ASX 200 rallies 44 points (+0.7%) to 6436 but well off highs, as RBA fires its best shot. Misses. Dow Futures up four points. After an extraordinary night for US markets, the ASX followed in more muted tones although bargain hunters abounded. Conviction remains low and the market remains skittish. The RBA cut rates by 25bps as expected and the PM has urged the banks to pass through the rate cuts in full. Clearly not a positive for NIM and the banks remained under pressure. It will be a brave bank not to pass on the whole cut. ‘Un-Australian’. CBA down 1.7% and WBC down 1.1%. Still no news on AUSTRAC either. Other financials did well, led by MQG up 1.5% and MFG up 2.6% as expected. The healthcare sector bounced back as expected with CSL up 2.2% and RMD up 5%. Miners too back in demand as a booming iron ore price and oil rise helped BHP up 1.9% and FMG up 3.3%. Golds flat-lined until the weight of disappointment, NCM unchanged. Energy stocks had a decent day yesterday, so gains were muted with WPL down 1% and CTX up 2.2%. In the tech sector, XRO rose 7.2% and APT put on 6.2% as the coast cleared. The All Tech Index was up 2.2% mostly on the leaders rise. In corporate news, CUV rose 6.37% after FDA meeting to advance SCENESSE in USA. Plenty hitting the market today in economic news but RBA cutting rates took centre staqe. 10-year yields fell to 0.77%. AUD rallies to 65.49c. Asian markets mixed as Abe pledges yet more money for stimulus, with Japan down 0.88% on the news, and China continuing to rally up 1.25%

Today’s Highlights

• ASX 200 up 44 to 6436. Rally fizzes from highs.
• High 6524 Low 6420. Big volume again.
• Banks drag on RBA rate cut.
• Miners solid. Energy mixed. Industrials mixed.
• 10-year bond yields ease to 0.77%.
• AUD rises to 65.49c.
• Dow futures up four points.
• Aussie gold steady at $2441
• Bitcoin rallies to US$8868
• Asian markets mixed with Japan down 0.88% and China up 1.25%.

STOCKS                                               

• BYE +9.80% oil price cheers.
• BGA +6.48% broker upgrades after results.
• CUV +6.37% FDA meeting.
• XRO +7.17% tech bounce.
• HVN +6.08% shorts cover.
• BAP +3.72% rate cuts help car market.
• APT +6.19% director’s interest.
• PRN -6.36% sell-off continues.
• MLX -6.94% CEO appointed.
• JIN -4.77% selling resumes.
• Z1P -3.87% brokers cool.
• AVZ -16.67% shareholder update.
• NXT +6.05% broker upgrades.
• 88E +11.11% operations update.
• APX +2.70% back on Bell Potters buy list.
• AEF +8.47% back in favour.
• Speculative stock of the day: Krakatoa Resources (KTA) +33.33% decent volume following an investor presentation yesterday. Not much else to get excited about in spec land.
• Biggest Rises: OPT, AHY, MVP, XRO, EOS, BGA and CUV.
• Biggest Falls: PRN, NWL, PSI, JIN, VUK, MYX and LYC.

TODAY

• Westpac (WBC) –1.08% Soon after the RBA’s decision, WBC and CBA announced it would decrease variable interest rates by 0.25% per annum for home loan customers, as well as small business cash-based loans and overdrafts.”
• Yojee (YOJ) +2.78% Chairman Ray Lee to retire, will remain a non-executive director. Lee will be replaced by director David Morton.
• Caltex (CTX) +2.19% has suggested that EG Group ups its bid. The UK group has offered $3.9bn in cash with a mix of cash and shares. Shareholders would receive $15.62 in cash and shares in a new entity Ampol. Canadian group ACT has a 35.25c on the table currently worth $8.8bn. Yesterday the board rejected the bid but did leave the door open for a higher offer.

ECONOMIC DATA

• RBA cuts cash rate by 25bps to 0.5% to support the economy as it responds to the global coronavirus outbreak. All four banks have done what they were told and cut by the full amount.  Here are some of the main points from the release:
• The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected.
• The outbreak is expected to delay progress in Australia towards full employment and the inflation target.
• The RBA is prepared to ease monetary policy further to support the Australian economy.
• Once it is contained, the Australian economy is expected to return to an improving trend. This outlook is supported by the low level of interest rates, high levels of spending on infrastructure, the lower exchange rate, a positive outlook for the resources sector and expected recoveries in residential construction and household consumption.
• New homes sales up 5.7% from a month earlier in January, according to data from the Housing Industry Association. The HIA warned international factors are likely to weigh on the volume of home building in Australia over the medium term.

• Dwelling approvals fell 15.3% in January, well below market expectations of a 1% increase and after an upwardly revised 3.9% gain in December. It is a volatile number and is driven by apartments.
• Current account surplus narrowed to $955m in Q4 of 2019, from a downwardly revised $6.50bn in the previous quarter, missing market estimates of a $2.3bn surplus.

BOND MARKET

ASIAN NEWS

• The Bank of Japan will inject Y500bn of liquidity into its financial markets with the unscheduled purchase of short-term debt securities.
• Indonesia plans a new stimulus package to combat the one case of CV19 they have. GDP set to slow to 4.7% in 1Q.

EUROPEAN AND US NEWS

• Reuters is reporting that the G7 finance ministers are offering thoughts and prayers. Seems nothing concrete as Japan, EU and UK have no room to move.  It’s up to the Fed.
• Visa the latest to cut its forecasts on CV19.
• Gilead Sciences has agreed to buy biotech Forty-Seven for $4.9bn in cash
• OPEC meeting the focus with 1m barrels cut to production the hope.
• Klobuchar is gone. Endorses Biden on Super Tuesday.
• Twitter has advised 5000 employees to work from home.
• Benjamin Netanyahu claims victory. 3^rd poll in a year.

And finally…

Clarence

XXX