The ASX 200 dropped hard today by 131 points to 6650 following Wall Street lower. Dow futures have rebounded from early losses but failed to help ASX rebound as nerves continue. Dow futures currently down only 39 points. Across the board losses as banks, resources and industrials all sold down. Tech was especially hard hit with APT down 6.2% and XRO off 6.3% although given the huge runs so far, hardly a huge dent in the story. The All–Tech index off 4.0%, with WTC falling 6.1%.  Short covering in ugly ducklings help some stocks put on solid gains especially those stocks which have huge short positions as the ‘Gamestop’ effect could play out here. URW up 14.5%, WEB up 1.5%, ING up 4.4% and IVC up 5.7% were some squeezed higher as hedge funds covered. The Big Bank Basket dropped to $154.74 with MQG down 1.6%. Industrials fell led by WOW down 2.1%, SEK off 3.7%, CSL down 3.0% and TLS down 1.3%. Miners in trouble as BHP fell 1.7% and RIO off 2.9% together with FMG off another 4.0%. Gold miners hitting a nine-month low. In corporate news, APE down 1.6% despite a guidance upgrade. Plenty of quarterlies around today with IFL down 10.6% after revealing money and advisers were walking out the door. On the economic front, International trade price indexes for the December quarter: Export price index: +5.5% vs survey: +5.3%. Import price index: -1.0% vs survey: -1.0%. 10 -year yield steady at 1.08%. Asian markets under pressure with Japan down 1.4% and China taking a 2.4% hit.

Today’s Highlights

  • ASX 200 dropped 131 points to 6650.
  • High 6768 Low 6598. Remarkably narrow range considering.
  • Big Bank Basket fell hard to $154.74
  • All Tech whacked 4.04%. Worst session in two months.
  • Dow Futures down 39 points.
  • Gold rises to AUD$2405 on lower dollar.
  • 10-year yield steady at 1.08%
  • AUD dips to 76.24c
  • Bitcoin slips to US$31,122
  • Asian markets narrowly mixed as Japan rose 0.3% and China off 0.1%

STOCKS

  • URW +14.50% big short squeeze.
  • IVC +5.73% shorts get mauled
  • ING +4.40% more short covering.
  • WSA -16.61% quarterly fails to impress.
  • IFL -10.61% losing FUM and advisers.
  • NVX -8.01% profit taking.
  • APT -6.18% tech stocks sell off.
  • OPY -11.72% quarterly disappointment.
  • CSL -3.02% breaks support.
  • RIO -2.86% new executive team.
  • MNS +50.00% battery powers up.
  • BUB +23.14% good quarterly.
  • BPH +14.29% another day of great gains. Three in a row,
  • JRV +6.86% US strategic metal exposure.
  • AMA +5.51% some bargain hunting.
  • TWE +5.92% shorts cover as China relations see upside.
  • PLS -6.96% sales jump 62%
  • FMG -4.01% cost pressures emerge.
  • GME +13.33% stock code similar to Gamestop.
  • TGR +2.96% big shorts getting covered.
  • CHN -12.93% gold miners hitting nine-month lows.
  • CIA -7.13% Investor presentation.
  • EOS +0.58% quarterly report
  • Speculative Stock of the Day:  Hawkstone Mining (HWK) +38.46% good volume after 90% recoveries from met tests.
  • Biggest Winners: URW, TWE, IVC, YAL, ING, SIG, OMH and NWS.
  • Biggest Losers: WSA, CHN, PDN, IFL, AVZ and LTR.

TODAY

  • Eagers Automotive (APE) –1.64% Expects FY underlying operating profit (continuing operations) $209.4m vs prior guidance $195-205m.The improved result compared to guidance has been delivered by stronger underlying operating profit for both the car and truck retailing businesses.
  • Galaxy Resources (GXY) -2.00 Expects FY21 total material mined between 2.3-2.6m bcm. Galaxy is experiencing solid demand for its spodumene as strong global EV sales increase the demand for lithium chemicals. As a result, spodumene inventory in China has declined to ~2 months of supply, down from ~ 6 months’ supply for much of 2020. GXY Completed contractual arrangements on two shipments with 30,000 tonnes scheduled for February and 15,000 tonnes for March. Pricing has moved significantly to begin the year and currently stands at approximately $480/dmt CIF. Mt Cattlin operations will be ramped to full rate in response to improving prices, low inventory and strong demand from Galaxy’s customers. The ramp up will commence immediately with full rate expected to be achieved in Q2.
  • Newcrest Mining (NCM) -2.84% Q2 gold production 535Koz vs quarter-ago 503Koz. Copper production 34,557t vs quarter-ago 34,763t. Group AISC of US$968/oz vs quarter-ago $980/oz. Cadia records lowest ever quarterly AISC at negative US$6/oz.
  • IOOF Holdings (IFL) -10.61% Q2 funds under management, advice and administration of $202.4bn.Financial Advice: $1.3bn net outflows. Portfolio & Estate Administration: $40m net inflows. Investment Management: $2.2bn net outflows. Pensions & Investments (P&I): $625m net outflows.
  • Splitit Payments (SPT) -2.67% Q4 merchant sales volume (MSV) $86.3m, +218% vs year ago. Revenue (Non-GAAP) surged to US$2.9m. Q1 update: The current quarter has started well with 3X MSV growth in January, year over year with ongoing traction in its core verticals.
  • Rio Tinto (RIO) – 2.86% Appoints Arnaud Soirat to a newly created position of COO. Other executive changes include appointing a permanent Chief Executive of Rio Tinto’s Iron Ore business and adding a Chief Executive Australia. Simon Trott, currently Chief Commercial Officer, will become Iron Ore Chief Executive; and Kellie Parker, now Managing Director Pacific Operations Aluminium, will join the Executive Committee as Chief Executive Australia.
  • Evolution Mining (EVN) -2.99% Q2 Gold production of 180.3Koz vs quarter-ago 170.0Koz at an AISC of $1,166/oz. On track to achieve FY21 guidance. Sees FY21 production between 670-730koz at an AISC between $1,240-1,300/oz.
  • Fortescue Metals Group (FMG) -4.01% Q2 total ore shipped 46.4Mt vs year-ago 46.4 Mt. Average revenue of US$121.84/dmt, realisation of 91% of the average Platts 62% CFR Index price. Ore mined 50.0Mt vs year ago 54.6Mt. C1(US$/wmt) 12.81 vs year ago 12.74. FY21 Guidance Repeated: Shipments 175 – 180mt, C1 costs of US$13-13.50/wmt and capital expenditure of US$3.0-3.4bn.
  • IGO Limited (IGO) –1.18% First half profit $54.2m vs year-ago $100.1m. Revenue $462.5m vs consensus $437.2m. Underlying EBITDA $242.3m vs consensus $225m. Following the recent equity raise, no interim dividend will be paid. Shareholder Returns Policy to be reviewed after completion of the Lithium Transaction. Q2 Nova nickel production 7,024t vs quarter-ago 7,276t. Q2 Nova copper production 3,171t vs quarter-ago 3,278t. Nova nickel production in H2 of FY21 is expected to be in line with guidance, while cash costs are expected to continue to benefit from favourable by-product credit pricing. At Tropicana, production and costs were better than pro-rata guidance for the quarter. Expect H2 of FY21 to be weaker at 80koz and 90koz for 3Q21 and 4Q21 respectively. Production is then expected to increase in FY22 as a result of investment in FY21 open pit cutbacks and the full ramp-up of underground ore from Boston Shaker.
  • Bubs Australia (BUB) +23.14% Q2 gross revenue $12.8m, +36% vs quarter ago.Bubs infant nutrition portfolio represents 57% of revenue with sales +27% over the quarter. Export sales outside of China +194% vs quarter ago. Corporate Daigou trade is softer than pre-Covid levels but +122% vs quarter ago. Outlook: Global expansion remains key focus. Anticipate revenue contribution from South East Asia will substantially increase with recent launch in Malaysia. Well placed to take advantage of continued domestic market recovery. Expect total China cross border e-commerce (CBEC) and Corporate Daigou channel sales momentum to continue.

ECONOMIC NEWS

  • International trade price indexes for the December quarter: Export price index: +5.5% vs survey: +5.3%. Import price index: -1.0% vs survey: -1.0%.

The Export price index rose 5.5% this quarter. The main contributors to the rise were:

  • Metalliferous ores and metal scrap (+11.5%), driven by the demand for iron ore from China.
  • Non-ferrous metals (+9.6%), due to increased global manufacturing demand.
  • Petroleum, petroleum products and related materials (+5.6%), reflecting the slow recovery in oil demand post-COVID-19.
  • Gas, natural and manufactured (+2.1%), due to the oil-linked contracts capturing the beginning of the recovery in oil prices.
  • Coal, coke and briquettes (+0.9%), reflecting the demand for thermal coal during the northern hemisphere winter.

The Import price index fell 1.0% this quarter. The main contributors to the fall were:

  • Inorganic chemicals (-33.1%), driven by an abundant international supply of caustic soda.
  • Medicinal and pharmaceutical products (-3.3%), recorded falls in prices of vaccines for the treatment of pneumococcal disease.
  • Gold, non-monetary (-3.8%), due to easing global uncertainty

BONDS

COVID – 19 NEWS

  • Across the U.S., 7.8 doses have been administered for every 100 people, and 54% of the shots delivered to states have been administered
  • Vaccine tracker: 82.5m doses in 59 countries. 3.95m a day. US averaging 1.95m a day.
  • In Saudi Arabia, people are being offered free coffee and food to get vaccinated.
  • Beijing has tightened the requirement to enter the city ahead of Lunar New Year and political gatherings.
  • El Presidente of Mexico has CV19.
  • Vietnam sees first local cases since December.
  • Pfizer and BioNTech said results of studies indicate their vaccine is effective against both the U.K. and South Africa variants.
  • China’s Fujian province said it detected Covid-19 in a shipment of imported cotton whose origins are unknown.
  • IMF warns on financial stability threat from vaccine shortages.

ASIAN NEWS

  • Chinese zero tolerance to CV19 now includes anal swab tests.
  • Samsung warns higher production costs will hurt H1 earnings.

EUROPEAN AND US HEADLINES

  • European futures pointing to 0.5% to 1% falls.
  • Apple revenue hits US$100bn on iPhone sales.
  • Reddit traders taking the Hedge funds to the cleaners on shorts.
  • EU versus AstraZeneca feud is escalating.
  • Biden commits to defending Japanese held islands that China claims.
  • Tesla’s Model S Plaid is the fastest accelerating car ‘in the world’. Cue Clarkson.0-60mph in less than 2 seconds.
  • The market moving Reddit Group was briefly out of commission before coming back online.
  • Boris is failing to stop the move to Scottish Independence.

And finally….

What do you call a line of rabbits moving backwards? A receding hare line.

If you say gullible really slowly it sounds like oranges.

Clarence

XXX