Monday 3rd February – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 finished down 94 points (-1.3%) at 6923 – well off the lows but it wasn’t a convincing bounce by any stretch. Dow Futures are up 197 points as the Kansas City Chiefs won the Super Bowl. Broad-based losses. All sectors sold off today on coronavirus fears and global slowdown woes. Fears of an avalanche as China opened proved unfounded and we saw a light bargain hunting filter through. Banks sold off with CBA down 0.8% and WBC down 1.2% after a US class action. Fund manager AEF came back to earth with a resounding thud, down 12.9% after valuations were questioned. Resource stocks were hit hard on growth fears and falling commodity prices. BHP down 2.9% and FMG down 3.4%. Gold producers though bucked the trend on the near-record AUD gold price EVN up 3% and GOR up 2.8%. REITs showed some defensive strength with GMG up 0.3% and SGP down only 0.4%. Elsewhere healthcare caught a sniffle, CSL dropped 0.21% and RMD fell 4.55%. Once again tourism and travel stocks felt the hate with CTD down 1.7% and SYD down 1.4%. Could have been worse. Quiet day on the corporate front although, OSH fell 7.2% after updating the market on its failed PNG expansion. FXL dropped 11% after a business update. 10-year yields fell again to 0.92% and economic news was dominated by house price records falling again. In Asia, China comes back online down 7.9%. Japan down 0.48% relatively quiet. HK up 0.24%.

TODAY’S HIGHLIGHTS

ASX 200 down 94 to 6923. Off lows.
High 6984 Low 6897. Better volume day.
10-year bond yields fall to 0.92%
Banks fall hard. Miners sold off.
OSH disappoints. Energy loses out.
REITs hold up. Just.
AUD slips to 66.95c
Dow Futures up 197 points.
Aussie gold hovers around record highs of $2361
Bitcoin steady at US$9349
Asian markets see losses as China comes back online down 7.9%. Japan down 0.48% relatively quiet. HK up 0.24%.

STOCKS

AVH +3.70% good buying following quarterly.
OEC +12.64% investor presentation cheers.
GOR +2.82% record AUD gold price.
JLG +2.92% acquisition.
AEF -12.86% folding quickly.
FXL -10.95% trading update
WOR -8.46% CEO retirement.
OSH -7.18% PNG P’nyang delay update. No expansion for the time being.
IEL -6.70% Schools out.
PBH -6.81% Super Bowl fails to inspire.
PCK +14.29% R&D cheque.
TPM -4.14% Vodafone executives resign ahead of Court decision.
UNV +6.38% bid from TER.
EXL -18.18% sale of business and update.
WBC -1.23% class action in US.
TCL +0.38% directors’ interest.
CIM -2.66% results tomorrow.
EVN +2.96% change in substantial holding.
PGC -17.07% business update.
BUB -10.49% turning sour.
LYC -2.74% major project status.
CGL +5.01% contract extension.
Speculative stock of the day: Betmakers (BET) +27.50% quarterly update. Good volume too. Reaffirms guidance of FY20 revenue of $10m. Cash of $2.7m.
Biggest Risers: MVP, SSM, PMEW, AVH, IMF, EVN and JLG
Biggest Falls: AEF, FXL, WOR, KAR, OSH, PBH and IEL

TODAY

AMP (AMP) -4.11% confirms the appointment of James Georgeson as CFO effective 3-Feb-20. Georgeson was appointed AMP’s Acting CFO in August 2019.
Oil Search (OSH) -7.18% media release made by the Prime Minister of Papua New Guinea notes negotiations on the P’nyang Gas Agreement have stopped at this stage, to allow the Government to concentrate on developments already in the pipeline.
IOOF Holdings (IFL) -2.65% completes acquisition of ANZ’s Pensions and Investments business; guides H1 UNPAT (cont ops) between $56-58m. The acquisition is expected to deliver significant EPS accretion in excess of that disclosed at the time of the initial announcement.
Lynas Corp (LYC) -2.74% awarded Major Project Status by the Australian Government to establish its new Rare Earths processing plant in Kalgoorlie, WA. The new status recognises the strategic significance of the project to the economy and provides a single-entry point for Commonwealth Government approvals as well as project support and coordination and assistance with State government approvals.
Evans Dixon (ED1) +5.01% appoints Paul Ryan as new CFO. Ryan has held multiple roles, including five years as Evans & Partners CEO where he was responsible for strategy, finance, risk, compliance and operations.
FlexiGroup (FLX) –10.95% H1 trading update; expects unaudited cash NPAT of $34.5m vs year-ago $31.9m and transaction volumes of $1.35bn, +3% y/y. Reiterates prior stance on FY20 outlook, transaction volume growth anticipated between 10-15%. Signs a four-year deal with Flight Centre to be the exclusive provider of interest-free finance to approved customers. Both a bit desperate perhaps.
Worley (WOR) -8.46% CEO Andrew Wood retires; Chris Ashton.

ECONOMIC NEWS

December building approvals beat market expectations and home prices continued to rise in January. Record house prices loom again. RBA meeting tomorrow. No change expected.
AUD gold price hits another record hit of $2378.
Richard DiNatale (who?) resigns as head of The Greens. Barnaby Joyce to run for this position as well maybe?
RBA will materially downgrade its GDP outlook according to UBS. Rate cut expected in March and June. UBS is now forecasting 2.2% GDP in 2020 and 2.6% in 2021. The Statement of Monetary Policy (SOMP) is due Friday.

BOND MARKET

ASIAN NEWS

China’s central bank injected 1.2 trillion yuan (US$255.95bn) into financial markets and fixed the yuan at 6.9249 today. The fix was the weakest since January 13^th.
Chinese oil demand has dropped by 20% due to the coronavirus outbreak according to a report from Bloomberg.

EUROPEAN AND US NEWS

And so it begins. The Democrat race to be beaten by Donald Trump.
Strange week for US politics as Trump will be cleared of wrongdoing and back it up with the State of the Union address.
Eurozone growth has slowed almost to a halt after the French and Italian economies shrank unexpectedly. Not sure why that was unexpected.
The UK is not out of the EU and now the fun begins as it has a year to agree to trade deals and standards. Not going to be easy.
Global deal-making has ground to a halt. January was the quietest month in nearly seven years.

And finally….