The ASX 200 fell 96 points to 6994.5 as it played catch up with two days of US falls. Dow futures rose slightly but it is all about the ongoing Chinese Coronavirus crisis. Broad based losses as investors sold anything travel or China related. Banks under a little pressure with CBA giving back 1.1% and WBC falling 0.8%. Geared financials like MQG down 1.95% and MFG were especially hard hit, falling 4.2%. Insurers remain under pressure too on increased claims, IAG down 1.9% following broker downgrades. Big drop in yields hurting financials. Miners were hit hard with iron ore closed in Chinese trading, it saw losses elsewhere, BHP fell 3.3%, RIO down 3.1% and FMG suffered a large 7.3% fall as Hunan revealed it had sold down another tranche of its holding. Gold stocks were one of the few bright spots in resources as AUD bullion prices hit all time highs on defensive buying. NST up 3.1% and EVN up 2.4%. Energy stocks took a hit too with OSH down 7.5% in the spotlight following no deal in PNG with its LNG expansion plans. Travel related stocks were hard hit with WEB down 13.9%, CTD down 7%, ALG down 7.7% and SLK down a more modest 1% after a broker note. CWN and SGR fell saw heavy selling as the Chinese gamblers will be a little thin on the ground. CWN down 5.1% and SGR down 5.2%. In corporate news, EOS continues to pile on the gains following a US Space acquisition rising 4.4%, RMS rose 4.5% after an update on its Greenfinch project and CCP were down 0.6% on its results. On the economic front, NAB Business confidence showed some stability and signs for optimism are emerging but they could well be snuffed out by recent bushfires and events in China. The 10-year yield dropped below 1% for the first time as bets on a rate cut before June cranked up. The AUD remains under pressure as fear grows, steady at 67.60c. Asian markets remain under selling pressure with China closed for its New Year, Japan down 0.8%.

• ASX 200 drops 96 to 6994.5. Attempts to rally half hearted.
• High 7051 Low 6964. Good volume.
• Banks and miners hit. Industrials and travel stocks under fire.
• Gold miners only bright spot as AUD price hits highs.
• 10-year bond yields crater to 0.96%
• AUD steady at lower levels of 67.60c
• Dow futures up points.
• Aussie gold at record highs of $2342 as AUD drops.
• Bitcoin rallies to US$9087
• Asian markets in holiday mode as Lunar New Year continues. Japan open and up 0.8%

STOCKS                                               

• EOS +4.37% US Space communications acquisition
• RMS +4.53% Greenfinch project update.
• PNV +2.47% progress in UK and Ireland.
• WEB -13.86% travel stocks hit.
• PLS -6.94% shorts back in control.
• OSH -7.52% no deal in PNG.
• CTD -6.98% global growth fears.
• ANN -0.03%% winner from health scare.
• ALG -7.67% tourism stocks taking it hard.
• AUB +1.27% earnings update.
• CWN -5.07% tourist dollars scarce.
• FMG -7.29% profit taking and Hunan selling too.
• KCN +9.47% Thai court case looms.
• MQG -1.95% geared to equity markets.
• MFG -4.16% could have been worse.
• TCL +0.25% defensive buying.
• QAN -5.22% UBS says it will take a $200bn.
• ZNO +15.33% back in the spotlight.
• Speculative stock of the day: Biotron (BIT) +17.14% hopes that HIV treatment could be useful in Coronavirus treatment.
• Biggest Risers: PRU, RMS, EOS, ECX, CGC, SAR and AGG.
• Biggest Falls: WEB, NIC, ORE, ALG, OSH , FMG and NWH.

TODAY

• Saracen Minerals (SAR) +3.48% Q2 gold production came in at 120,127oz at an AISC of $1,098/oz. Production for FY20 is expected to be more than 500k ounces and more than 600k ounces in FY21.
• Volpara (VHT) +2.75% Q3 average recurring revenue (ARR) came in ahead of midrange forecasts at NZ$16.8M. Guides FY20 ARR of at least NZ$17.8M vs prior NZ$17.1M.
• A.P. Eagers (APE) –2.96%There are reports APE might need to downgrade its profit expectations on the back of falling car sales. A report from the FCAI showed that car sales in 2019 were down 7.8%. Last year the company issued two profit downgrades.
• AMP (AMP) -1.08% Divestment of its NZ wealth division is reportedly in the final stages of bidding and expected to sell to a private equity group for $300-500m.
• National Storage REIT (NSR) –0.46% Last Wednesday NSR received a non-binding proposal from Gaw Capital Partners but is reportedly seeking another offer. JP Morgan has allegedly been meeting with several parties, Helman was named as the dominant player.
• Bingo Industries (BIN) –unchanged-  The ACCC is investigating the building & demolition waste sector in NSW. The investigation commenced in late 2019 and relates to price adjustments. BIN notes it is one of several market participants involved. FY guidance reaffirmed, EBITDA expected in the range of $159-164m.
• AUB Group (AUB) – 1.27%reaffirms earnings guidance, expects to deliver toward the top of previously announced guidance range of 8-10% growth in adjusted NPAT in FY20.
• Credit Corp (CCP) -0.61% Reports H1 NPAT of $38.6m vs consensus of $39.2m. Revenue $190.9m vs consensus $183.2m. EPS came in a 70c and an interim dividend of 36c was declared. FY NPAT is anticipated in the range of $81-83m. EPS is forecast in the range of 149c-151c. Baycorp acquisition is reportedly on track to achieve full-year NPAT of $6m with the integration ahead of schedule.
• NRW Holdings (NWH) -7.14% reports that a serious accident on Monday at Roy Hill Iron Ore Mine resulted in an employee’s death.
• Oil Search (OSH) -7.52% reports Q4 Production of 7.0 mmboe vs quarter-ago 6.8 mmboe. Revenue $446.7m vs consensus $424.9m. Total production in FY20 is expected between 27.5m and 29.5m. Production costs are forecast to be between 1100c and 1200c ($ per boe).
• Western Areas (WSA) -3.65% December quarter total nickel mined was 5,849T vs quarter ago 5,805T. Unit cash cost in concentrate came in at 310c per lb vs quarter-ago 306c per Ib. Mill production expected to be between 21-22K tonnes in FY20. Unit Cash Cost is expected to be between 290c and 330c per Ib.

ECONOMIC NEWS

• Conditions edged 1pt lower in the month to +3 index points – another below average result and one that is well below the level seen in early 2018. Confidence weakened, falling 2pts to -2 index points, the lowest read since mid-2013.
• Business conditions edged lower in December to +3 index points – ending the year below average and significantly below the levels seen in early 2018 but appearing to have stabilised.

• “Conditions appear to have bottomed, but our forward-looking indicators suggest they are likely to remain weak”.
• Peter Costello has warned that Future Fund returns could fall as global debt levels and demographic changes put downward pressure on equity markets. Not sure why we care that much its not our future but the retirement plans of civil servants.
• The pool of securities with a yield below zero surged by $US1.16 trillion last week as the flight to quality and defensive assets accelerates due to the virus. There is nolw US$12.4 trillion in negative yielding debt instruments.

BOND MARKET

• Yield curve flattest in two years. 10-year yield below 1%. Traders factoring a June rate cut.

ASIA NEWS

• WHO chief heads to China as toll hits 100 plus.
• China has extended the Lunar New Year by 2 days to try to contain the coronavirus.

EUROPEAN AND US NEWS

• Huawei looks set to get approval for UKs 5G network this week.
• UK officially leaves EU this week. Now it has until December to agree on terms or it crashes out with a ‘hard Brexit’. Big Bens bells will remain silent despite a crowdfunding attempt to speed up the renos.
• Not a great time to come to market for an IPO as mattress making Casper in the US is finding out, as it has repriced its valuation significantly lower than its last funding round.
• OPEC considering supply cuts to counter the Coronavirus.
• Boeing in new debt fund raising now increased to US$12bn.
• Trump impeachment continues as the John Bolton book revelations make life a little tougher for the President.
• Here is some good news. The EU is pushing through a proposal for a single standard for phone chargers. Apple not happy though as expected.

And finally….

Paddy Murphy, a furniture dealer from Dublin, decided to expand the line of furniture in his store, so he decided to go to Paris to see what he could find . After arriving in Paris , he visited with some manufacturers and selected a line that he thought would sell well back home. To celebrate the new acquisition, he decided to visit a small bistro and have a glass of wine. As he sat enjoying his wine, he noticed that the small place was quite crowded, and that the other chair at his table was the only vacant seat in the house. Before long, a very beautiful young Parisian girl came to his table ,asked him something in French (which Murphy could n o t understand) , so he motioned to the vacant chair and invited her to sit down.He tried to speak to her in English, but she did not speak his language. After a couple of minutes of trying to communicate with her, he took a napkin and drew a picture of a wine glass and showed it to her. She nodded, so he ordered a glass of wine for her. After sitting together at the table for a while, he took another napkin, and drew a picture of a plate with food on it, and she nodded. They left the bistro and found a quiet cafe that featured a small group playing romantic music. They ordered dinner, after which he took another napkin and drew a picture of a couple dancing. She nodded, and they got up to dance. They danced until the cafe closed and the band was packing up. Back at their table, the young lady took a napkin and drew a picture of a four-poster bed. To this day, Murphy has no idea how she figured out he was in the furniture business.

Clarence

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