The ASX 200 up 110 to 6850 as Xmas comes early. Good Chinese numbers helped.  US Futures up 6 points. A huge start to the week where it tough to find a stock that is down. Banks and miners led the charge as sellers took the last plane to the coast. It is not so much a case of a single buy signal more a sigh of relief and a growing reset of expectations. Expect the rally to continue as FOMO rises and volumes thin. The financial sector was a star performer with WBC up 1.5% and CBA up 1.75%. Over in the UK, VUK rallied yet another 8.75% on BoJos victory last week. MQG joined in the celebrations up 1.7% and decked the halls as MFG rose 2.2%. Insurers chomped at the bit with QBE up 2.6% and IAG up 0.9% too. Meanwhile miners showed a clean pair of heels with BHP up 1.6% and FMG pushing new highs up 0.8%. S32 up 1.4% and even gold miners were in demand with NCM up 2.25%. Healthcare was once again a standout sector as CSL piled on the points up 2.5%. $300 looks very doable pre-Xmas. RHC rose 2.7% and SHL up 2.1%. In industrials REITS saw gains across the board and bond proxies too had a stunning day with TCL up 1.6% and SYD up 1.6%. WOW held its AGM and rose 0.6% in staples, WES up 1.95% and COL up 0.9%. Energy shares were also in demand led by WPL up 1% and STO rising 2.3%. In corporate news, SIQ fell 15.2% after an insurance update pointing to a hit of around $4m, SIG fell 9.85% after API sold out its stake. PNV rose 3.1% today after announcing its product was being used in some of the White Island tragedy victims burns. NVL rose 52.5% on a takeover approach from VetPartners at 370c in cash. OPY stared life today in an underwhelming fashion down 17.2% on its IPO price. On the economic front, the government snuck through its MYEFO which confirmed the slowing economy and forecasts were adjusted downwards, as Josh Frydenberg tried desperately to spin the update as best he could. The 10-year bond yield rose to 1.15% and the AUD hit 68.75c. Asian markets were slightly weaker with China down  % and Japan down %. Another weekend of yuletide festivities to cheer the market there down 0.4%

• ASX 200 up a massive 110 points to 6850.
• High 6866 Low 6747. Market breaks out to the upside on better volume day.
• China data cheers. MYEFO downgrades.
• Banks run hard. Miners up as metals gain.
• Energy finds its mojo and healthcare back in rude health.
• Staples rise and gold miners stiffen too.
• 10-year bond yields 1.15%
• AUD slips to 68.75c
• US futures up 6 points.
• Aussie gold firms to $2145
• Bitcoin down to US$7063
• Asian markets slightly weaker with Japan up 0.30% and China down 0.15%

STOCKS                                               

• NEA +8.75% buyers back.
• VUK +8.75% Boris bounce continues.
• SAR +% WGX+8.29% gold miners in demand.
• PRN -18.90% guidance update
• SIQ -15.21% $4m insurance hit
• SIG -9.85% API sells out.
• TLS +1.36% joining the Xmas push.
• SXY -2.86% extension of acquisition of Eromanga licence.
• NVL +52.54% scheme of arrangement at 370c
• JMS +6.00% manganese price rebound.
• TWE -1.30% no celebration just yet. It is coming though.
• A2M -1.09% sours.
• WGN -2.14% Cross River Rail contract.
• BSL +1.97% JP Morgan upgrade.
• NST – raises money buys stake in super pit.
• SPL +1.57% tax refund.
• ISX – corrects options ‘oversight’. Still suspended.
• WHC -0.36% MYEFO cuts thermal coal forecasts back to US$64 a tonne from US$91.
• Speculative stock of the day: OPY -% new float flops first day in flop now pay later sector.
• Biggest Risers: VUK, NEA, WGX, SAR, MP1, IMF and PRU.
• Biggest Falls: PRN, SIQ, SIG, VGI, PAR and PBH.

TODAY

• Starpharma (SPL) +1.57% Receives $4.9m R&D tax incentive refund from the federal government for its R&D activities associated with its DEP and VivaGel products.
• Smartgroup (SIQ) -15.21% Has announced a $4m downgrade to its after-tax profit due to insurance changes.
• National Vet Care (NVL) +52.54% has agreed to be acquired by VetPartners, for 370c per share. The stock closed Friday 236c meaning that the premium is 56.8% and the business is valued at $251.5m. VetPartners owns 140 clinics in Australia, New Zealand and Singapore. The merger of the two brands and the proposed deal is recommended by the board of NVL.
• Woolworths Group (WOW) +0.56% CEO pleased with trading to date for Q2.
• Wagners (WGN) -2.14% Wins supply contract to the Brisbane Cross River Rail project. Revenue from the contract is expected to be in the vicinity of $40m over an estimated 9 month period commencing late 2020.
• Northern Star (NST) – Trading halt pending an announcement on a potential significant transaction.
• Australian Pharmaceutical Industries (API) +0.78% Has sold its $81m interest in SIG. Chairman Mark Smith, said the “strategic and commercial fundamentals that made the merger a compelling proposition for both sets of shareholders have significantly diminished.”
• Qantas (QAN) +1.24% Jetstar provides an update on industrial action; financial impact estimated between $20m-25m.

ECONOMIC NEWS

• CBA/IHS Markit Australia PMI (December, ‘Flash’): Manufacturing: 49.4 points, down from 49.9 points in November; Services: 49.5 points, down from 49.7 points in November. Activity is contracting.

MYEFO UPDATE

Click here to view the release

• GDP forecast revised down to 2.25% from 2.75%. The forecast for next financial year stays unchanged at 2.25%
• Wage growth forecasts also plunge from 2.75% this financial year to 2.25% and next year, falls from 3.25% to 2.5%.
• Budget surplus forecast revised down to $5bn.
• The MYEFO shows company tax receipts have been downgraded by $700m for this year and $7.9bn over the forward estimates. In this financial year, total tax receipts are down $2.6 billion and non-tax receipts are down by more than $400 million, since the election campaign update.
• CPI forecast growth down to 2% from 2.25%
• Net debt is projected to be $392.3bn in 2019-20 (19.5% of GDP) and to improve across the forward estimates and medium term.
• ‘Stimulus’ measures include $537m for more aged care home care packages, $3.8bn in fast-tracked infrastructure spending and $550m extra in drought assistance.

BOND MARKET

ASIAN NEWS

• Chinese industrial output rose 6.2% from a year earlier, versus a median estimate of 5.0%. Retail sales expanded 8.0%, compared to a projected 7.6% increase. Fixed-asset investment was unchanged at 5.2% in the first eleven months, the same as forecast.

China’s ambassador to Germany threatened Berlin with retaliation if it excludes Huawei as a supplier of 5G wireless equipment

EUROPEAN AND US NEWS

• Boeing is considering suspending production of 737 Max.
• Several factors including design, poor drainage and heavy rainfall caused the deadly dam breach at Vale’s Córrego do Feijão mine in January according to a report released recently.
• Who is going to be the new governor at the Old Lady of Threadneedle Street?
• Boris is looking at plans to pump billions of investment pounds in the Midlands and the North of England.
• US retail has been hot with the worst year since 2008 as discounts last way beyond BF and CM.

And finally….

I was in a bar the other night when I got picked on by four huge blokes. My mate told me to pretend we were the police.

I only got through half of the first verse of Roxanne before the biggest guy thumped me.

 

How do you get an arts graduate off your front door step….

Give him the money for the pizza.

 

My wife says I’m hopeless at fixing appliances.

Well, she’s in for a shock.

 

A boy asks his Dad one day, “Dad, why is my sister called Paris?”

His Dad replies, “Because she was conceived in Paris.”

The boy says, “Ahh, thanks Dad.”

His Dad says, “You’re welcome, Backseat.”

Clarence

XXXX