The ASX 200 closes up strongly by 47 points to 7371 (+0.6%) after some stumbles due to WBC results. Banks were underwhelming as WBC disappointed on most numbers and buyback below forecast, the stock fell 7.6% to a six-month low. CBA stood loud and proud as the best, up 1.5% with the Big Bank Basket down to $186.67. The bond market yields came off dramatically ahead of the RBA backflip, insurers better with QBE up 2.5% and IAG up 0.8%. MQG returned from its capital raising and rose modestly by 0.4%. Industrials and bond sensitive plays pushed ahead as the 10-year yield fell to 1.9% taking some of the sting out. TCL rose 1.6% as traffic returns REITS better as shoppers return and rates drop, GPT up 0.8%. Consumer stocks were also back in favour led by WES up 1.8% and DMP rising 3.5%. Tech mixed as APT fell 1.0% but others improved. The All–Tech Index rose 1.8%. Miners steadied despite falls in iron ore on Friday, BHP fell 0.5% FMG up 2.9% and RIO doing better up 0.8%. Energy stocks were in demand with STO up 1.7% and KAR up 1.9%. Gold miners eased but base metals were better and lithium continues to trundle higher. All eyes on Glasgow helping in clean and green themes. In corporate news, AST agreed on a bid from Brookfield, PRT agreed to a bid from SWM and STP rose 79.8% in listing its comfy undies business. JDO joined the boards for the first bank in 30 years to join the ASX up 7.6%. On the economic front, it is all about the RBA tomorrow.
- Winners: SWM, TLX, AVZ, JDO, INR, ALG, ORE, CXL, WTC.
- Losers: WBC, RED, NWH, RMD, BOE, JRV, EQT, HT1, VUL.
- Positive sectors: Consumer stocks. REITS, Energy. Financials ex WBC.
- Negative sectors: Gold miners.
- High 7388 Low 7326. The odd wobble.
- Big Bank Basket: Down to $186.67. Down 0.3% CBA only winner.
- All-Tech index: Up 1.8%. APT down 1.0%.
- Gold: Steady at AUD2377.
- Bitcoin: Drifts down to US$60370.
- Aussie Dollar: Falls to 75.07c.
- 10-YEAR YIELD: Flops back to 1.90%.
- Asian Markets: Japan up 1.88% on election result. Hong Kong down 1.1% on earnings and China up 0.07%.
- US Futures: Dow futures up 76. NASDAQ futures up 44.
STOCKS ON THE MOVE
- SWM +14.29% PRT takeover.
- AVZ +9.86% lithium stocks back in focus.
- TUA +5.00% bargain hunters.
- ORE +5.84% lithium bounce.
- CXL +5.80% Glasgow focus.
- AST +3.64% Brookfield ups bid.
- CDA +3.78% director’s buying. Modest but a positive sign.
- WBC -7.36% results miss and gloomy second half.
- RMD -4.92% broker downgrades following quarterly.
- PH2 +12.16% hydrogen lift.
- RHY +7.03% going again.
- IMU +4.04% positive collaboration announcement.
- GQG -2.50% drifting lower.
- KCN -12.38% disappointment on Thai announcement.
- AT1 -8.62% no kicker from tests.
- RED -5.77% turning down.
- HT1 -4.15% profit taking.
- VUL -4.00% sell off continues.
- IPO of the Day: Bamboo undies maker Step One (STP) +79.74% Raised $81m at 153c. Founder Greg Taylor sells down from 100% to 66%.
- Speculative stock of the Day: GlobalLith (GL1) +34.02% good volume as the company announces a cornerstone investment from Yibin Tianyi taking a 9.9% interest. $13.6m raised for Marble Bar lithium project.
IN THE NEWS
- Wesfarmers (WES) understood to be eyeing West Australian building company the Buckeridge Group of Companies.
- GR Engineering Services (GNG) upgrades full-year revenue guidance to $540-560m vs prior $440-460m.
- TPG Telecom (TPG) appoints Grant Dempsey as CFO effective February 2022.
- Alumina (AWC) CFO Grant Dempsey to resign on January 31, 2022.
- Brookfield consortium to acquire AusNet Services (AST) for 265c in cash.
- Service Stream (SSM) completes previously-announced Lendlease services acquisition, expects FY22 pro-forma revenue ~$1.7bn.
- Seven West Media (SWM) to acquire Prime Media for $131.9m. Takes strategic stake in CarExpert.
- Waypoint REIT (WPR) announce pro-rata capital return of 17c/security at AGM.
- IGO Limited (IGO) Q1 net profit $46m vs quarter-ago $452.6m. The prior quarter included both results from the Tropicana operation as well as a post-tax gain on the sale of the operation of $385m.
- MACA (MLD) attracting takeover interest from Thiess.
- Judo Bank (JDO) – the first bank to list in Australia in 30 years kicks off today at 12.30 pm. 210c issue price.
- Step One (STP) IPO today. Founder sells down from 100% to 66%.
ECONOMIC NEWS/ BOND MARKETS
- Melbourne-Institute inflation for October: Headline +0.2% over the month, to be up 3.1% vs year ago. Trimmed mean: +0.2% over the month, to be up 2.8% vs year ago.
- CoreLogic house prices rose 1.5% in October, the slowest improvement in nine months, to be up 21.6% over the year which is the fastest rise in 32 years. Tighter serviceability requirements, rising fixed mortgage rates and affordability limits weighing on the reading. The rate of property price growth is slowing. AMP’s Shane Oliver, last Tuesday, said the worsening affordability would reduce the pool of buyers, which would eventually lead to price falls. Domain’s chief of research and economics Nicola Powell reaffirmed that point. While price falls aren’t happening just yet, it is now a little more obvious that the heat is coming out of the market. Lending data today revealed a decrease in the value of loans in September, down 1.4%, which was better than estimates of a 2% decrease. Another change to the property market dynamic is the lift in supply. Sydney’s sellers added 29% new listings during September, increasing the total housing stock by 16% from the multi-year low recorded in January. Melbourne is expected to see stronger property price growth than other capitals as it returns from lockdown. CBA calculate national prices will still rise 7% in 2022. A rate hike in November 2022 is now forecast by CBA.
- Westpac (WBC) – Chief economist Bill Evans has called for the RBA to abandon its rate guidance. Westpac believes the RBA will keep the cash rate on hold until February 2023.
- Coal prices continue to fall in China.
- Chinese airline stocks under pressure as travel curbs bite.
- Japanese elections out of the way. The song remains the same. As always. More stimulus as always. The ruling LDP defied worst-case scenarios to secure a majority by itself.
- Chinese New-home sales fell 32% in October. The official manufacturing purchasing managers’ index fell to 49.2.
US AND EUROPEAN NEWS
- COP (out) 26 begins. Johnson warns the conference has a huge way to go after G20 fail.
- Biden hails EU-Steel imports deal as a chance to curb the import of Chinese products.
- Jen Psaki, Biden’s press secretary tests positive for CV19.
- UK – France still at loggerheads over fishing rights.
- UK analysts say that rising home loan rates could slow the housing boom in the UK.
and finally…the things kids say…
1. NUDITY: I was driving with my three young children one warm summer evening when a woman in a convertible ahead of us stood up and waved. She was stark naked! As I was reeling from the shock, I heard my 5 year old shout out from the back seat “Mom that lady isn’t wearing a seat belt!”
2. OPINIONS: On the first day of school a first-grader handed his teacher a note from his mother. The note read, “The opinions expressed by this child are not necessarily those of his parents.”
3. KETCHUP: A woman was trying hard to get the ketchup out of the bottle. During her struggle the phone rang, so she asked her 4-year-old daughter to answer the phone, “Mommy can’t come to the phone to talk to you right now, She’s hitting the bottle.”
4. MORE NUDITY: A little boy got lost at the YMCA and found himself in the women’s locker room. When he was spotted, the room burst into shrieks, with ladies grabbing towels and running for cover. The little boy watched in amazement and then asked, ‘What’s the matter, haven’t you ever seen a little boy before/’
5. POLICE: #1 While taking a routine vandalism report at an elementary school, I was interrupted by a little girl about 6 years old. Looking up and down at my uniform she asked, “Are you a cop?”
“Yes, that’s right” I told her.
“Well then,” she said as she extended her foot toward me, “Would you please tie my shoe?”
6. POLICE: # 2 It was the end of the day when I parked my police van in front of the station. As I gathered my equipment, my K-9 partner, Jake, was barking and I saw a little boy staring in at me.
“Is that a dog you got back there?”, he asked.
“It sure is,” I replied
Puzzled, the boy looked at me and then towards the back of the van. Finally, he said, “What’d he do?”
7. AGING: I volunteer to deliver meals on wheels and I often take my daughter with me on afternoon rounds. She was unfailingly intrigued by the various appliances of old age, particularly the canes, walkers, and wheelchairs. One day I found her staring at a set of false teeth soaking in a glass. As I braced myself for the inevitable barrage of questions, she merely whispered, “The Tooth Fairy will never believe this!”
8. DRESS-UP: A little girl was watching her parents dress for a party. When she saw her dad donning his tuxedo, she warned “Daddy, you shouldn’t wear that suit.”
“And why not, darling?”
“You know that it always gives you a headache the next morning.”