scheme Meeting. 99.23% of the votes cast were in favour of the Scheme Resolution.
• Coles Group (COL) +0.85% To pay dairy co-operative, Norco around $5.25m following an ACCC probe which found COL was not passing on all of its 10c price rise to farmers as claimed in its marketing materials.
• Metcash (MTS) –0.36% First-half loss after tax of $151.6m which includes the previously announced $237.4m write-down following the loss of its 7-Eleven contract. Underlying profit fell 4.5% to $95.7m on lower earnings (EBIT). An interim dividend of 6c per share was declared.
• ANZ responds to RBNZ capital requirements; net impact on CET1 capital is around $3.0bn increase by Jul-2027. The bank said it is confident it can meet the higher requirements without the need to raise additional capital, given the extended transition period and its strong capital position.

ECONOMIC NEWS

Balance on goods and services

• In trend terms, the balance on goods and services was a surplus of $6.341bn in October 2019, a decrease of $229m on the surplus in September 2019.
• In seasonally adjusted terms, the balance on goods and services was a surplus of $4.502bn in October 2019, a decrease of $2.345bn on the surplus in September 2019.

• Australian retail turnover was relatively unchanged (0.0%) in October. Below expectations. In seasonally adjusted terms, there were mixed results across the states. Victoria (-0.4 %), New South Wales (-0.2%), and South Australia (-0.5 %) fell, while Queensland (0.4 %), Tasmania (1.4%), the Northern Territory (2.3%), Western Australia (0.2%), and the Australian Capital Territory (0.3%) rose in seasonally adjusted terms in October 2019. The trend estimate for Australian retail turnover rose 0.2% in October 2019, following a 0.2% rise in September.

• AMP Capital’s head economist Shane Oliver sees a 9% return for local stocks next year and a 10% house price rise. He also forecasts that the AUD will fall to 65c but he does that every year.
• ASIC has put small mining stocks on notice about conflicts of interest and a crackdown on directors who do not act in a ‘fair and reasonable’ way.

BOND MARKET

ASIAN NEWS

• Japan’s PM Abe has launched a US$239bn stimulus package in an effort to revive the economy. Japan has a history of shouting big numbers but underspending, as actual spending outside of promised loans and private sector assistance fall short and fail to move the dial. The nation’s yield curve has shifted to its flattest level in three months even amid heightened speculation around the planned fiscal boost.

• Forget the baby boom in China and infant formula, the money is in pets. China now has the world’s largest dog and cat population at 188m. Pet owners are set to spend US$28.6bn on their pets this year, up 19% from last year. As birth rates are falling, pet ownership rates are climbing. By 2024, there are expected to be 248m pets in China. No wonder Mars and Nestle are interested in this huge market. Keeping a dog was illegal in China up until the 1980s too.

EUROPEAN AND US NEWS

• Huawei fights US ban in court action.
• US fitness/cycling app company Peloton may have to rethink its advertising campaign and the creatives behind it. The latest ad in time for Xmas has been widely criticised as being sexist and was widely criticised on social media as the stock cratered by as much as 10%. The ad is called “the gift that gives back”. Certainly gives back share price gains.
• Tonight’s the night when we get to know the IPO price of Aramco. The world’s biggest company is expected top be valued at around US$1.7 trillion. Saudi will urge OPEC to make more production cuts.
• The head of Expedia has resigned together with the CFO after a disagreement in strategy. Barry Diller will take the reins.
• Some countries are continuing to push ahead with the digital sales tax championed by France despite the push back from Trump.

And finally…

I bought myself some glasses. My observational comedy improved.

I’m learning the hokey cokey. Not all of it. But – I’ve got the ins and outs

I saw a documentary on how ships are kept together. Riveting!

I have a lot of growing up to do. I realised that the other day inside my fort.

What’s a couple?’ I asked my mum. She said, ‘Two or three’. Which probably explains why her marriage collapsed

Clarence

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