ASX 200 down 27points (0.4%) at the close as profit-taking and nerves crept in despite a solid US lead. Dow Futures down points. For the week the ASX 200 is 5 points higher. Banks mixed heading into the weekend with CBA up 0.7% and WBC down 0.6%. Financials too under pressure, MFG down 1.24% and ASX down 1.4%. RBA chief teller Lowe’s comments in Canberra seemed to take QE and interest rate cuts well and truly off the table and the market has sold off on this disappointment. Statement of Monetary Policy (SOMP) calls into question low rates and long-term benefits. Both the energy sector and materials were weaker despite rises in oil and iron ore. BHP down 1.9% and WPL down 1.5%. Tropical cyclone Damien hits Pilbara this weekend. CSL came off the boil down 0.2% with industrials generally weaker, TLS down 1.0% and CIM resumed its spiral lower by 4.9%. In the news, some initially underwhelming corporate results from REA were overturned with the stock up 3.1% focussing on the future rather than the past. NWS up 3.2% in a similar fashion. In other corporate news KMD pleased the market with its business update rising 17.61% and CWN unchanged after Melco abandoned its deal to buy another near 10% stake in the casino group citing coronavirus and Macau shut down as the reasons. SIG up 0.8% after cancelling its dividend for the first time since 2002. FLT updated the market on the impact of the coronavirus and fell 2.4% as impact is unknown but a negative none the less. AUD back to 67.20c and 10-year yields at 1.05% with Asian markets lower.
- ASX 200 down 27 points to 7023. Up 5 points for the week. Feels more.
- High 7052 Low 7002 Average volume.
- Bank weaker except CBA. Miners slip.
- Energy stocks lower again.
- Results in focus.
- NWS, REA soft results still rally though.
- FLT warns on coronavirus impact.
- 10-year bond yields rally to %
- AUD falls to 67.20c on SOMP.
- Dow futures up points.
- Aussie gold rises to $2331
- Bitcoin rallies hard to US$9775
- Asian markets feeling the heat down with Japan down % and China off % as Xi calls Trump to say don’t worry.
- FLT -2.38% warns on virus effects
- COL +1.62% cops a downgrade from Morgans
- MGR +1.50% MS downgrades
- BIT +25.00% testing its products on virus.
- ZNO +11.80% up on virus spread.
- AJL -invests again in UK fracking.
- ORE -7.03% lithium depressed.
- AAC +10.17% it’s raining (men) hallelujah.
- WTC +2.83% shorts covering.
- PBH +2.06% book squaring.
- BET -8.97% profit taking on ASX query.
- BGL +9.78% change in substantial holding
- WZR +12.28% chairman’s letter and Moelis research report
- MYX -4.55% US moves on drug pricing.
- GOR +9.34% buyers back.
- ZNO +11.80% Coronavirus winner. BIT +25.00% doing well too.
- Speculative stock of the day: De Grey Mining +42.11% up 100% yesterday and another % today. Very impressive drill results. Big volume.
- Biggest Risers: KMD, AAC, GOR, WGX, NCK, PNI, ALG and SHV.
- Biggest Falls: ORE, CIM, MYX, AEF, NWL, BPT and MGX.
- REA Group (REA) +3.1% reports H1 core NPAT $152.9m vs consensus $162.1m. Core revenue $440.3m vs consensus $452.2m. Core EBITDA $267.2m vs consensus $273.8. An interim dividend of 55c per share was declared. Anticipates more favourable listings conditions in H2 will deliver a stronger revenue outcome. Rate of revenue growth is still expected to exceed the rate of cost growth for F
- News Corp. (NWS)+3.17% reports Q2 adj EPS US18c vs consensus US14c. Revenue down 6% to US$2.48bn vs consensus US$2.52bn, reflecting a US$50 million, or 2%, negative impact from foreign currency fluctuations. Total segment EBITDA US$355m vs year-ago US$370m.
- Sigma Healthcare (SIG) +0.85% confirms FY20 guidance; will not pay final dividend. Underlying EBITDA $46-47m ($57-58m including the benefit from the new accounting standard framework) vs consensus $56.7m. One off costs associated with transforming the business will result in Sigma generating insufficient franking credits to pay a fully franked final dividend in respect of FY20. The franking credit position will be reviewed as we progress through FY21.
- Kathmandu (KMD) +17.61% underlying EBIT for H1 FY2020 is expected to be around 40% above the same period last year following the acquisition of Rip Curl. Same store sales growth of 1.5% for the 26 weeks ended 26 January 2020. Online sales grew by over 30% in H1 FY2020, underpinned by enhancements made to the online platform in the first half of last year.
- Flight Centre (FLT) -2.38% guides underlying H1 PBT between $100-105m vs previous $90-110m. Coronavirus affecting early 2H travel patterns, particularly in Asia – too early to judge full-year impact but will make it more difficult to achieve FY20 guidance. As announced previously, statutory 1H PBT will be lower than the underlying 1H result.
RBA Statement on Monetary Policy: The bank downgraded its year average economic growth forecast for 2020 to 2.25% from 2.5%. It also downgraded economic growth to June 2020 to 2.5%. Click here for the full release.
Phillip Lowe’s comments
- “If the unemployment rate were to be moving materially in the wrong direction and there was no further progress being made towards the inflation target, the balance of arguments would tilt towards a further easing of monetary policy. “
- “The threshold for undertaking QE – that is, the RBA purchasing assets through balance sheet expansion – has not been reached in Australia and I do not expect it to be reached. So, it is not on our agenda at the moment.”
- The Reserve Bank Governor expects inflation to be at 2% next quarter and then bounce around this level over 2020.
Lowe tells people to shop around for home loans.
AMP economist Shane Oliver has accused the Reserve Bank of continually overestimating the outlook for the economy, growth forecasts “chronically too optimistic.”
UBS sees best cash returns with miners this season. Looking at iron ore miners for the lead.
- President Xi reaffirms commitment to US trade deal. 636 now confirmed dead.
- Cruise ship virus numbers, now 61 sick.
- Toyota and Honda have extended the closure periods for factories in China. Toyota will stay shut until mid-February and Hinda until at least later in the month.
EUROPEAN AND US NEWS
- Fiat Chrysler has warned that one of its European plants will be forced to halt production in a matter of weeks.
- Some OPEC + members are calling for deep supply cuts.
- Iowa Democrats declare Buttigieg the winner.
- Julia Gillard’s Misogyny speech voted most unforgettable moment on Australian TV. Scott and Charlene number 5.
A man approached a local person in a village he was visiting.
“What’s the quickest way to Sydney?”
The local scratched his head.
“Are you walking or driving?” he asked the stranger.
“That’s the quickest way!”
A man walks into his doctor’s office and says, “Doctor, I think I’m addicted to Twitter.”
The doctor looks at him and says, “Sorry, I don’t follow you.”
Here is a brain teaser for Friday
You are driving in a car at a constant speed.
On your left side is a ‘drop off’, (The ground is 30-40cm below the level you are travelling on), and on your right side is a fire engine travelling at the same speed as you.
In front of you is a galloping horse, which is the same size as your car and you cannot overtake it.
Behind you is a galloping zebra. Both the horse and zebra are also travelling at the same speed as you. What must you do to safely get out of this highly dangerous situation?
Get your drunk-butt off the merry-go-round.