Monday 19th October – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

The ASX 200 rallied hard today after a positive lead from US and more stimulus hopes. The index rose 53 points to 6229, slipping into the match out with Dow Futures up 166. Volume starting to wane as election approaches but Banks once again in focus, the Big Bank Basket rose to $127.70 with MQG up 1.3% and ASX up 1.1%. Miners too in the green room, BHP up 0.7%, FMG up 1.1% and gold miners NCM doing well up 0.9%. Healthcare also continues to do well, CSL up 1.7% leading the charge, SHL up 1.0% and COH too up 2.2%. Tech stocks were in fashion, XRO putting on another 1.7% and APT up 0.8% with WTC up 4.4%. The All Tech Index rose 1.5%. Industrials were slightly better, TCL rose 1.3% on the Victorian restrictions easing. WOW up 0.5% and COL up 0.7%. In corporate news, CIM rose 8.3% after a deal to sell 50% of Thiess, DDR rose 6.8% after a 3Q update, JLG up 5.5% after signing a deal with WBC Insurance and CWN in strife down 8.2% following news of AUSTRAC taking a peek. Nothing locally on the economic front although we saw Chinese GDP underwhelm at 4.9%. Given every other country would give their eye teeth for this growth, it was largely ignored. The 10-year bond yield eases to 0.74%. Asian markets mixed with Japan up 1.2% and China down 0.3%.

Today’s Highlights

ASX 200 up 53 to 6229.
High 6248 Low 6185. Same range as Friday.
Big Bank Basket rises to $127.70
All Tech Index up 1.47%
10 trading days until the US election.
Dow Futures up 166 on stimulus hopes.
Gold rallies to AUD$2665
10-year bond yield slips to 0.74%
AUD falls to 70.79c
Bitcoin steady at US$11,443
Asian markets mixed with Japan up 1.2% and China down 0.3%.

STOCKS

OPT -13.67% IPO terms in US.
CWN -8.23% AUSTRAC investigation.
BRN +19.74% buyers back on an Appendix 2 A.
CIM +8.24% Thiess deal positive.
LYC +6.34% rare earth blip on Chinese export issues.
NAB +0.94% Bell Potter turns positive on NAB.
JLG +5.54% deal with WBC Insurance.
CGF +4.93% brokers turning positive.
AVA +26.74% quarterly revenue update.
ALG +12.03% QLD opening soon?
MHJ +9.90% broker upgrades.
4DX -5.00% profit taking.
DOU -26.09% dash and splash. Huge volume high of 44.5c Low 23.5c
3DP -9.64% continued profit taking.
Speculative Stock of the Day: Hollista CollTech (HCT) +136.11% the company has successfully tested Path-Away against SAR – CoV2. Path-Away® achieved a 3-Log reduction (99.9%) of the virus within two minutes, on a hard surface.
Biggest Winners: BRN, CIM, DDR, PME, LYC and JLG.
Biggest Losers: OPT, CWN, WAF, PLL, SKO, NHC and OCL

TODAY

Home Consortium (HMC) – unchanged – CEO and Chairman David Di Pilla to step down from Chairman role, will remain CEO. Director Christopher Saxon will become independent Chairman effective January 1 2021.
Ampol (ALD) +1.27% Unaudited Q3 replacement cost of sales operating profit (RCOP) EBIT ex-items $58m vs year-ago $154m. RCOP NPAT ex-items $24m vs year-ago $94m. Matt Halliday, Managing Director and CEO had this to say, “the resilient performance of our integrated business in the third quarter, particularly in Convenience Retail, was pleasing considering weak economic conditions and the continued impacts of COVID-19 on hydrocarbon demand. Our focus remains on optimising value across our integrated supply chain against prevailing market conditions to maximise value for shareholders”.
Link Group (LNK) +1.03% Received further correspondence from the Pacific Equity Partners and Carlyle Group consortium which outlined additional information on the potential scrip alternatives referred to in the Proposal. The indicative offer price of 520c/share was not changed.
Pengana Capital Group (PCG) – unchanged – Funds under management (FUM) $3.33bn at the end of September vs $3.33bn at the end of August.
APN Convenience Retail REIT (AQR) -0.53%To acquire Chevron Balcatta, WA for $6.96m.With a weighted average lease expiry of 11.7 years and annual rental increases of between 3% and 4%, the property is expected to provide a long term, secure and growing income.
South32 (S32) +4.27% Q1 alumina production 1,308kt vs year-ago 1,315kt. Energy coal production 6,723kt vs year-ago 6,771kt. The company has lifted its on-market share buy-back suspension. The $1.43bn capital management program is 92% complete with $121m remaining to be returned to shareholders, ahead of its extension or expiry on September 3, 2021. Expects to agree on a resolution for the future of its South Africa Energy Coal business by no later than the 31 December 2020.
Resolute Mining (RSG) -1.04% MD and CEO John Welborn to step down.CFO Stuart Gale has been appointed as Interim CEO while an executive search process is undertaken. There is no change to 2020 Guidance.
Crown Resorts (CWN) -8.23% AUSTRAC informs Crown Resorts that it has identified potential non-compliance by Crown Melbourne with Anti-Money Laundering and Counter-Terrorism legislation.
CIMIC Group (CIM) – To sell 50% of Thiess to Elliott for $2.2bn.The transaction includes future share transfer options including a potential initial public offering or sale to a third party, and an option for Elliott to sell its interest in Thiess to CIMIC between three and six years from completion. The transaction will strengthen CIMIC’s balance sheet by generating cash proceeds on completion of $1.7-1.9bn as well as reducing CIMIC’s factoring balance by ~$700m and CIMIC’s lease liability balance by ~$500m.
Dicker Data (DDR) +6.85% Nine-month revenue $1.48bn vs year-ago $1.29bn. Year to date results end of Q320, profit before tax $60.8m vs year-ago $47.4m. Gross margins were maintained in line with half-year results and some operating cost leverage was achieved. Heading into the final quarter for FY20, the demand continues to be strong with customers concentrating heavily on business growth strategies post COVID-19. Observes increased quoting activity and the resumption of larger infrastructure projects, previously put on hold.

ECONOMIC DATA

ANZ rate strategists are now forecasting the Reserve Bank will unveil a $100bn QE program. The $100bn figure which is expected to be deployed to buy five and ten year government and semi government bonds.

COVID – 19 NEWS

France sees 30,000 new cases Sunday.

BONDS

ASIAN NEWS

Chinese GDP climbed 4.9% in the third quarter from a year ago. China’s economy grew at a quarter-on-quarter pace of 2.7% compared to consensus forecasts for a 3.3% rise.
Retail sales expanded 3.3% in September, industrial production grew 6.9% in the month and investment growth accelerated to 0.8% in the nine months to the end of the quarter.

China’s Securities Regulatory Commission has given the green light to the hearing from the Ant Group on its HK IPO. Ant Group could the biggest IPO, in the world.(Cue Jeremey Clarkson).

EUROPEAN AND US HEADLINES

Slightly positive open for European markets except London which is roaring towards a cliff.
More UK EU trade talks. Back and forth. Back and forth. Talk now of the Australian trade option with EU.
French curfew to last at least 4 weeks. Spain’s minimum income guarantee has caused 1m applications for government support.
Interesting findings from the Lowy Institute on power in Asian Pacific. America retained its place as the region’s top superpower, its 10-point lead on China two years ago has been halved.