The ASX 200 fell 123 points to 6838 (-1.8%) as the correction becomes official. After a promising start, the market got whacked from the twin forces of rising 10-year yields above 2% and the US futures turning down on the Fed press conference fall out. The taper tantrum is alive and well. From a 60 rally to a 160 fall today, it was once again vicious as sellers ambushed the market with the Big Bank Basket falling modestly to $168.26 (-0.9%) and other financials also under pressure. MQG off 3.1% and NWL down 4.2%. Healthcare was put into ICU today as CSL tumbled 3.5%. The SPP closes on the 7th of February and has a discount to VWAP option which is now looking interesting. SHL fell 2.1% and RMD off 3.9%. Industrials across the board felt the brunt of the selling, WES down 3.7%, TCL down 4.0% as bond yields rose above 2%, TLS down 1.3% and REITs in a hole, GMG off 3.7%. Even boring consumer staples struggled, COL down 3.1% and WOW falling 2.1%. Tech under serious pressure as WTC fell 9.9% and SQ2 continued to fall down another 5.4% with the Index down 5.1%. In resources, iron ore majors held up, BHP up 1.4% and RIO up 2.1% but gold miners were not so lucky getting smashed with EVN down 11.3% and NST off 8.2%. Looks a little overdone considering the bullion move. It is sell first ask questions later. Quarterlies didn’t help matters. Lithium stocks remain depressed, PLS down 2.8% and MIN off 5.6%. Energy stocks a rare patch of green with STO up 3.6% and WPL better by 2.5% despite a Myanmar withdrawal and a $300m write off. In corporate news, PMV updated the market on its success in ‘Smiggling’ the world up 2.1% and KGN revealed it was having a tough time making money. Again down 12.3%. GMA got a boost from renewing its CBA contract for mortgage insurance, rising 13.8%. That might come in handy if rates rise. HPG became LoPages after a quarterly update sent the shares down 16.0% and PLT lived up to its name on a positive quarterly up 8.3%. On the economic front, NZ inflation growing at the fastest rate in 31 years. Asian markets are down heavily. 10 year yields up to 2.02%.
- Winners: GMA, BPT, AMI, 88E, KAR, GRR, PTM, AST
- Losers: KGN, EVN, SLR, DEG, CDA, WTC, Z1P
- Positive sectors: Iron ore. Energy
- Negative sectors: Gold miners. Healthcare. Industrials. REITs. Tech
- High 7043 Low 6758 Huge range and massive volume
- Big Bank Basket: Falls to $168.26(-0.9%)
- All-Tech index: Down 5.1%
- Gold: Eases to $2565
- Bitcoin: Slipping slightly to US$35891
- Aussie Dollar: Savaged to 70.71c
- 10-Year Yield: Rises to 2.02%
- Asian Markets: Japan down 2.7%, HK off 2.5% and China down 1.1%
- US Futures: Dow down 448 points Nasdaq down 265
Stocks on the Move
- BHP +1.42% UK courts approve unification.
- GMA +13.76% CBA win.
- 88E +8.33% oil and gas play.
- KAR +5.73% crude doing well.
- KGN -12.27% fails to deliver again.
- EVN -11.28% quarterly disappoints.
- SLR -11.04% quarterly report.
- WTC -9.85% tech sell-off.
- CDA -10.22% brokers turn slightly negative.
- Z1P -9.66% becoming a substantial shareholder.
- ADH -8.55% sell-off continues.
- DUB -8.07% tech wreck.
- HPG -15.96% now lowpages on quarterly report.
- MAD -6.44% falling into a hole.
- ICI -11.54% VR1 -% metaverse sell off.
- PBH -3.45% launches online casino in West Virginia. Take me home.
- MP1 -9.46% sell-off continues.
- Speculative stock of the Day: Newly listed Haranga Resources (HAR) +30.00% not a great day to list but looks to have got away with it. For now. Not huge volume.
In the News
- Nickel Mines (NIC) CEO notes exceptionally strong outlook. Declares final dividend 2c,which brings the full year 2021 dividend to 4c, a +33% increase on 2020. Record earnings and cash flow achieved on the back of its RKEF and mining operations. Production and cash flow profile is on track to more than triple over the next 12 months.
- Woodside (WPL) – has decided to withdraw from its interests in Myanmar, having operated in the country since 2013. The non-cash expense associated with the decision to withdraw is expected to affect 2021 net profit by $US138bn on top of an already US$71m expense.
- Life 360 (360) – third consecutive quarter of record subscribers. 62% direct revenue growth. Global Monthly Active User base was 35.5m, an increase of 1.7m from the September 2021 quarter and 34% year-on-year. Due to potential implications under U.S. federal securities laws, 360 are not currently able to provide specific guidance for CY22. That’s life.
- Kogan (KGN) – trading update – gross sales were broadly in line with its forecasts but growth in November and December slowed.
- Westgold (WGX) – reported a record second-quarter production of 66,688 ounces at an all-in sustaining cost of $1714.
- Champion Iron (CIA) – it has declared its first-ever dividend of 10c. The company reported revenue of $253m and $1.13bn for the three and nine-month periods ended December 31, 2021.
- Silver Lake (SLR) – Gold production of 64,009 oz and 243 tons of copper in the last quarter. It said the results leave it well placed to deliver its FY22 guidance.
- Gemworth Mortgage (GMA) – good win today with it being selected as the exclusive providers of mortgage insurance to CBA.
- Evolution Mining (EVN) – reported gold production of 148,084 ounces in the December quarter at an all-in sustaining cost of $1347 per ounce. Year-to-date production is 318,766 ounces at an AISC of $1381 per ounce. Maintained guidance.
Economic News/Bond Markets
- Export price index rose 3.5% this quarter and 38.3% through the year.
- Import price index rose 5.8% this quarter and 13.8% through the year. There is that inflation from imports.
- National Australia Bank now sees the Reserve Bank of Australia raising interest rates in November, with follow-up hikes in December 2022 and February 2023. 15bps then a 25bps rise. Suspect it may happen sooner than that.
- Bank of Canada keeps rates unchanged.
- New Zealand sees a 1.4% rise in CPI in Q4. Annual inflation accelerated 5.9%, compared to 4.9% in the previous quarter and against forecasts of 5.7%.
- Tianqi Lithium Corp, the Chinese battery-material supplier that’s planning to list in Hong Kong, will return to profitability for the first time in three years due to surging electric-vehicle demand. Chinese lithium carbonate prices have been on a tear, jumping by almost a third this year after surging more than 400% in 2021.
- CSI 300 Index has dropped more than 20% from its Feb. 10 peak that is despite the authorities trying to calm nervous investors and offer support.
US and European News
- European markets showing a big drop on the back of Dow weakness.
- Powell sends mixed message. Market confused.
- Oil markets down around 1% in Asian trade.
- Bill Ackman has bought US$1.1bn worth of Netflix after sell-off.
- Tesla warns of supply chain constraints.
- ECB has warned European leaders that sanctions on Russian Swift access could have massive consequences.
- US has warned that the supply of chips has fallen to just five day’s worth of supplies.
- Cathie Wood has declared that ‘innovation is now on sale’.
- Boris Johnson says he will not quit as report on ‘Partygate’ looms.