Monday 19th December – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 closed down 15 points to 7134 (0.2%). Volumes starting to thin out pre Xmas. Not a bad performance considering US falls. Resources once again finding support with BHP, RIO and FMG all in the green. Gold miners too showing good strength today with NST up 3.4%, EVN up 4.3% and NCM down 0.3% on news of the CEO retiring. Lithium stocks trying hard and failing in places to find support. Oil and gas stocks better as oil prices rising in Asia. WDS up 0.4% and coal stocks ahead, WHC up 3.1% and YAL better by 2.3%. Base metals stocks better too. Banks were mixed but more drift than pressure, CBA down % with the Big Bank Basket down to $182.86 (0.3%). Insurers fell despite 10-year yields picking up. SUN down 0.3% and QBE down 0.9%. Healthcare fell led by CSL off 1.1% and RMD down 0.9%. Industrials mainly weaker, COL off 1.3%, ALL off 2.0% and SGR getting smashed on NSW tax changes down 17.8%. REITs fell in higher rates, GMG off 1.7% and MGR down 1.4%. Tech eased at the close, XRO off 0.4% and the Index down 0.4 %. In corporate news, STX made a scrip play for WGO, MCR saw Wyloo emerge as a near 20% holder. PRN rose 10.6% on a decent update, GMD saw some director buying and GMD up as the chair bought some more. BWX has downgraded its earnings and has replaced the chair but still remains suspended. David Jones has been sold to Anchorage PE. In economic news, not much to get excited about but in some positive political news, Penny Wong is heading to China. Asian markets slightly lower, 10 year yields up to 3.51%

HEADLINES

Winners: ADT, PRN, GMD, A4N, SBM, NIC
Losers: SGR, IMU, TLG, DDR, PNV, ARU, PBH, FCL
Positive sectors: Iron ore. Gold miners. Coal. Base metals.
Negative sectors: Healthcare. REITs. Casinos.
High 7153 Low 7123 Narrow Xmas trade.
Big Bank Basket: Closed at $182.86 down slightly.
All-Tech index: Down 0.4%
Gold firms to $2669
Bitcoin: Lower to US$16,657
Aussie Dollar: Higher to 67.15c
10-Year Yield: Heads to 3.51%
Asian markets: HK down 0.5%, China down 1.4% with Japan down 0.7%.
US Futures: Dow up 12 Nasdaq up 12

MAJOR MOVERS

ADT +11.66% covers lots of metals.
PRN +10.60% operational update
SBM +4.90% change in substantial holding.
GMD +6.1% change of director’s interest.
MCR +3.83% Twiggy takes his take higher.
MRM +21.25% positive trading update.
RXM +9.52% Hog Ranch gold trend extended.
WGO +6.67% STX makes scrip bid.
SGR -17.83% changes to NSW tax.
TLG -8.54% profit taking.
PNV -6.83% completion of SPP.
AMI -7.41% investor conference call.
DDR -7.78% good rally on Friday unravels.
Speculative Stock of the Day : We talked this one Friday. Meteroric Resources (MEI) +45.16%. It was up 87% on Friday and today kicking on again. Up another 48%. Good volume too. That is the point of the SSOTD. Heads up for potential gains continuing.

IN THE NEWS

Strike Energy (STX)has made an off-market bid for Warrego Energy (WGO) to acquire all shares of the company for an implied offer price of 33.5c per share this is a 19.6% higher valuation than the previous higher offer from Hancock at 28c per share. Warrego said they are considering both offers.
Newcrest Mining (NCM) Has announced that Chief Executive Sandeep Biswas is retiring and to be replaced by CFO Sherry Duhe, effective today.
Perenti (PRN) Has upgraded their earnings guidance as they report improved business conditions in both Africa and Australia. PRN forecasts revenue to be between $2.7bn to $2.9bn in FY23. PRN also announced that one of their subsidiaries has been awarded a new contract to work at Evolution Minings’ underground gold and copper mine.
Sezzle Inc. (SZL)Reports that they have become profitable in November, with net income of US$200,000 for the month and reports a total income increase of 16.5% yoy to US$13.3m. Active users increase to 120,000 as of 18^th December. SZL has also forecasted profits in 2023.
Sims (SGM) – Has sold 8.2 acres of surplus land in New Jersey for US$31.5m, approximately A$46m.
Goldman Sachs has indicated they may cut up to 4000 jobs as they deal with a decrease in profit and revenue.
The Star Entertainment Group Limited (SGR) – The Star Entertainment Grouphas responded to the media release from NSW Treasurer MP Matt Kean regarding increases to casino tax rates in NSW. Mr Kean said – “It’s important that casinos pay their fair share of tax. These reformed tax rates will replace the existing regime under which casinos pay less tax on poker machines than hotels and clubs”. No further details have been made available in relation to the potential reforms, the impact of any proposed changes if implemented will be dependent on the details of the reforms. Star’s CEO and MD Robbie Cooke responded by saying “We are not sure how the Government modelled its financials nor the basis for suggesting The Star does not pay its fair share of taxes. Specifically, in addition to state gaming taxes, The Star also pays millions in corporate taxes, with total taxes paid as a percentage of The Star’s profits being around 70%, and as high as 80% in the last 5 years when all the tax regimes are considered.”

ECONOMIC NEWS

ANZ has downgraded its Australian GDP forecast to 1.5% year-on-year by the end of 2023, from 1.8% previously. It expects Australia to avoid recession, particularly given the tailwind from the recovery in net migration. ANZ still sees the cash rate peaking at 3.85 per cent by May 2023 with no cuts until late 2024.
ANZ Research is calling gold to US$1900 in a 2023 recession scenario.
NZ consumer confidence hits a record low of 75.6 in the last quarter of 2022 down from 87.6 in the previous period. The last time consumer confidence came to these levels was during the recession in the 1990s and during the Global Financial Crisis 2008/09. The reading is a sign that more New Zealanders are pessimistic about the economic environment than those that are optimistic.

ASIAN MARKETS

China has reported two deaths so far from the latest round of CV19.

The Bank of Japan is expected to keep monetary stimulus unchanged at the governors third last policy meeting this week. It is forecast to leave its negative interest rate and yield curve control program unchanged

US AND EUROPEAN HEADLINES

US defence contractor L3Harris to buy Aerojet Rocketdyne for US$4.7bn.
Elon Musk has asked his Twitter followers whether he should step down. He said he will abide by the result.
Twitter said it will no longer allow users to promote other social media accounts on its platform
We all say it, but the Japanese seem to say it more. This was a survey taken in July.