Marcus Today End Of Day Report
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- ASX 200 tumbles 193 points to 5833 as Wall Street smashed.
- High 6026 Low 5796. Good volumes.
- RBA meeting leaves rates unchanged.
- Retail Sales fall more than twice for December thanks to household debt.
- All sectors hurt today. Banks the worst hit.
- REITs and Bond proxies slide.
- High PE stocks vulnerable.
- AUD slips to 78.51c as USD gains ground on rate rise fears, and poor retail sales data.
- AUD Bullion price US$1,338.
- Bitcoin falls below US$7,000.
- US futures down 711 - volatile and searching for a base.
- Asian markets hit with CSI 300 down 2.45% and Japan -5.35%.
FUTURES AND HIGHS AND LOWS
- HENRY CALL – The 'submarine risk management' theory in times of trouble. We have built up substantial cash holdings in our SMAs over the last week giving us firepower when the market bottoms. Preservation of capital is our mantra in volatile times. We have also started a shopping list of bargain stocks for the 'February' sales.
- TRADING PORTFOLIO – We’ve been stopped out of a few stocks today which is no surprise.
- SMALL STOCK PORTFOLIO – Interesting to see that copper and other metals were stronger in the face of the correction. Good for MLX. Henry is keeping an eye on things.
- INSIDERS – An interesting update on WHA.
- INSIDERS CONNECT WITH US - We invite you to send us your own stock ideas. We also have the facility for you to email us any questions. Click on the "Ask Marcus Today" button in the newsletter or below - Ask us anything:
Advancers and Decliners
- LHC +40.47% 365c bid from private equity.
- WGX +4.21% Aussie gold producers doing well.
- ASB +0.57% US defence exposure.
- OZL -1.56% copper price rises (ran out of steam).
- WTC -10.73% high PE stocks sold off.
- CLQ -8.85% lithium stocks suffer.
- BIG -12.05% high PEs under pressure.
- A2M -5.94% profit taking.
- MFG -6.35% acquisition and profit numbers.
- WHA -12.23% acquisition of ingredient manufacturer.
- Biggest risers – AJC, LHC, LNY, NEW, TAU, WLC, SXA.
- Biggest fallers – BDI, CVS, EMP, MSR, RMT, JHL, IEC.
- Macquarie Group Limited (MQG) –5.30% Expects a 10% lift in annual profit following ‘satisfactory’ trading conditions in the latest quarter. The investment bank also pointed out its financial position ‘comfortably’ exceeds regulatory requirements with a capital surplus of $4.1bn. Macquarie said profit contribution from its commodities global markets businesses and Macquarie Capital arm were lower due to the timing of income associated with transportation and storage agreements
- Electro Optic Systems (EOS) +5.50% The company has tapped the market for $60m plus a $5m SPP with strong demand reported. The company has recently announced a significant new order for $410m from an undisclosed country. The company share price will come under some pressure after it returns to trade. The deal was done at the closing price.
- Magellan Financial (MFG) -6.35% The company has announced two strategic acquisitions this morning. The acquisitions are for Airlie Funds Management and Frontier Partners, its US distribution arm, for $15m in cash and 4.5m MFG shares worth around $140m. Magellan, which announced a 33% fall in interim profit to $65.7m today, said the deals would "strengthen its retail funds management business in Australia and add significant focus to its institutional distribution activities in North America".
- Retail sales dropped 0.5% in December, compared to the 0.2% decline analysts had been expecting. Over the quarter, sales rose 0.9%, compared to the 1.0% increase forecast.
- The trade balance recorded a deficit of $1.36bn compared to the $0.2bn surplus were forecast.
- The RBA held the cash rate unchanged at 1.5% today - as widely expected. While saying the Australian economy grew at around its trend rate over the year to the September quarter, and is expected to average around 3% over the next few years, policymakers judged the outlook for household consumption as uncertain. RBA governor, Philip Lowe said this:
- Business conditions look positive.
- Increased public infrastructure investment continues to support the economy.
- Employment growth was strong over 2017 and unemployment declined in all States.
- Inflation remains low, both CPI and underlying inflation running under 2%. Forecasts are for inflation to pick up gradually as the economy strengthens.
- Housing debt continues to outpace income. APRA has introduced supervisory measures to address medium term risk.
- Housing prices are little changed but conditions eased in Sydney. Additional supply of apartments in Eastern capital cities is scheduled to come on stream over the next couple of years and rent increases are set to remain low in most cities.
ALL ORDS SECTOR SUMMARY
ALL ORDS TOP MOVERS
ALL ORDS BOTTOM MOVERS
ASX 200 SECTOR SUMMARY
ASX 200 TOP MOVERS
ASX 200 BOTTOM MOVERS
BOND MARKET UPDATE
- One Tokyo ETF fund the Velocity Shares Daily Inverse VIX short term traded note has fallen 80%. Nomura Europe Finance announced that its Tokyo-listed exchange-traded inverse VIX product "will be redeemed early, after a condition for early redemption was triggered due to movements in the underlying index".
EUROPE AND US MORNING HEADLINES
- Jerome Powell has an interesting first day at the Fed.
- Paul Tudor Jones said inflation is about to appear “with a vengeance” and may force the new Federal Reserve chair to accelerate interest-rate hikes.
- Unwinding of positions betting on continued low volatility, known as index-option gamma hedging, short-volatility trades and volatility-targeting strategies were also behind the outflows according to JP Morgan. More volatility may be triggered up to US$100bn in outflows as systemic approaches gather pace.
- The Saxo analyst who predicted a 10% correction says the declines will be short lived. He believes that 3.5% - 4% yield is the danger levels for a bear market.
- Broadcom raises Qualcomm bid to US$146bn.
- The chief executive of Lululemon, the yoga pants maker, has abruptly resigned after falling short of “standards of conduct”.
- Lloyds Banking Group said it was cutting 930 jobs.
- Super Bowl pulls in smallest audience in nine years.
Henry Jennings has been involved in financial markets for over 35 years as both a trader and a broker in London and Sydney.
Starting his career in London trading derivatives and moving to Australia in 1989, Henry eventually settled at Macquarie Group, rising to become a Divisional Director responsible for Equity Trading in Australia. For the last decade, Henry has been involved in private client broking and now writes exclusively for the renowned financial newsletter Marcus Today. Henry regularly appears on ABC TV and Sky Business as a market analyst, commentator and strategist and has presented at various conferences most recently for the AIA on the Gold Coast.
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