Tuesday 11th February – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

Happy Birthday Mum xx

ASX 200 rises 43 points to 7055 as virus fears recede and earnings take the focus. Dow Futures up points. The banks driving the index higher with CBA up 0.5% and WBC up 0.5%. MQG reaffirmed guidance this morning and fell 0.5%. In other financial news, SUN -1.3% revealed the cost of climate change and a slowing of business across the board. IAG slipped 0.15% post its results. CGF rose 13.9% after a good set of numbers especially in Japan. In the industrials, defensives were once again in demand, TCL up 1.4% despite flat traffic numbers, WES up another 0.3% and ALL up 0.8% on the lower AUD. CSL charging ahead of their results tomorrow up 0.9% and dragging the sector higher with SHL up 1.5%. Mining stocks picked up on bargain hunting, BHP up 0.4% and FMG up 2.4% and energy stocks making a plucky attempt at stabilising with WPL up 1.2%. In other company news, COH fell 3.4% after downgrading earnings slightly due to the coronavirus outbreak in China. ECX rose 10.2% after the AGM address and SIQ rose 0.3% on sector optimism. In economic news, home loans grew at the fastest pace in three years, a 4.4% increase in new mortgage commitments, excluding refinancing of existing loans, was biggest monthly gain since September 2016. New home buyer loans were up 6.2% and investor loans up 2.8%. Macquarie grew its mortgage business by 11%. 10-year yields 1.02% down again and the AUD slightly higher at 67c. Asian markets slightly better with China up % and Japan closed for a holiday.

ASX 200 up 43 to 7055.
High 7070 Low 7017. Average volume.
Banks lead index higher. Insurers sag as rain clouds outlook.
Miners find support. Energy better.
CSL rally continues. CBA still the one. Just.
TLS picks up. Industrials firm.
10-year bond yields fall to 1.02%
AUD rises to 67.09c.
Dow futures up points.
Aussie gold rises to $2338
Bitcoin falls to US$9740
Asian markets weaker with Japan closed for a holiday and China down 0.4%.

STOCKS

BIT -12.50% profit taking as virus fears recede.
ZNO -9.29% too fast and furious.
COH -3.39% earnings downgrade on corona.
AVH +5.23% the beat goes on.
ECX +10.21% SIQ +0.30% sector benefits from ECX results.
ANN +0.56% MS looking for a bounce.
JBH -3.94% analyst rethink.
SSM -2.13% downgrades.
BPT -2.53% production downgrades.
JHX +2.29% trading halt pending results.
ARQ -12.50% sells Enterprise business to Quadrant
MQG -0.55% reaffirms guidance.
DOW +0.27% oil and gas business not for sale.
DWS -unchanged- lowers dividend
ALU -0.02% downgraded to hold at Bell Potter.
CIM +0.46% new contract win.
TTT +0.58% defence partnership cheers.
PGC -6.45% selling resumes.
TCL +1.43% traffic growth subdued.
CLV +2.28% heading back into it.
NCM +0.61% Wafi-Golpu injunction lifted.
AVZ +11.29% Manono project update.
Speculative stock of the day: Moho Resources (MOH) +172.73% significant gold results from second RC drill hole at East Sampson. Results include: 15m @ 4.71 g/t Au from 88m including 3m @ 15.18 g/t Au from 100m
Biggest Risers: CGF, ECX, AMA, SGF, SDF, AVH and TYR.
Biggest Falls: EVN, JBH, ALK, COH, WEB, LYC and BWX.

TODAY

Beach Energy (BPT) -2.53% reports H1 underlying NPAT $273.5m vs consensus $264.3m. Revenue $948.3m vs consensus $909.3m. Adjusted EBITDA $622.0m vs consensus $625.4m. An interim dividend of 1cps was declared. Guidance for FY20, adjusted EBITDA expected in the range of $1.28-1.35bn vs prior guidance $1.25-1.4bn. Production expectations cut slightly to 27-28 MMboe vs prior 27-29 MMboe. CapEx expected between $875–950m vs prior $750–850m.
Macquarie Group (MQG) -0.55% has reaffirmed guidance for 2020. CEO Shemara Wikramanayake said the group remained on track to be ‘slightly down’ on the 2019 numbers. She said “Macquarie remains well-positioned to deliver superior performance in the medium term.”
Challenger (CGF) +13.87% reports H1 normalized NPAT of $191m, down 4.2% vs consensus of $237.1m. Group AUM came in at $86.3bn vs year-ago $78.4bn. An interim dividend of 17.5 cps was declared. On track to achieve FY20 normalised NPBT around the top end of its guidance range between $500m and $550m. On track to achieve its normalised ROE target of the RBA cash rate plus a margin of 14%. FY dividend is expected to remain unchanged from FY19 at 35.5 cps.
Northern Star Resources (NST) +0.37% reports H1 underlying NPAT $139.4m vs consensus $102.8m. Revenue came in at $827.0m vs consensus of $797.3m. EBITDA $322.3m vs consensus $318.7m. An interim dividend of 7.5cps was declared. The company said it was on track to meet FY20 guidance of 920,000-1,040,000oz at AISC of $1,240-1,340/oz.
Suncorp Group (SUN) -1.28% reports H1 cash earnings $365m vs year-ago $413m. Reported NPAT $642m vs year-ago $250m. Underlying insurance trading ratio (ITR) 9.3% vs year-ago 12.2%. An interim dividend of 26cps was declared. FY20 outlook, targeting at least flat unit growth in Australian Consumer Insurance. Group reserve releases expected to be above 1.5% of net earned premium (NEP). Net interest margin (NIM) expected to remain within the operating range of 1.85% – 1.95%. Dividend payout ratio policy of 60-80% of cash earnings to be maintained.
Transurban Group (TCL) +1.43% reports H1 proportional EBITDA $1.09bn ex-items vs consensus $1.14bn. Revenue $2.11bn vs consensus $2.25bn. Free cash flow $927m. An interim distribution of 31c was declared. Reaffirms full-year distribution of 62c.
Cochlear (COH) -3.39% lowers guidance due to impact from the coronavirus; expects FY20 Underlying NPAT in the range of $270-290m vs prior guided $290-300m. Hospitals across Greater China, which includes Hong Kong and Taiwan, are deferring surgeries to limit the risk of infection. During the SARS epidemic, Cochlear experienced a material reduction in sales in China over a three-month period, followed by an uplift as the backlog of delayed surgeries cleared. COH is confident that many of the delayed surgeries will progress once hospitals resume normal operations.
Downer EDI (DOW) +0.27% responds to media speculation; confirms oil & gas business is not for sale and no consideration is being given to its sale.

ECONOMIC NEWS

The value of new loan commitments for housing rose 4.4 % in December 2019, seasonally adjusted.

The number of loan commitments to owner occupier first home buyers rose 6.2% in December following subdued first home buyer activity over the prior three months. December’s rise was the second strongest of 2019 with owner occupier first home buyer commitments up 21.3 % on December 2018.

NAB Business conditions survey unchanged at 3 points. The employment index declined 3 points to 1 point, from 4 points in December, and the trading conditions index edged 1- point lower to 5 points.

BOND MARKET

ASIAN NEWS

Japan closed for a public holiday.
1000 deaths now from Coronavirus. Worse now than SARS. Sacks top Hubei health officials.
Economists queuing up to downgrade Chinese outlook.
Singapore is bracing itself for a 30% fall in tourism. It is losing about 18,000 to 20,000 tourists a day and this could accelerate if the situation gets out of control.
SoftBank is rapidly losing its mantle as the smartest guy in the room as it Brandless online retailing business is set to let 95% of its staff go.
Indonesia has no ‘official’ cases of CV. Yeah right.

EUROPEAN AND US NEWS

US Judge looks set to approve T-Mobile/ Sprint deal in US.
US DoJ is charging four Chinese hackers with the 2017 data breach from Equifax.
Deutsche Bank could save EUR 100m by simplifying its corporate structure.
New Hampshire primaries in US. Fed Chief Jerome Powell gives testimony.
Trump promises spending cuts to Medicaid, the environment and other social safety nets but ramps up nuclear spending plans. Trump forecasts 3% GDP growth for next 15 years. He is proposing to cut US$4.4 trillion from the budget in the next decade. Unlikely to get past Democrats. More election positioning.
Merkel was supposed to make an easy hand over to her hand-picked successor, but the news is that she will no longer run for the top spot following a series of underwhelming responses to right wing issues.
Global emissions from energy held steady in 2019 for the first time in three years as developed nations continued to move away from coal power and toward renewable energy and natural gas. Greta will be happy.

And finally….

Reaching the end of a job interview, the human resources officer asks a young engineering graduate: “And what starting salary are you looking for?”

The engineer replies: “In the region of $125,000 a year, depending on the benefits package.”
The interviewer inquires: “Well, what would you say to a package of five weeks’ holiday, 14 paid holidays, full medical and dental and a company car, say, a red Corvette?”

The engineer sits up straight and says: “Wow! Are you kidding?”

The interviewer replies: “Yeah, but you started it!”