Friday 24th January – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

The ASX 200 rally peters out slightly ahead of the long Australia Day weekend. ASX 200 up only 2.5 to 7090.5. Dow Futures down points. A promising start but investors lost interest as the day wore on with a three-day weekend looming and a week-long Chinese holiday. Lunar New Year though is being scaled back dramatically in China as the Coronavirus forces city closures and potentially a closure of casinos in Macau. The banks were the strength today as defensive non-Asian exposed stocks. CBA up 0.5% and WBC up 0.5% after the new chair took to the media. Healthcare stocks rallied yet again with CSL pushing up 1.1% and SHL up 0.7%. In the mining sector, the iron ore miners were under pressure with BHP down 1.5% and RIO down 2.8% although FMG held firm down only 0.4% at the close. Consumer stocks firmed with industrials although SYD fell 2.4% as the virus spreads around the region effecting billions of travel plans. In corporate news, IAG issued a profit warning as the hailstorm took its toll, down 5.4%. SUN followed in its wake down 1.7%. In economic news, economists rushed to change interest rate cut forecasts following this week’s good jobs number. Meanwhile the 10-year yield continues to come under pressure down to 1.09%. The AUD trading around 68.49c and Asian markets closed as New Year kicks in. The year of the Rat. Japan up 0.1% though.

ASX 200 up 2.5 to 7090.5.
High 7123 Low 7086. Up 0.3% this week.
Banks show strength. Insurers hit with hail damage.
Miners under pressure on iron ore falls. Energy stocks shrug off lower oil prices.
Healthcare doing well as usual.
IAG gets hit with hail and margin pressure.
DOW and CIM bounce.
10-year bond yields ease to 1.16%
AUD rises to 68.49c
Oil up 0.4% in Asian trade.
Dow futures down
Aussie gold steady at $2276.
Bitcoin slips to US$8303
Asian markets in holiday mode as Lunar New Year kicks off. Japan open and up 0.08%

STOCKS

CIM +3.03% DOW +6.00% brokers turning positive.
VRL +4.42% another takeover bid
EOS +3.90% keeps on trucking.
NWL +5.13% broker upgrades.
IAG -5.44% hail Caesar. Not good.
M7T +12.50% back in favour.
TNE -4.99% Pinnacle selling down to 8%
WGX -4.24% quarterly update.
CVN -4.23% oil price hurts.
MSB -unchanged- rally runs out of steam.
SYD -2.43% coronavirus weighs.
SUN -1.67% IAG influence on hail damage.
APT +2.44% BNPL still going well.
CBA +0.5% cracks $85 for first time since July 17.
MVP +8.78% great rally continues.
PGL +4.00% management changes.
EHL +0.44% no bid for DOW business.
Speculative stock of the day: Imricor (IMR) +29.03% received CE mark approval for its Vision-MR Ablation Catheter and Vision-MR Dispersive Electrode.
IPO of the Day Cosol (COS) +% stunning debut with a 80% rise on decent volume. Small IT business focused on clients operating in asset-intensive industries. Enterprise Asset Management it is called EAM. On track to show 47% EBIT growth from $2.76m to $4.07%
Biggest Risers: MVP, DOW, NWL, VRL, PNI, PGH and PAR
Biggest Falls: RNC, IAG, TNE, COE, PRN and AGG

TODAY

Village Roadshow (VRL) +4.42% has been approached by BGH Capital for a takeover at 400c per share. The offer values the company at $781m, ahead of Pacific Equity Partners bid of 390c.
Virtus Health (VRT) +3.23% appoints Kate Munnings as Group CEO.
Prospa (PLG) +4.00% CFO Edoardo Bigazzi to leave the company to pursue other opportunities; Peter Loosmore appointed interim CFO effective 28-Jan.
Emeco Holdings (EHL) +0.44% responds to the report in The Australian regarding Downer Mining; Is NOT a bidder in the sales process for DOW.
Insurance Australia Group (IAG) -5.44% now expects FY20 reported insurance margin to be in the range of 14.5-16.5% vs previous guidance of 16-18%, following the hailstorm event.
Mount Gibson Iron reports (MGX) -3.57% raises FY20 guidance, now expects iron ore sales between 4.8-5.3 Mwmt vs prior 3.7-4.0 Mwmt.
Genworth Mortgage Insurance Australia (GMA) +0.26% appoints Pauline Blight-Johnston as CEO and MD. Blight-Johnston takes over from Duncan West who was appointed acting CEO on the first of January.

ECONOMIC NEWS

‘Flash’ IHS Markit Purchasing Manager Indexes for January: Manufacturing 49.1 points vs prior 49.2 points. Services 48.9 points vs prior 49.8 points. Composite 48.6 points vs prior 49.6 points. A reading under 50 points to a contraction in activity.
Westpac and NAB have forecast annualised core inflation to reach 1.8% in December, up from 1.7% in September.
Brisbane based Morgans sees downside risk on earnings reports. We will look at some to surprise next week.
The odds of a February rate cut have tumbled to 17%. July is now looking strong. Westpac’s Bill Evans pushes his cut hope out to April.

BOND MARKET

ASIA NEWS

Coronavirus continues to grip Asia as Lunar New Year is being scaled down dramatically and cities closed off. Estimates that it could knock 1% off Chinese GDP growth although may be too early to say.

WHO says virus is local health emergency for now.
In Hong Kong, face masks are selling fast and at vastly inflated prices as the coronavirus spooks residents with long memories of 2003 and SARS.
Happy Year of the Rat.

EUROPEAN AND US NEWS

Atlassian delivers. Great result. 37% rise in revenue.
Steve Mnuchin has criticised Greta challenging her view onb climate change as she has not been to college.
ECB launches strategic review. It’s a yearlong review. Seems to be SOP these days. Keeps anyone from making decisions.
Intel shares surge as chip recovery continues. Always a good indicator of global growth and confidence.
Davos continues. Good to watch the former Lebanese Foreign Minister squirm as a journalist asked him how he afforded his private jet fare/ Davos ticket on $5000 a month. Maybe Afterpay?

The funnies!!!

While reading an article last night about fathers and sons, memories came flooding back to the time I took me son out for his first pint.

Off we went to our local pub only two miles from the cottage.

I got him a Guinness.

He didn’t like it, so I drank it.

Then I got him a Kilkenny’s, he didn’t like that either, so I drank it.

Finally, I thought he might like some Harp Lager.

He didn’t. I drank it.

I thought maybe he’d like whiskey better than beer so we tried a Jameson’s, nope!

In desperation, I had him try that rare Redbreast, Ireland’s finest.

He wouldn’t even smell it.

What could I do but drink it!