ASX 200 limped to a 23-point loss to 7139 after a busy action-packed week. Dow Futures down points. A quiet end to the week with results slowing before the avalanche begins again next week. Banks were strong again as the Big Bank Basket at $169.26 is pushing ever higher despite obvious headwinds. CBA up 1.1% and WBC up 0.5% as the AUSTRAC issue will start to rear its head in the next few weeks. Insurers posted some modest gains led by IAG up 1.8% and SUN up 1.1%.  Elsewhere miners slipped with FMG down 1.2% and BHP down 0.8% despite a rise in the iron ore price. Energy stocks slipped slightly with STO down 1.9% and WPL down 0.1%. Gold producers still not finding their mojo despite record AUD prices. NCM up 1.4% and GOR up 0.3%. In industrials TLS fell 0.8%, WES down 2% and WOW down 0.3%. Healthcare also took a tumble with a broker downgrade to COH taking its toll and sending he stock down %. CSL gave up 0.7% after a great run. In corporate news, FPH rose 2.8% after upgrading earnings guidance. VEA rose 5.9% after selling its holding in VVR down 0.4%. The AUD continues to fall against the USD and making that US trip now very unattractive. Remains more of a function of USD strength on defensive buying and bearishness on the AUD as a Chinese proxy.11- year low. 10-year yields dropped to 0.95% whilst Asian markets were mixed Japan down % and China up %.

• ASX 200 drifts 23 lower to 7139. Long week of results.
• High 7163 Low 7136. Narrow range.
• ASX 200 is up 9 points this week.
• Banks firm everything else weaker.
• No early OPEC meeting dashes supply cut hope.
• 10-year bond yields slip to 0.95%
• AUD falls to 66.02c.
• Dow futures down points
• Aussie gold pops to $2463
• Bitcoin rallies to US$9702
• Asian markets positive with Japan up % and China up %

STOCKS                                               

• VRL -2.28% joins the Corona Club.
• GXY +5.31% hit by lower lithium prices.
• AFG +10.55% great result.
• CDA +7.06% good to see a bounce.
• BLD +5.38% speculation BLD could be a takeover target.
• NHC -14.25% Mitsubishi sells down stake.
• BWX -6.93% management changes.
• AX1 -6.57% broker downgrades.
• MVP -4.53% sell off begins?
• MYX -6.25% more disappointing numbers.
• PPT -5.23% broker downgrades.
• ZNO -7.97% book squaring.
• M7T +13.21% great results.
• ALU -4.10% sell off continues.
• SDV +7.36% moving higher.
• LBL -22.76% disappoints but looks overdone.
• MOC -9.47% results see downgrades.
• DEG -5.26% profit taking.
• ISU -13.98% thin volume.
• Speculative stock of the day: Lake Resources (LKE) +36.11% Bill Gates backs US$20m Series A funding for its technology provider of a direct extraction ion exchange process. Lilac Solutions is the one raising the money and teaming with LKE to develop the Kachi Lithium Brine project.
• Biggest Risers: AFG, WGX, NWH, CDA, VEA, BLD, ALK, CCX and MYS
• Biggest Falls: NHC, PPH, BWX, AX1, IMF, SFR, MYX and SHV.

TODAY

• Inghams Group (ING) -4.40% reports H1 underlying NPAT (pre-AASB 16) $42.0m vs consensus $42.4m. Revenue $1.30bn vs consensus $1.25bn. Underlying EBITDA $91.7M vs consensus $92.0m. Core Poultry volumes 216.0kt, +4.1% y/y. Interim dividend 7.3c/share, fully franked. 5-year strategic growth plan on track and embedded throughout the business. Feed cost outlook remains elevated and further collaboration with customers to mitigate costs continues.
• BWX (BWX) -6.93% reports H1 underlying NPAT $4.2m vs consensus $7.1m; CFO Vinod Somani to step down to pursue other opportunities. Revenue $84.1m vs consensus $87.4m. Adjusted EBITDA $11.6m vs consensus $12.8m. Interim dividend 1.3c/share, fully franked. On track to meet FY20 guidance; revenue growth 20-25%, EBITDA growth 25-35%. The group is confident that its prioritised international strategy would offset any potential China-related shortfall in H2.
• Adairs (ADH) +7.92% reports H1 NPAT $13.2m vs consensus $14.5m. Sales $178.9m vs consensus $177.0m. EBIT $23.2m ex-items vs consensus $21.4m. Interim dividend 7c/share, fully franked. FY20 guidance unchanged, expects sales between $385-400m, EBIT in the range of $48-52m and capital investment $9-11m.
• Orocobre (ORE) +4.23% reports H1 underlying NPAT (US$9.9m) vs consensus (US$2.6m). Revenue US$49.0m vs consensus US$46.5m. Adjusted EBITDAIX US$2.1m vs consensus US$2.8m. Expects production of at least +5% y/y in FY20.
• Fisher & Paykel Healthcare (FPH) +2.84% guides FY net profit after tax NZ$260m-270m vs prior guidance NZ$255m-265m. Better-than-expected sales in its Homecare product group, combined with strong growth in its Hospital product group as well as increased demand from China have led to the upgrade.
• Chinese company Mengniu has been given the tick of approval to buy Lions Drinks and Dairy business.
• Rio Tinto (RIO) 0 finally given up any chance of a negotiated settlement with the Mongolian government and is now headed for a UN Arbitration panel.

ECONOMIC NEWS

• Container traffic out of Chinese ports has collapsed with almost half of the planned sailings from Asia to north Europe being cancelled. No difference on the Pacific rim runs to USA. A group called SeaIntelligence in Denmark has said the loss is around 300,000 containers this week. Expect the crunch to come in early March and beyond even if things return to normal.
• Capital Economics has predicted the AUD will fall to 65c and 10-year yields to 0.5%. Thing is, the RBA is getting a lower dollar without having to cut rates and stimulate the housing market any further.
• APRA has said banks should be prepared for “stress testing” exercises to include cyber hacking and climate change. It also wants banks to develop scenarios “calibrated to be severe yet plausible”.

BOND MARKET

ASIAN NEWS

• Korea reports another 52 cases of coronavirus. The number of coronavirus cases in China, the epicentre of the outbreak, topped 75,000.
• Japan feeling the effects of the virus as it heads towards a recession. How low can interest rates go there? The Jibun Bank Japan Manufacturing Purchasing Managers Index registered 47.6 for the sharpest deterioration in conditions in more than seven years.

• Data from China showed car sales sank 92% in the first half of February.
• Some analysts have warned the effects of the virus are only just starting to show up.
• Data from China showed car sales sank 92% in the first half of February

EUROPEAN AND US NEWS

• Seems that diamonds are not forever as De Beers has posted its lowest ever profit numbers under Anglo ownership. Weaker Chinese demand and a glut of stones.
• EU budget talks continue with the money from the UK. Germany and UK used to pay the bills with France. Now one is gone, and France is being difficult. UKs exit cost EUR 75bn on the budget. No wonder they made it tough to leave.
• Donald Trump has taken a swipe at South Korean film “Parasite” as winner of Academy Award.
• T-Mobile and Sprint strike a new deal.
• Victoria’s Secret sees private equity take a 55% stake.

And finally ..thanks Hans

Murphy showed up at Mass one Sunday and the priest almost fell down when he saw him.  He’d never been  to church in his life.

After Mass, the priest caught up with him and said, “Murphy, I am so glad ya decided to come to Mass. What  made ya come?”

Murphy said, “I got to be honest with you Father, a while back, I misplaced  me hat and I really, really love that hat.  I know that McGlynn had a hat just like mine and I knew he came to church  every Sunday.  I also knew that he had to take off his hat during Mass and figured he would  leave it in the back of the church.  So, I was going to leave after Communion and steal McGlynn’s hat.”

The priest said, “Well, Murphy, I notice that ya didn’t steal McGlynn’s  hat.  What changed your mind?”

Murphy replied, “Well, after I heard your sermon on the 10 Commandments  I decided that I didn’t need to steal McGlynn’s hat after all.”

With a tear in his eye the priest gave Murphy a big smile and said, “After I talked about ‘Thou Shalt Not Steal’ ya decided you would rather  do without your hat than burn in hell, hey?”

Murphy slowly shook his head. “No, Father, after ya talked about ‘Thou  Shalt Not Commit Adultery’ I remembered where I left me hat.”

 

Clarence

XXX