Monday 6th February – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 slipped 19 points to 7539 (0.3%) on tepid trade as resources were sold off in lithium and gold miners. NCM held up the Gold Index but the reality was a broad sell-off. Only NCM, RIO and BHP in the green today. Lithium stocks under pressure, IGO off 1.4% and PLS down 2.5% with LTR falling 3.9%. Gold miners hit hard as bullion fell, RRL down 1.0%, SLR off 3.6% with NST down 0.9%. NCM rallied 9.3% on news that Newmont had approached the company with a script bid. Energy stocks slightly firmer with WDS up 1.2% and STO up 0.3%. Coal stocks better, WHC rallying 2.9%. In the industrials, REITs fell back to earth with a thud. GMG down 2.5% and GPT down 2.1%. Losses across the board in industrials, Healthcare slid led by CSL off 0.6% and SHL down 2.2%. Tech weaker with the All–Tech Index down 1.2%. WTC falling 2.9% with CPU up again by 2.4%. Banks eased, the Big Bank Basket down $192.06 (0.3%) and MQG off 0.8%. In corporate news, NCK tumbled 13.0% on its results, no guidance and disappointing dividend not helping. MFG unchanged as FUM actually rose despite outflows slowly. PMT up another 9.6% on extension to the recent strike length. On the economic front, retail trade numbers with Asian markets falling as balloons pop. Japan up 0.4% HK down 2.4% and China down 0.9%. 10-year yields 3.46% again. Dow Jones futures down 86 points. NASDAQ futures down 60 points.

HEADLINES

Winners: NCM, MSB, FCL, BPT, IPL, MAD, WHC, RIC.
Losers: NCK, RED, CTT, WGX, SDR, LKE, AGY, BOE, SLX.
Positive sectors: Iron ore. Coal.
Negative sectors: Banks. Tech. Lithium. Gold miners.
High 7568 Low 7531. Narrow range.
RBA tomorrow.
Big Bank Basket: Falls to $192.06 (0.3%)
All-Tech index: Falls 1.2%
Gold falls to $2704
Bitcoin: Slips to US$22,909
Aussie Dollar: Falls to 69.41c
10-Year Yield: Back up to 3.46%
Asian markets: Japan up 0.4% HK down 2.4% and China down 0.9%
US Futures: Dow down 86 Nasdaq down 60.

MAJOR MOVERS

NCM +9.27% Newmont makes an conditional approach.
MSB +8.61% continuing to push higher.
TYR +2.78% Potentia granted DD.
IHL +11.11% TGA surprise on classification of psilocybin.
BPT +3.70% Waitsia Stage 2 update.
MAD +3.00% conference presentation.
PPC +1.77% daily share buyback notice.
PMT +9.64% drill results bring more cheer, extends strike length.
MAP +7.25% recent positive first animal data.
SKT -9.02% new director gloss wears off.
ASN -12.73% profit taking.
NCK -13.04% so far not so good. No guidance and dividend disappoints.
WGX -8.13% gold miners on the nose.
WBT -5.4% profit taking.
Speculative Stock of the Day: EMD +63.16% expands MDMA programs after TGA decision. Late surge and good volume.
Above Average Volumes: BGE, IBX, AUA, EMD, DBF, AHF.

COMPANY NEWS

Newcrest Mining (NCM) – Confirmed it received a new conditional, non-binding proposal from Newmont Corporation to acquire the company. The bid would entitle Newcrest shareholders to receive 0.380 Newmont shares for each Newcrest share held and is subject to various conditions and approvals.
BHP (BHP) – Received approval for its proposed acquisition of OZ Minerals (OZL) from the Brazilian Administrative Council for Economic Defence. The acquisition is still subject to approval from OZ Minerals shareholders and the court.
Beach Energy (BPT) – Reached a deal with Webuild to complete the Waitsia Stage 2 project, subject to the finalisation of the Clough administration. The revised total capital expenditure estimate for the project is $400m to $450m, up from the original estimate of $350m to $400m.
Aurizon (AZJ) – Received approval from the ACCC for the sale of its East Coast Rail business to Magnetic Rail. The sale agreement is now unconditional, and the two companies expect to complete the transaction in February 2023.
Nick Scali (NCK) Reported net profit after tax for the half-year ending December 31st, 2022 was $60.6m, an increase of 70.2% compared to the prior corresponding period. The company’s first-half revenue was $283.9m, 57.4% above the prior corresponding period, due to a large outstanding order bank and record deliveries. Net sales decreased 3%.
Endeavour Group Limited (EDV) is introducing a new $1.89 per carton handling charge to beer suppliers, starting May 1st, to offset rising costs following a review of its supply chains.
Anteris Technologies LTD (AVR) has entered a non-binding agreement with Yorkville Advisors for a $50m SEPA facility to provide ongoing capital for the company. The agreement allows Anteris to issue new shares in exchange for drawdown up to a maximum of $50m over 36 months, subject to due diligence and internal approvals by the investor and entry into a binding agreement by the end of February 2023.
DDH1 Limited (DDH) released preliminary unaudited results for H123 showing growth. Revenue up 15.7% YoY and the company performed well in key areas such as revenue per rig, operating EBITDA, and ROIC. The CEO, Sy van Dyk, mentioned that despite elevated underlying costs due to inflation, the costs are moderating and the company is making meaningful rate increases in contract renewals.
ASX Limited (ASX) released its Monthly Activity Report for January 2023 that showed that the total capital raised was $3bn, down 83% pcp. The average daily number of trades down 33% and the average daily value traded was down by 38%. The average daily movement of the All Ordinaries Index was 0.5%, down by 0.6% pcp. The average daily value of futures was up 13% compared to the previous year and the average daily options volume was up 88%.
ARB Corporation Limited (ARB) provides an update for the half-year. Sales revenue of $340.9m, down 5.1% from the previous year, and a profit before tax between $64.0m to $64.6m, down 29.7%. The company remains positive with a strong customer order book and plans for new product development, expansion, and partnerships. The results will be released on February 21^st.
Cobram Estate Olives Limited (CBO) provides an update to shareholders on their 2023 Australian crop and flood situation. The company’s biennial olive crop is expected to be higher yielding in FY23, and capital projects such as the Boort olive mill upgrade and new plantings are progressing well.
88 Energy Limited (88E) raised A$17.5m by issuing 1.8b shares at a discounted price of A$0.0095 per share. The funds will be used to finance the Hickory-1 well, new acreage, potential expansion, and working capital. The company has enough cash to cover expenses for a year.
Hancock Energy has won control of Warrego Energy (WGO) by increasing its stake to 50.54% through Mineral Resources (MIN) selling its shares into Hancock’s 36c offer. This confirms the offer level at 36c per share instead of 28c if its interest in Warrego remained below 40%.

ECONOMIC & OTHER NEWS

Retail Trade

The December 2022 seasonally adjusted estimate:

Fell 3.9% month-on-month.
Rose 7.5% compared with December 2021.
In volume terms, the seasonally adjusted estimate fell 0.2% in the December quarter 2022.

Growth in food-related volumes offset the weakness in discretionary spending. Food retailing (+2.1%) had the largest rise, with volumes rising for the first time since COVID-19 Delta lockdowns ended. Despite growth in this quarter, food retailing volumes were down 1.4% compared to December quarter 2021.
Consumer price rises are expected to slow to about 4% by December after reaching a 32-year high of 7.8% last quarter, Diana Mousina, senior economist at AMP, said in a research note Monday.

ASIAN MARKETS

Adani group’s 10 stocks all fell in early Indian trading. Adani Enterprises, the flagship company, dropped as much as 9.7%.
Chinese banks are touting a wide variety of retail lending products including preferential interest rates and incentives such as gift cards on e-commerce platforms to lure customers to their retail loan offerings. The Jiangsu branch of BOC is offering annualized rates as low as 3.6% on a consumer loan product until the end of March.
Active foreign fund managers are buying mainland China and Hong Kong stocks at a pace not seen since 2018, according to EPFR.

US AND EUROPEAN HEADLINES