The ASX 200 took a breather today dropping 59 points to 6765 (0.9%). Etes on bond yields. Dow Futures down 45 points. Pause and breath for the market today as the rally finally ran out of momentum. Rising bond yields are weighing on REITs and bond proxies. Downgrades and write downs for ORG and AGL (hardly a surprise) hurt sentiment and the banks cooled. The Big Bank Basket fell to $158.24. Insurers slipped slightly. Big miners also in the doghouse despite iron ore rises with BHP down 0.5% and gold miner NCM down 2.2%. Other gold miners fell too as bullion hit a nine-month low. CHN down 3.0% and DEG off 5.6%. FMG bucked the trend up 1.8%. CSL continued to fall another 1.7% with some bond proxies also under pressure with TCL down 2.2% and SYD off 3.7%. Victorian CV19 issues not helping sentiment. One case in Victoria has once again shown how quickly authorities move the goal posts. Makes travel plans tricky. Tech stocks weaker though APT rose 1.4% on a broker comment. The AllTech Index down 0.3%. In corporate news, VUL returned from a capital raise with a family affair as Gina has joined son, John Hancock on the register. The stock rose 14.8%. PNI up 10.2% after its first-half profit beat consensus expectations. Retailers mixed, NCK gave up early gains down 0.8% % on its half-year results, profit met guidance expectations ,but numbers inflated by Jobkeeper. AMC down 3.8% despite a broker upgrade. On the economic front, we recorded a trade surplus of $6.785bn missing estimates of $8.75bn. 10-year bond yields spike to 1.22% making life uncomfortable for some. Asian markets heading lower with Japan down 0.8% and China down 0.8%.

Today’s Highlights

  • ASX 200 down 59 to 6765. Takes a breather.
  • High 6829 Low 6757. Up 100 points since Xmas eve.
  • Big Bank Basket slips to $158.25.
  • All Tech drops 0.27%
  • Dow Futures down 45.
  • Gold dips to AUD$2387. 9-month low in USD.
  • 10-year yields rise again to 1.22% March 9th low of 0.61% a distant memory.
  • AUD steady at 76.21c
  • Bitcoin pushes on to US$37615
  • Asian markets heading lower with Japan down 0.8% and China down 0.8%.

MARCUS TODAY TEAM INSIGHTS

MARCUS STRATEGY – Quiet sort of day – taking a pause from the 3.6% gain in the last three days on the ASX 200. A few stock observations today and a look at the plain vanilla themes running through the market. With not much going on today I have answered an email about trading courses and tell you “The Truth about Stock Market Education”. It was also inspired by my failed attempts to cancel a subscription to some stock market software. Enjoy. READ MORE



HENRY’S TAKE -A solid day yesterday. Some still frustrate like HUM, but winners too. 6 stocks. One theme. The Dog Basket. Up 38% in 4 months. A look at the uranium sector today, plus some housekeeping. I talk about why I hold BBOZ, the power of recommendations, and sticking to a conservative approach. Well, a little conservative. Ask the Analyst is available on the webinar page on the web site. READ MORE


STOCKS

  • APT +1.45% on GS earnings surprise list.
  • VUL +14.80% Gina joins her son.
  • ORG -6.85% earning s guidance.
  • CCL -0.61% hedge funds bet on higher offer.
  • CXL +5.26% lunchtime kick from The Call.
  • AGL -3.63% too much wind it seems.
  • RIC +3.30% Twiggy takes a bite of 5%.
  • QAN +0.21%% AQZ wet lease for three aircrafts.
  • AQZ +9.44% QAN deal.
  • AXE +10.29% keynote speaker at IBM Think Summit.
  • SPL +10.77% nasal spray hopes.
  • MMM +8.54% Melbourne lockdown sparks rush to food at home.
  • VUK -5.32% profit taking.
  • ADO -13.51% reality sinking in.
  • CXO -10.14% placement weighs. Needs Bevan.
  • AGY – another lithium hopeful raising $25m-$30m at 13c
  • 4DS 6.98-% change of director’s interest.
  • RZI +10.78% basking in recent FUM.
  • NCK -0.85% toys with giving ‘Jobkeeper’ money back. May have fallen down the back of the sofa.
  • Speculative Stock of the Day: Oneview Healthcare (ONE) +48.15% Samsung partnership presentation for Bell Potter clients. Solid volume.
  • Biggest Winners: VUL, SPL, PNI, INR, AQZ, MMM and YAL..
  • Biggest Losers: OMH, ORG, TLX, TPW, DEG, TMS and NWH

TODAY

  • Westpac Banking (WBC) – 0.18%To launch a sales process for its auto loans portfolio. Estimates for theportfolio range between $1-2bn.
  • Woodside Petroleum (WPL) -0.44% May not progress further in its interest for Chevron’s $5.8bn North West Shelf stake. There is speculation WPL is hesitant to pay over fair value during a time of lower oil prices and also notes there has not been an announcement on CEO Peter Coleman’s replacement. Newswires report Macquarie Group may be interested in the stake.
  • Pinnacle Investment Management (PNI) +10.21% First half profit $30.3m vs year-ago $13.8m and consensus$22.1m. Revenue $14.4m vs year-ago $11.4m and consensus $12.4m. Fully franked interim dividend per share of 11.7cps, +70% from 1H FY20. Aggregate Affiliates’ funds under management (FUM) $70.5bn at the end of December, +20% from $58.7bn at the end of June. Aggregate retail FUM $16.7bn at the end of December, +28% from $13.1bn at the end of June. Net inflows $5.5bn, including $1.9bn retail (no inflows from LICs/LITs).
  • Tabcorp Holdings (TAH) -1.53% New Chairman reportedly receptive to a takeover deal at the right price.
  • Telstra Corp. (TLS) -1.57% To move ahead with T22 job reductions.CEO Andy Penn in a letter to staff, outlined that Telstra will move ahead with job reductions that it had previously put on hold due to the pandemic. It was proposing cuts of up to 1425 roles with the understanding it would cut a further 800 by the end of the year.
  • Nick Scali (NCK) -0.85% H1 underlying profit $40.5m vs company guidance $40.5m. Revenue $171.1m vs consensus $190m. Sales orders: $191.1m vs year-ago $126.1m. EBITDA $60.2m vs consensus $60.3m. Interim dividend 40c/share, fully franked. Outlook: To open two showrooms in H2, taking new store openings for FY21 to 4 stores. Sales order growth for the group in January 2021 was +47% vs year ago, the largest month of written sales orders in the company’s history. The rate of sales revenue growth has been lower than sales orders due to the extended lead times caused by delays in raw materials to our suppliers and shipping issues which continue to be challenging. These supply chain delays make it difficult to accurately predict sales revenue growth for H2.
  • Centuria Office REIT (COF)+1.54% H1 funds from operations (FFO) 11.2 cents/unit vs year-ago 9.6 cents/unit. Revenue $94.5m vs year-ago $67.5m. Funds from operations $57.7m vs year-ago $39.0m. Portfolio rent collection averaged more than 96%. Rent relief totalled $2.6m, an annualised reduction of ~50% from the rent relief provided in relation to Q4 FY20. FY21 Guidance: Funds from operations guidance 19.4 – 19.9 cents/unit. Distribution per unit guidance reiterated at 16.5 cents/unit.
  • AGL Energy (AGL) -3.63% To recognise asset impairment charges of $2.69bn in its HY results. AGL’s guidance range for FY21 underlying profit after tax (PAT) is unchanged from the range of $500-580m (which is ex-significant items). AGL anticipates a positive impact to underlying PAT in FY22 and FY23 of ~$50-80m. These impacts are the aggregate of a decrease in cost of goods sold as a result of the provision for the onerous wind farm offtake contracts, a net decrease in depreciation expense, and a net increase in interest costs.
  • HomeCo Daily Needs REIT (HDN) -0.39% Initiated as a buy at Goldman Sachs, target price of 140c.
  • ASX (ASX) -0.51%Reports January activity. Volatility 0.7% vs year-ago 0.6%. Expected future volatility an average of 14.4 vs year-ago 12.4. Total capital raised $1.07bn vs year-ago $1.33bn. Average daily number of trades down 8% vs year-ago. Average daily value $6.11bn vs year-ago $5.19bn. Average daily contracts down 32% vs year-ago
  • Viva Leisure (VVA) +8.30% Completes acquisition of the 6 Pinnacle health clubs in Victoria.
  • Origin Energy (ORG) -6.85% Expects FY21 Energy Markets underlying EBITDA of $1.0bn-1.14bn vs prior guidance of $1.15-1.30bn. Updated FY21 guidance: Australia Pacific Liquid Natural Gas (APLNG) production 685-705 petajoules (PJ) vs prior guidance of 675-705PJ, distribution breakeven $24-28/barrels of oil equivalent (boe) vs prior guidance $25-29/boe. Cash distribution from APLNG $575-675m. Capital expenditure of $400-440m vs prior guidance of $420-470m. Trading update: Several factors have materially affected Energy Markets’ near-term outlook. Despite the external challenges facing the business, operations continue to perform well with strong cash flow generation. Generation assets are performing at a high level of reliability and retail business is on track to meet FY21 cost out target. Challenging operating conditions are expected to persist in FY22, with electricity gross profit expected to be impacted.

ECONOMIC NEWS

  • Trade balance for December: Surplus $6.785bn vs survey: surplus $8.75bn. Exports: +3% vs survey: +6%, imports: -2% vs survey: -2%.

CV19 NEWS

  • ScoMo has bought another 10m doses of Pfizer vaccination.
  • Mexico reported 1,707 daily CV19 deaths bringing the country’s total to 161,240.
  • American Airlines Group Inc. told 13,000 employees they could be laid off again as the summer rebound is not happening. United Airlines told 14,000 a similar thing last week.
  • 108m doses across 67 countries. 4.25m a day.

BONDS


ASIAN MARKETS

  • Ant and Chinese banks pulling back lending.
  • Food prices are soaring in China ahead of New Year. Vegetable prices have skyrocketed due to the unusually cold weather. Pork prices have returned to near their September highs.
  • Qualcomm the world’s largest phone chip maker is struggling to keep up with demand due to supply chain issues.
  • Chinese firms have missed interest or principal payments on a combined $2.7 billion worth of dollar notes since the year began, nearly 33% of last year’s tally.
  • The head of the Tokyo Olympic Organizing Committee said he might have to resign after his comments that women talk too much in meetings sparked broad criticism. Women are highly competitive and if one speaks, then others also feel they must do so, said Mori. New rules outlined for Olympic crowds with no cheering allowed.

EUROPEAN AND US HEADLINES

  • Super Mario is back to run Italy. “Whatever it takes’.
  • McKinsey will pay US$550m to settle Opioid claims.
  • Eurozone inflation jumps to most in a decade.
  • Chip supply issues closing down some US car production.
  • Last year, an average 10.9bn shares changed hands across U.S. exchanges each day, the most on record in Bloomberg data going back to 2008. This year, daily average has increased to almost 15bn shares. Gamestop inspired high of nearly 24bn on January 27th.

And finally please send jokes to henry@marcustoday.com.au

Clarence

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