ASX 200 crashed 110 points to 7024 (1.5%) today on a killer combo of weaker US, RBA minutes and the shock of the BoJ effectively letting rates drift higher. 10-year yields jumped to 3.71% and banks at least held their ground on the jump but everything else, well Spilt Enz summed it up. I See Red! Maybe more Martha with no where to run, no where to hide. Except banks with the Big Bank Basket unchanged at $182.68  MQG fell hard 1.6%, Insurers better, just, Fund managers turned lower, MFG down another 2.0%, AMP off 1.5%.  Healthcare in ICU with CSL down 0.9% and FPH off 2.0%, RHC down 2.5% and RMD easing back. REITS were smashed on higher interest rates, GMG down 4.5%, SCG off 3.8% and DXS down 2.4%. Old skool platform stocks dropped hard as DHG revealed surprisingly weak listing numbers. REA followed down 7.7% and CAR off 3.3% with SEK not found off 5.5%. Industrials hit hard, WES down 3.4%, ALL off 4.5% and DMP falling 4.0%. Resources though bore the brunt of the sell off. Holding in for so long it was only natural, that ice would melt and so would BHP off 1.6%, FMG slid 1.5% and lithium and base metal stocks saw sellers back ready or not. PLS down 4.2% and S32 off 2.4%. Energy stocks too ran out with WDS off 1.2% and WHC down 2.6%. In corporate news, DHG whacked 9.1% with NEC, on update. BWX returned and wished they hadn’t falling 53.2%. JLG cratered 12.3% as the COO sold 4m shares to ‘diversify his risk’.  CCX freaked out falling 31.4% on volatile demand. BHP extended its DD on OZL for another week. Someone is working over Xmas. In economic news, consumer confidence end 2022 on a weak note. Maybe a middle D.The RBA minutes showed could have been anything. BoJ raised rates! 10 year yields soared, Asian markets slapped down.

HEADLINES

• Winners: PRN, STA, RED, HLI, SDF, AUB, JRV, AGL
• Losers: INR, PBH, JLG, LTR, SGR, ARU, A4N
• Positive sectors: Banks. Insurers.
• Negative sectors: REITs. ‘Old Skool’ platforms. Disc Consumer.
• High 7124 Low 7020
• Big Bank Basket: Closed at $182.68 unchanged
• All-Tech index: Down 4.5%
• Gold firms to $2689
• Bitcoin: Steady at US$16,702
• Aussie Dollar: Lower to 66.62
• 10-Year Yield: Rockets to 3.71%
• Asian markets: HK down 1.4%, China down 1.2% with Japan down 2.6%.
• US Futures: Dow down 174 Nasdaq down 75

MAJOR MOVERS

• RED +2.63% and it was all yellow. High grade results at Darlot.
• PRN +4.17% broker upgrades.
• STA +3.75% first shipment of HMC (Heavy Mineral Concentrate) completed.
• OZL +1.42% BHP extends DD for another week.
• TNT +11.11% explodes higher on business update.
• WGX +13.25% tracking to guidance.
• IVZ +16.95% good move higher.
• JLG -12.22% COO sells 4m shares.
• INR -15.79% another positive permitting step.
• PBH -13.03% rout continues.
• LTR -10.30% executes Power Purchase agreement
• REA -7.73% DHG -9.12% really listings down?
• SGR -9.43% coming up lemons
• BWX -53.17% not even lipstick on this pig.
• CCX -31.36% retail downturn.
• WR1 -9.66% finalises OTC listing yesterday.
• Speculative Stock of the Day: Nothing on any volume.  

IN THE NEWS

• BWX (BWX) –  BWX came out of a trading halt and reported a statutory loss of $335.6m in FY22 and downgraded FY23 guidance. The company also admitted to using deceptive sales practices known as channel stuffing. BWX also provided an update on debt which they expect to peak at $95m.
• MAAS Group (MGH) has announced an on-market share buyback of up to 10%, to begin in the new year.
• Liontown Resources (LTR) – Executes a binding Power Purchase agreement for the Kathleen Valley project securing approval for a $25m guarantee facility. Zenith Energy will run the hybrid power station for an initial term of 15 years.
• Johns Lyng Group (JLG) has announced that the COO, Mr. Lindsay Barber has sold 4m shares, representing approximately 31% of his holdings, The company has also reaffirmed guidance with a 27.4% increase in sales revenue expected.
• Commonwealth Bank (CBA) – Criminal proceedings against CBA have now been withdrawn due to the limitation period. CBA had previously pleaded guilty to 30 criminal charges between 2011 and 2015 for false or misleading claims.
• City Chic Collective (CCX) – Similar results to their last announcement. Trading is still trending down with only the ANZ region having an increase from the pcp. CCX stated that 1HFY23 results will be significantly impacted by the December period and are confident that inventory will be at the lower end of guidance.
• Growth-Point Properties (GOZ) has issued a revised FY23 guidance, increasing funds from operations to 25.5 cps to 26.5 cps. The company has said they have seen positive leasing activity, including recently entering into a 7.2-year lease with the state government. A distribution of 10.7 cps will also be paid.
• Nine Entertainment Group (NEC) Has issued a market update following DHG’s decreased FY23 guidance. NEC currently holds 60% of DHG but has said that the decreased earnings forecast has not affected their own guidance. NEC is still in line with FY23 guidance.
• Domain Holdings (DHG) – Has issued a market update with a revaluation of their FY23 guidance. DHG has stated EBITDA is now likely to be $48m. DHG has stated that market conditions continue to remain tough with cyclical challenges.
• Monadelphous Group (MND) has announced they have secured contracts totalling approximately $110m. The contracts came from numerous sources including the reappointment to BHPs site engineering panel for three-years and a five-year contract to provide pipeline maintenance services in the Queensland coal seam gas market.
• David Jones has been sold to the Australian private equity firm Anchorage Capital Partners for $100m. This is a significant decrease from the price Woolworths Holdings paid in 2014 of $2.1bn
• AVZ – Omni Bridgeway (OBL) has agreed to fund a shareholder class action against suspended AVZ Minerals for allegedly breaching its continuous disclosure obligations and misleading investors.

ECONOMIC NEWS

• Australian retailers are finally seeing a slowdown in sales.

RBA Board Minutes

• The Board considered several options for the cash rate decision at the December meeting: a 50bps increase; a 25bps increase; or no change in the cash rate.
• Arguments for a 50bps increase stemmed from the fact that inflation remained too high and the economy continued to operate with excess demand
• Arguments for a 25bps increase also recognised the need to bring demand and supply in the economy more into balance, but acknowledged that there had already been a significant cumulative increase in interest rates and that the full effects of this adjustment would take time to occur.
• Arguments for no change in the cash rate placed further emphasis on the lagged effects of the large policy adjustment to date, and the value in proceeding cautiously in an uncertain environment.
• The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.

ASIAN MARKETS

• This is pretty significant even if it sounds innocuous. The BOJ will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous upper limit of 0.25% on its movement range. It kept its target on the yield unchanged at around zero percent and left its short-term interest rate at -0.1%. It also said it would “significantly” increase its bond purchases to 9 trillion yen (US$67.5bn) per month compared with the currently planned 7.3 trillion yen.

• Hong Kong will further ease social distancing rules including rules on banquets, chief executive John Lee told reporters.
• The People’s Bank of China kept its one-year and five-year loan prime rates unchanged in December, according to an announcement. The central bank maintained its one-year loan prime rate at 3.65% and its five-year loan prime rate at 4.30%, in line with expectation.
• China’s best-performing mutual fund isn’t buying into the big market’s reopening story and is instead sticking to value stocks as it bets the economic recovery will remain weak in 2023.
• Lemon prices have doubled in the past four or five days as the Chinese rush to get the vitamin c boost.

US AND EUROPEAN HEADLINES

• Rich investors are betting on double-digit declines in stocks next year, according to the CNBC Millionaire Survey. 56% of millionaire investors surveyed expect the S&P 500 to decline by 10% in 2023.
• Germany reassures NATO on task force after equipment failure.
• Kevin Rudd to be new US Ambassador.

And finally.

Clarence

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