The ASX 200 opened so well and failed so badly, finishing down 42 points at 6607 (-0.67%) Dow futures not helping down 318 points. After such a good start, it all turned turtle. Was it end of month, was it Chinese liquidity issues, was it just pre-match nerves ahead of results season? Who knows but volatility is back, volumes picked up with a solid day,  iron ore falls didn’t help matters. For the week the ASX 200 was down 193 points from 6800. Up 20 points for the year. Plenty of noise. Banks flopped with the Big Bank Basket down to $151.89 led by CBA down 1.9%. MQG off 1.5% and insurers falling as SUN dropped 2.4%. Miners too threw in the towel after a promising start with BHP down 1.6% and FMG down 4.1%. CSL was a standout up 1.8% as some bargain hunters appeared, lithium stocks and battery stocks disconnected seeing SYR down 11.4%, GXY off 8.5% and PLS down 13.1%. Tech stocks finished weaker with APT down 1.4% and XRO down 1.6% leading to a fall of 0.5% in the AllTech Index. In corporate news, plenty of quarterly reports keeping investors on their toes, LYC down 4.0% on its quarterly update. HUM fell 0.9% expects unaudited H1 cash profit of $43.4m vs year-ago $34.5m. EVN up 4.0% on a broker upgrade. On the economic front, Private sector credit for December: +0.3% vs survey: +0.2%. 10-year bond yields up to 1.13%. Could be scaring the traders. Asian markets mixed with Japan down 1.35% and China flat.

Today’s Highlights

  • ASX 200 dropped 42 points to 6607. Big reversal.
  • High 6730 Low 6585. Market belly flops
  • ASX 200 down 193 points for the week.
  • Big Bank Basket fell hard to $151.89
  • All Tech slightly weaker down 0.5%
  • Dow Futures down 318 points
  • Gold rises to AUD$2408.
  • 10-year yield rises to 1.13%
  • AUD rises to 76.45c
  • Bitcoin rises to US$33,322
  • Asian markets mixed with Japan down 1.35% and China flat

STOCKS

  • SSM +10.12% Telstra contract
  • MMS +9.88% business update.
  • NVX -16.13% quarterly report disappoints. Lithium under pressure.
  • PLS -13.08% PLL -12.26% ORE -13.04% SYR -11.40% battery stock sell off.
  • KGN -8.49% profit taking on update.
  • VUL -3.66% profit taking after volatile month.
  • WSA -4.88% broker downgrades as expected.
  • CXL +15.44% positive announcement of EU LEILAC project (see Henry’s Take today)
  • SVL +13.95% Robinhood trader target silver this time.
  • BPH -29.17% strong rise sees some profit taking.
  • AXE -6.29% quarterly report.
  • MNS -17.33% stop and reverse.
  • FMG -4.14% 13% for the week.
  • ZNO -17.37% quarterly.
  • IVC -8.30% death to the short squeeze.
  • TLS +0.65% bucked the trend today. TCL too +1.38%
  • IPO of the Day: Pentanet (5GG) +136.00% it’s a Perth based 5G gaming company. Great first day.
  • Speculative Stock of the Day: Flexiroam (FRX) +54.17% Quarterly report- Operating cash outflow of $209k. Underlying cash inflow of $15k after excluding one-off costs associated share placement. Strong cash balance at end of December 2020 of $2.8m.
  • Biggest Winners: SSM, MMS, IAP, DHG, INR, ECX and PME.
  • Biggest Losers: NVX, PLS, ORE, PLL, SYR, GXY, KGN and IVC. Lithium depressed.

TODAY

  • Worley (WOR) +0.71% Enters strategic partnership with Avantium Renewable Polymers to develop its flagship renewable plastic feedstock plant in the Netherlands.
  • Oz Minerals (OZL) +0.81% Full-year copper production 97.6Kt vs company guidance 88-105Kt. Gold production 258.0Koz vs company guidance 242-259Koz. All-in Sustaining Costs (US cents/lb) 56.9 vs company guidance 60-75. FY21 Guidance: Copper production 120-145Kt, gold production 190-215Koz, C1 cash costs (US cents/lb) 0.55-65.
  • National Australia Bank (NAB) -1.59% To acquire 86 400 Holdings for up to $220m. The acquisition will accelerate NAB’s UBank’s growth.
  • Origin Energy (ORG) -2.07% Q2 production (PJ) 68.3 vs quarter-ago 64.2. Integrated Gas (Origin Share): Revenue $398.0m vs quarter-ago $373.9m. Energy Markets: Electricity sales (TWh) 8.0 vs quarter-ago 8.7. Natural gas sales PJ 58.0 vs quarter-ago 72.0. Origin Capex $98m vs quarter-ago $74m.
  • Service Stream (SSM) +10.12 Secures 5-year field agreement with Telstra. Whilst the agreement does not provide guaranteed volumes, SSM has historically delivered ~$70m of wireless and $30m in fixed-line infrastructure works per annum to Telstra under similar agreements.
  • Sandfire Resources (SFR) +0.42% Q2 copper production 16,390t vs quarter-ago 19,400t. Gold production 9,660oz vs quarter-ago 11,683oz. C1 cash costs US$0.89/lb vs quarter-ago US$0.53/lb. In FY21 sees, the upper end of 67-70kt of contained copper and 36-40koz of contained gold with C1 costs between US$0.85-$0.90/lb.
  • PointsBet Holdings (PBH) +0.77% Q2 turnover of $1.20bn vs year-ago $297.3m. Active clients 211.1K vs year-ago 102.2K. Net win margin 3.7% vs year-ago 6.1%.
  • McMillan Shakespeare (MMS) +9.88% Expects H1 underlying profit $42.7m. notes it has experienced more positive market conditions than expected. The result includes a $7.3m contribution from the Federal Government’s JobKeeper program. CEO comments “We have benefited from unusual trading conditions in the broader motor industry in H1. These conditions are expected to normalise throughout the course of H2 of the 2021 financial year and as such, operating performance in H2 is expected to be similar to H1, excluding the JobKeeper contribution. Whilst we are pleased with the position of the business leading into H2 of the financial year, COVID -19 continues to impact our operations, business and consumer activity – and there remains the potential for further disruption.”
  • Lynas Rare Earths (LYC) -4.02% Q2 NdPr production 1,367t vs quarter-ago 1,342t. Total REO production 3,410t vs quarter-ago 4,110t. Revenue $119.4m vs quarter-ago $87.3m. Average selling price $29.5/kg vs quarter-ago $19.4/kg. Sales receipts $68m vs quarter-ago $72m.
  • Bluescope Steel (BSL)+3.49% Expects H1 underlying EBIT of ~$530m vs prior guidance of $475m.Since the company’s AGM update, benchmark steel spreads have continued to rise, further enhancing performance during November and December, leading to improved preliminary results from each of Australian Steel Products (ASP), North Star and Building Products Asia & North America.
  • Bank of Queensland (BOQ) -2.57% November quarter APRA Basel III Pillar 3 report. Common Equity Tier 1 Capital Ratio 9.9% vs 9.8% as at 31-Aug, company target 9.0-9.5%. Total Capital Ratio was 13.7% vs 12.7% as at 31-Aug, company target 11.75-13.5%.
  • ResMed (RMD) -0.73% Q2 revenue increased 9% to US$800m. Net operating profit increased 12%. Management Comments: “Our second-quarter results reflect continued solid performance and positive trends across our business resulting in top-line growth as well as double-digit improvement in operating income and earnings per share,” said Mick Farrell, ResMed CEO. “In our core markets of sleep apnea, COPD, and asthma, we are seeing continued sequential improvement in new patient volume and ongoing adoption of our mask and accessories resupply programs.
  • humm group (HUM)-0.87% H1 expects unaudited H1 Cash profit of $43.4m vs year-ago $34.5m. Loan impairment expense $25.0m vs year-ago $38.6m. Observed strong profitability in the Commercial & Leasing and Cards segments. Continued top line growth in Buy Now Pay Later, with total customers of over 2.6m, +40.4% vs year ago. Outlook: In H2 humm group will be making new investments in marketing and people as it enters two international markets. As a result, the Company expects H2 Cash profit to be lower than H1.
  • Kogan.com (KGN) -8.49% H1 gross Sales grew by more than +96% vs year ago. Gross profit grew by more than +120%, adjusted EBITDA grew by more than +175% over the same period. Active customers were 3m for Kogan.com and 719,000 for Mighty Ape.

ECONOMIC NEWS

  • Producer price index for the December quarter: +0.5% but down 0.1% over the year.
  • Private sector credit for December: +0.3% vs survey: +0.2%.

BONDS

COVID – 19 NEWS

  • Vaccine Tracker: 86.4m jabs given in 60 countries. 4.19m doses a day on average. 27.3m in US.
  • US$44 million vaccine system from CDC gets few users in the US.
  • NZ considering extra quarantine restrictions on international arrivals.
  • Singapore will grant financial assistance to people who suffer serious side effects related to the Covid-19 vaccine.
  • Mexico now has more deaths than India.
  • London’s Oxford Street will never fully recover says one study with 20% boarded up and gone.
  • Brazil’s President said CV19 will last forever. We just have to learn to live with it.
  • Novavax vaccine 89% effective. US using CV19 sniffing dogs to diagnose virus cases.

ASIAN NEWS

  • Lucky Me! Noodle maker set for a US$1bn IPO in the Philippines.
  • China looks like clamping down on Lunar New Year trips.

EUROPEAN AND US HEADLINES

  • UK is expecting 300,000 Hong Kong Chinese to move to Britain.
  • If you think Gamestop is silly, one Botticelli painting just sold for US$92m.
  • McKinsey in advance talks to settle opioid claims.
  • EU versus vaccine makers continue. Seconds away round two.
  • The battle will kick off again in Gamestop and others tonight. Reddit seems to have succeeded where ‘Occupy Wall Street’ failed.
  • Plenty of real Chinese and US data to drop before Monday.

And finally

Diarrhoea awareness next next week. Starts Monday ends Friday.

To clear up the Moody Blues lyric, does anyone know what the knights in white sat in?

Clarence

XXXX