The ASX drifted 6 points lower to 6670 as stimulus cheques in the US will start flowing. The local market was heartened by the possible containment of the ‘Avalon Outbreak’ to only 15 new cases overnight although travel stocks were easier but well off lows. Banks also in the red on economic fall out of a possible third wave(?). The Big Bank Basket eased to $149.49 with CBA down 0.2% and WBC off 0.1%. No real positives except iron ore stocks with FMG doing well up 4.9% and BHP up 1.2%. Healthcare suffered as CV19 runs rampant across Europe, the UK and the US. CSL dropped 0.9% with COH down 2.7%. Tech stocks coming under a little pressure as XRO fell 2.5% and APT dropped % whilst companies that will be winners from further restrictions like KGN up 4.8% did well. The All-Tech Index down 0.6%. In corporate news, WTC got whacked 6.6% after yet another short seller attack, this time from Viceroy Research. WOR down 1.9% on CFO retirement. CCX up 11.0% after $41m acquisition of UK plus-size brand Evans from the Arcadia group. MPL and NHF up 3.7% and 3.2% respectively after approval to increase health insurance premiums. SUN up 1.4% on positive court ruling over COVID claims. EOS down 4.1%, withdraws guidance. A2M up 1.2% on Morgan Stanley upgrade. Nothing much on the economic front, the 10-year yield steady at 0.96%, AUD off slightly to 75.74c. Asian markets mixed as Japan loses 0.49% and China up 0.55%. Dow Futures up 19.

Today’s Highlights

  • ASX 200 down 6 to 6670.  Off lows.
  • High 6678 Low 6636. Xmas volumes kicking in. Narrow range.
  • Big Bank Basket eases to $149.49
  • All Tech down 0.63%
  • Dow Futures up 19 points.
  • Gold rises to AUD$2505
  • 10-year yields steady at 0.96%
  • AUD rises to 75.74c
  • Bitcoin rockets to US$23,986.
  • Asian markets mixed as Japan loses 0.49% AND China up 0.55%.

STOCKS

  • WTC -6.62% short sellers back.
  • HUB -3.97% update on EAS investment.
  • AGL -5.14% Liddell forces downgrade.
  • EML -4.76% European shutdowns.
  • BRN – 3.08% Appendix 3G
  • MSB -4.56% rats deserting the ship.
  • CCX +11.04% UK acquisition.
  • PLS +7.98% back in the green.
  • FMG +4.93% iron ore rises.
  • CPH +18.75% regulatory approval in Uruguay.
  • WBT +12.02% two patents filed.
  • XRO -2.48% tech selling.
  • TCL -1.06% NSW lockdowns.
  • FLT -1.77% WEB -0.40% SYD -0.78% Avalon Outbreak weighs.
  • VUK -6.67% UK woes.
  • Z1P -4.96% placement stock weighs.
  • WSA +5.60% nickel price rises.
  • BRU +45.16% farm out deal with ORG.
  • Speculative Stock of the Day: Legacy Iron Ore (LCY) +85.19% good volume. The name says it all.
  • Biggest Winners: CCX, PLS, SZL, ASM, TLT, RED, WSA and LFG.
  • Biggest Losers: VUK, WTC, AGL, IMD, Z1P, EML and AMP.

TODAY

  • Suncorp Group (SUN) +1.44% Positive outcome on COVID-19 business interruption insurance claims. The Court’s interpretation is consistent with Suncorp’s position that cover for loss arising from a pandemic is a high risk for an insurer which would normally be excluded. SUN believes that its overall reserving continues to be adequate.
  • Abacus (ABP) -2.05% Despite the headline ‘Abacus Property cashed-up for National Storage REIT takeover bid’. Abacus reportedly has no plans to target National Storage. The article notes further speculation that ABP has eyes on Australian Unity Investment Real Estate and particularly the Australian Unity Office Fund. Speculation likely to be confirmed later today.
  • Worley (WOR) -1.89% CFO Tom Honan gives notice of retirement. Honan will remain in the role of CFO as Worley undertakes a global executive search and will support the transition process until the end of this financial year.
  • Sandfire Resources (SFR) +2.63% Thought to be among parties interested in EMR Capital’s Golden Grove mine. Newswires nameSilver Lake, Mt Gibson Iron, Sumitomo, Mitsui, as well as Oz Minerals, Western Areas, and Mincor as other potential candidates.
  • City Chic (CCX) +11.04% Acquires UK plus-size brand Evans from the Arcadia group for $41.0m in cash. Expected to be earnings accretive in the first full year. In the financial year to August 2020 (12 months), the Evans website had 19m visits and generated ~£23m of sales and the wholesale business delivered sales of ~£3m. The transaction excludes the Evans “bricks and mortar” store network of over 100 locations in the UK.
  • Medibank Private (MPL) +3.75% Receives approval to increase Medibank and ahm health insurance premiums by an average of 3.25% from April 1, 2021.
  • Silver Lake Resources (SLR) +2.96% To sell Andy Well and Gnaweeda projects to Latitude Consolidated for $8m in cash. Latitude has agreed to pay a non-refundable $250K deposit and the transaction is expected to close in early 2021.
  • Freedom Foods (FNP) – Genevieve Gregor expected to succeed Perry Gunner as Non-Executive Chair.
  • NIB Holdings (NHF) – Receives approval from Minister for Health to increase insurance cover premiums for nib health funds by an average of 4.36% across all products.
  • Centuria Industrial REIT (CIP) -0.64% External valuations of ~58% of its portfolio revealed an $83.7m increase from prior book values. Total portfolio weighted average capitalisation rate firmed by 24 basis points to 5.42% at the end of December 2020. Total portfolio value increased to $2.4bn.
  • Electro-Optic Systems Holdings (EOS) -4.11% Withdraws previous EBIT guidance of $20-30m. Notes that delivery processes were disrupted by COVID-19 late March and only recovered by October.
  • AGL Energy (AGL) -5.14% updates its FY21 guidance, expects Underlying profit between $500-580m vs prior $560-660m.

ECONOMIC NEWS

  • Citi says it does not expect the current circumstances in New South Wales to have a significant impact on economic growth.
  • The current lockdown could cost NSW $360m in retail sales a week in what is traditionally the busiest time for shopping.

BONDS

COVID – 19 NEWS

  • The pandemic aid package negotiated by Congressional leaders includes US$15bn to reinstate payroll reimbursements to airlines that expired two months ago.
  • South Korea reported 926 new cases in 24 hours, dropping below 1,000 for the first time in a week.
  • Canada suspended flights between Canada and the U.K. for 72 hours effective midnight Sunday.
  • The WHO is working with scientists in the U.K. to understand if a new coronavirus variant reported there spreads easier, causes more severe illness and evades the antibody response generated by vaccination. That would be a worry for sure.

ASIAN NEWS

  • The Japanese government has announced more spending for 2021. Overall spending will increase by about 3.8% to 106.6 trillion yen (US$1 trillion) in the year starting April.
  • China facing power cuts as shortages on Australian coal bans start to effect power supply.

EUROPEAN AND US HEADLINES

  • Finally, the stimulus plan has been approved. The politicians can all go home now. The plan would provide direct payments of US$600 to most Americans and US$300-per-week in enhanced unemployment benefits through March. There would be US$284bn for the Paycheck Protection Program that provides forgivable loans to small businesses.
  • Lockheed Martin Corp. agreed to acquire the defence industry supplier Aerojet Rocketdyne Holdings Inc. in a deal valued at $4.4bn.
  • Boris calls COBRA meeting as trucks from Europe now not allowed to enter UK.
  • Welcome to Brexit. Are we there yet?

And finally….

Little Johnny wanted to go to the zoo and pestered his parents for days. Finally, his mother talked his reluctant father into taking him. After several hours, the two men of the family come back, smiling and tired. “So how was it?” his mother asked when they returned home. “Great,” Little Johnny replied. “Did you and your father have a good time?” asked his mother. “Yeah, Daddy especially liked it,” exclaimed Little Johnny excitedly, “especially when one of the animals came home at 30 to 1!”

Clarence

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