The ASX 200 fell 13 points to 7066 in quiet trade as the US celebrated Martin Luther King Jr. Late closing rally helped improve the result. US Futures down 95 points. The five- day winning streak appears over after a 6% rise in 2020 for the ASX 200. BHP fell 0.1% after its solid half yearly production report disappointed slightly on iron ore production but higher commodity prices helped. FMG continues to push ever higher, up another 2.1%. KGN continued to be sold off after yesterday’s business update falling 7.3%. SYD saw weakness following its passenger numbers yesterday, and the potential spread of the coronavirus from China hurting, down 3.0% and the banks remain mixed as a rotation from CBA down 0.5% into the other three continues with NAB up 0.35%. Industrials were generally weaker in quiet trade although WOW bucked the trend rising 2%. In corporate news, RSG is raising $200m at 110c a share and DTL rose 4% after an earnings update. PGH also in the news with it plan to divest its contract manufacturing business pleasing the market with a 3.35% rise. On the economic front, CBA’s latest household spending index shows home buying intentions are running at a record rate indicating the rebound in house prices looks set to continue which is a positive for the banking sector and maybe new vehicle sales. 10 year yields around 1.16% still, although Asian markets under pressure as Lunar New Year approaches and the Coronavirus appears to be spreading with a first case potentially reported in Brisbane. China down 1.15% and Japan down 0.58% as the BOJ kept monetary policy on hold.

• ASX 200 down 13 to 7066.
• High 7075 Low 7041. Narrow range thin volume.
• Banks mixed as CBA stutters
• BHP production report. FMG hits more highs.
• CSL marches higher.
• Miners doing well on iron ore rise.
• 10-year bond yields ease to 1.16%
• AUD fades to 68.60c
• Dow futures down 95 points.
• Aussie gold higher at $2284 as dollar falls.
• Bitcoin steady at US$8656
• Asian markets down on Coronavirus news Hong Kong down 2.22% China down 1.15% and Japan off 0.58%.

STOCKS                                               

• AFG +4.18% small bounce after losses.
• DTL +3.96% earnings upgrade.
• PGH +3.35% divestment of contract manufacturing business.
• PRU +5.12% Quarterly report brings buyers.
• KGN -7.28% broker downgrades
• PLS -5.19% profit taking.
• ORE -3.49% additional contract
• WTC -3.98% TNE -4.69% tech stock sell off.
• HUB -5.29% FUM disappoints.
• SYD -3.00% Coronavirus issues.
• MMS -2.73% CFO transition.
• SYR -9.45% run over?
• EXL -12.38% speeding ticket from ASX.
• WGO +21.05% Perth Basin exposure reappraised.
• STX +10.53% Perth Basin exposure. Media article.
• WZR +6.82% small bounce.
• Speculative stock of the day: Zoono Group (ZNO) +31.18% good volume. No reason found. Quarterly last week may have helped. Good bounce after recent selling.
• Biggest Risers: OCL, PRU, ALG, AMA, DTL, CDA and PGH.
• Biggest Falls: KGN, HUB, PLS, PAR, TNE, CTD and AEF.

TODAY

• BHP -0.10% Half Year Operational Review – Group copper production unchanged in December half. All major projects on track. Q2 Production: Petroleum production (Mboe) 28,195 vs year-ago 30,147. Iron ore production fell short of expectations. BHP produced 68m tonnes of iron ore and sold 69.4m tonnes. Higher prices will make a big difference. BHP’s received price in the final six months of 2019 was 41% higher than previous period at $US78 a tonne. Received copper prices were 2% higher than the year before, while the small nickel division received 26% higher prices. Guidance was maintained for all commodities, including thermal coal which is seeing an impact at its Mt Arthur mine as smoke from bushfires affects air quality and production.
• Resolute Mining (RSG) – is raising around $200m at 110c with its largest shareholder Duncan Saville and other directors expected to take up their full allocation or around $25m. The funds will be used to complete the pay-out of the Taurus debt facility. The strengthened balance sheet will help the company refinance its remaining debt. Canaccord is handling the capital raise.
• Data #3 (DTL) +3.96% Company expects to meet the top end of its guidance of between $11m-$12.5m. This compares to $9m NPAT previously. Final results to be released February 19th.
• HUB24 (HUB) -5.29% reports FUA of $15.84bn at 31-Dec vs quarter-ago $14.38bn.

ECONOMIC NEWS

• Morgan Stanley noted that average total shareholder return for the major banks lagged the ASX 200 index by 14% in 2019. The broker believes that the sector will once again deliver sub optimal performance in 2020.

BOND MARKET

ASIAN NEWS

• The Bank of Japan kept monetary policy steady and nudged up its economic growth forecasts. The BOJ maintained its short-term interest rate target at negative 0.1% and pledged to guide 10-year government bond yields to around 0%, by a 7-2 vote.
• The BOJ revised up its growth projection for the fiscal year beginning in April to 0.9% from an estimate of 0.7% growth made in October.
• The Coronavirus appears to be able to be transmitted human to human as aid workers now face infection and so far, four people have died. Fifteen medical professionals have been affected as well, with one critically ill, according to a report from state news agency Xinhua.
• Moody’s has cut Hong Kong’s credit rating on the continued protests and the government response.

EUROPEAN AND US NEWS

• Howard Marks, co-founder of Oaktree Capital, which manages more than $US120bn, was blunt when asked about the current market. When he was asked last week in an interview on Bloomberg Television whether now was a good time to be investing, he replied: “It is not.”
• The Google head has called for a moratorium on facial recognition technology. He believes that regulators should aware of the risks in the technology.
• Trump’s trade talk success continues it seems with rumours of an agreement with France on the proposed digital tax it was looking at bringing in aimed squarely at the US tech sector.
• Meanwhile in a land far, far away, the Trump impeachment trial looks set to kick off whilst he is in Davos for the 50th World Economic Forum.

• Boeing has been told by one of its biggest customers to rename the 737 Max. Air Lease Corp thinks a serious rebranding exercise will be needed to regain public trust. May need more than that I suspect.

And finally….

A guy goes to the supermarket and notices an attractive woman waving at him.

She says hello. He’s rather taken aback because he can’t place where he knows her from.

So he says, “Do you know me?”

To which she replies, “I think you’re the father of one of my kids.”

Now his mind travels back to the only time he has ever been unfaithful to his wife and says, “My God, are you the stripper from my bachelor party that I made love to on the pool table with all my buddies watching while your partner whipped my butt with wet celery?”

She looks into his eyes and says calmly, “No, I’m your son’s teacher.”

Clarence 

XXX