Friday 14th January – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

The ASX 200 stumbled 81 points lower to 7394 (1.1%) on weak overseas leads and tech under pressure here. Banks took flight with the Big Bank Basket down to $180.07 (1%) led lower by CBA down 1.2%, NAB down 0.6% and MQG down 1.0%. Insurers also eased with QBE down 1.0% and PDL down heavily on disappointing FUM numbers falling 15.8%. Healthcare slipped as CSL fell 2.0% SHL down 1.2% though RMD rose strongly up 3.6%. Industrials weak across the board. WES fell 2.1%, GMG down 1.9%, WOW down 2.9% and REH off 2.5%. Tech in trouble, APT in allsorts as Block fell in US, APT down 9.2% and XRO down 5.1%. The All–Tech Index fell 2.6%. Not a fun place to be. Meanwhile in resources, a breather today in lithium stocks and iron ore, BHP down 0.4%, RIO off 1.0% and PLS down 0.3%. Gold miners in demand NST up 1.1% and EVN up 0.3%. Energy stocks fell, STO down 1.4% and WPL off 0.3%. In corporate news, BRN had another good day following an announcement on funding from its put arrangements, well off highs though up 7.1%. In economic news, new job ads fell 3.2% on SEEK. Asian markets weaker and 10-year yields steady at 1.85%.

MAJOR MOVERS:

Winners: ADO, CXO, CCX, BRN, DEG, BLX, AGY, TLX
Losers: PDL, PNR, TPW, APT, BWX, BOE, Z1P, XRO
Positive sectors: Gold miners.
Negative sectors: Everything else.
Hi 7459 Lo 7387.
Big Bank Basket: Slides to $180.07
All-Tech index: Down 2.6%
Gold: Steady at $2506.
Bitcoin: Slightly lower to US$42738
Aussie Dollar: Steady at 72.81c 10-YEAR YIELD: Steady at 1.85%.
Asian Markets: Japan down 1.5% Hong Kong down 1.0% and China down 0.6%.
US Futures: Dow futures up 19 NASDAQ futures up 10.

STOCKS ON THE MOVE

BRN +7.14% triggers funding through put arrangement. Well off highs.
ADO +25.49% RAT test winner perhaps.
CCX +11.63% trading update.
CXO +11.80% follow through form buyers.
DEG +7.11% gold miners in demand slightly.
AGY +5.00% near term lithium producer.
RMD +3.57% maybe ventilator and AUD winner.
WBT +3.75% coat tailing BRN.
4DS +17.33% BRN shows potential.
LEG +31.25% no news but good volume.
PDL -15.82% no FUM for these guys.
PNR -11.90% profit taking.
APT -9.16% tech collapse and merger beckons.
Z1P -5.13% BNPL slowing in US as Omicron bites.
FLT -4.58% WEB -3.30% travel issues.
BWX -8.38% brokers kick in.
WHC -5.08% coal under pressure.
NHC -2.13% CEO resigns.
Speculative stock of the Day: Ardea Resources (ARL) +50.98% decent volume after Emu Lake nickel sulphide discovery confirmed with 2.72m at 5.42% nickel.

IN THE NEWS

Monash IVF (MVF) said doesn’t expect a material financial impact from surgery suspension in Victoria. Management expects the suspension to lead to pent-up demand once services resume in Victoria.
Virtus Health (VRT)said it isn’t able to provide an update on the financial impact of elective surgery restrictions.
Star Entertainment Group (SGR) advised by AUSTRAC it has expanded the scope of its investigation to other entities within The Star group. Said it has not yet made a decision on the appropriate regulatory response. In June last year, AUSTRAC identified potential compliance breaches and started an investigation. Brokers are relatively bullish following a trading update back in October which highlighted optimism for normalising trading conditions after a challenging start to FY22. The licence review continues to cast a shadow over the share price given the uncertainty surrounding the regulatory fallout.
Pendal Group (PDL) funds under management (FUM) at the end of December $135.7bn vs quarter-ago $139.2bn.
VGI Partners (VGI)funds under management (FUM) at the end of December $2.5bn vs $2.8bn a quarter ago.
City Chic Collective (CCX) preliminary first-half revenue $178.3m vs year-ago $119m. Management said the number isn’t really comparable to last year. Added H2 earnings are expected to be stronger than H1 earnings in FY22. Inventory levels are expected to build into the second half of the financial year. Interim results are due February 24.
Michael Hill International (MHJ) expects first-half EBIT between $49-53m vs $44.6m last year. Q2 sales $217.5m vs year-ago $198m. Brand elevation and operational initiatives underpinned margin growth of 200-300bps in all markets and channels against FY21Q2. The share price has had an impressive run since the bottom of the pandemic. Citi upgraded to BUY in October after its first-quarter sales update when margin improvement was only 100-200bps. Today’s result is another solid improvement on that. Scope for M&A and expansion into new markets also talked up. Target prices are well behind the current share price. Citi’s 90c target implying downside of 37%. It will be interesting to see if today’s update prompts any target price revisions tomorrow.
iCar Asia (ICQ) takeover bidder Carsome Group holds its final bid price firm at 53c. iCar board unanimously recommends shareholders vote in favour of offer.
Turquoise Hill holder Pentwater issues a letter to Rio Tinto (RIO) board on corporate governance concerns.
Qantas (QAN) expects Q3 domestic capacity to be 70% of pre-COVID levels vs prior guidance of 102%. Not a great update but the market may have already been expecting a revision to capacity levels given the big jump in case numbers and dampened appetite for travel. International capacity for Q3 will fall from 30% to around 20% of pre-COVID levels. Management noted the big jump in case numbers had influenced consumer behaviour but was optimistic that demand would return to normal quickly. Broker’s remain bullish, Credit Suisse bucking the trend says UNDERPERFORM following a guidance update in December. UBS says BUY, target price implying upside of more than 24%. Believes risks are more than priced in. Morgan Stanley continues to see significant upside. Target price pointing to upside of 40.3%.

ECONOMIC NEWS/ BOND MARKETS

New job ads on SEEK (SEK) fell 3.2% in December. The first fall after three months of solid gains following the end of lockdowns.
The value of new loans for housing rose 6.3% to $31.4bn in November 2021 (seasonally adjusted) following three months of falls. The result was well ahead of expectations of a 0.4% rise.

CV19 NEWS

Hong Kong will extend the restrictions for a further two weeks. The rules will last until Feb. 3.

ASIAN MARKETS

China’s trade surplus reached US$94.5bn on record breaking exports in December. For the full year, the trade surplus hit US$676bn. Exports in December were US$340.5bn.

Evegrande gained after it avoided what would have been its first default on a public onshore bond.
Looks like frozen is going to be all the rage for Chinese New Year celebrations as many will stay at home. China reported finding 143 new local Covid cases across five provinces yesterday. Holiday celebrations will be very muted it seems.

TSMC the world’s largest chip maker is investing US14bn in new capacity.

US AND EUROPEAN NEWS

Biden loses another piece of legislation as court blocks vaccine mandate.
TPG Private Equity company hit a US$100bn valuation on debut.
Brisbane company Tritium will list on Nasdaq today through a back door SPAC. After the closing of the deal and the post-close financing, Tritium was expected to have a cash balance of about $US120m.
More problems for No10 with news that two parties held as the Queen mourned Philip.
Bank results kick off in US tonight.
Biden nominates Raskin to be Fed’s top banking regulator.
Student loan provider Navient has agreed to pat some US states $1.85bn over costly repayment plans.