Just when you thought it was safe to go back into the wood

February 13, 2020 - 2 weeks ago
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After Wall Street stocks finished to substantial gains, the ASX 200 started the Thursday morning on a strong foothold, however, by lunchtime, those gains were almost all given back following the release of the new Covid-19 coronavirus numbers.

In a Thursday press conference, China said it confirmed 15,152 new cases and 254 additional deaths.

Those figures include the ones reported earlier by Hubei province under its new diagnosis methodology.

That brings the country’s total death toll to 1,367 as the number of people infected hit 59,804, according to the government.

Losses from some consumer-facing stocks, building products makers, Cochlear (COH) and property groups weighed most heavily on the ASX.

It appeared to be a bright warming start for the bulls on the S&P/ASX 200 index after the overnight’s session on Wall Street displayed a fresh round of buying, lifting all three major U.S. benchmarks indexes to fresh highs as it was reported that the spread of the virus had appeared to have slowed down.

The benchmark S&P/ASX 200 index rallied to a fresh all-time high of 7,145.80, just above 7,144.89, previously posted in January, before tumbling to a finish on Thursday just up +15 points, or +0.21%, to 7,103.2, lifting for a third day, in what was a choppy day session for the local share market, while the broader all ordinaries index closed up +19.3 points, or +0.27%, at 7,204.6.

Consumer staples, telecom stocks and mining shares were lower while all other sectors were managing to hold or add slight gains, led by utilities, collectively up +1.6% after AGL Energy beat expectations.

Australia’s largest energy producer rose +3.6% to $20.22 after reporting a half-year profit of $432 million, down from a year ago but up than what analysts had forecast.

Breville Group was the main shiner on the ASX after surging a whopping +27.63% advance to an all-time high of $25.50 after the small home appliance company reported an impressive +14.1% spike in first-half net profit.

Meanwhile, Warehouse owner and operator Goodman Group advanced +5.8% to an 11-year high of $16.30 after its operating profit climbed +14% to $530.4 million on strong demand from e-commerce platforms and data centre users.

TPG and Vodafone Australia co-co-owner Hutchison Telecommunications both shined after rally after the Federal Court cleared the way for their $15 billion mergers, which the Australian Competition and Consumer Commission had opposed.

TPG gained +11.5% to a two-year high of $8.15 while Hutchison soared +17.9% to a nine-month high of $0.165.

Meanwhile, Telstra slipped -1.6% to $3.76 after its first-half profit plummeted -7.6% to $1.14 billion, in line with market expectations.

Health care stocks, biotechnology manufacturer CSL gained +0.83% to $330.99, closing over $330 for the first time as the blood products giant’s strong run continued, while Ramsay lost -0.61% to $79.42, with Sonic losing -0.66% to $31.51, and Fisher & Paykel Healthcare slipped -1.18% to $23.39, and Cochlear weighed on the ASX after falling -2% to $228.21.

NAB gained +1.4% to $26.49 after Australia’s third-largest lender narrowly beat first-quarter profit expectations with cash earnings of $1.65 billion.

Meanwhile, the other “Fab Four” (three) (banks)) were up as also, with the Commonwealth adding +0.6% to $88.73, while Westpac rose +0.6% to $25.41 and ANZ managed to rise +0.3% to $26.43.

Embattled financial services business AMP fell -0.55% to $1.81 after posting a $2.5 billion full-year loss. The losses were mostly attributed to some one-off costs as the business restructures itself in the light of scathing Hayne Royal Commission reports.

Intellectual property services law group IPH rose +4.7% to an all-time closing high of $9.95 after announcing first-half profit surged +12% to $27.2 million.

Elsewhere, Synlait nosedived -18.7% to $6.54 after the milk processor warned that significantly lower-than-expected infant powder sales caused by Chinese market consolidation would sap its first-half net profit.

Treasury Wine Estates (TWE) plunged -6.16% to $11.13 following its pre-released profit results together with concerns of less demand in China due to the coronavirus. TWE – which owns many of Australia’s best-known wine brands including Penfolds – recorded just a +1.9% lift in net profit to $229.2m for the six months to December.

The result was predominantly held back by its American operations, which have been impacted by competitors flooding the market with the product at low prices.

Meanwhile, the materials sector declined slightly by the end of the day, despite Titans BHP gained +0.4% to $38.54, while Rio Tinto gained +0.5% to $98.01 and South32 rose +1.6% to $2.59, while those gains were offset by Fortescue Metal, down -0.63% to $11.04.

Woodside reported over $500 million in profits over 2019, causing a morning surge in its share price. However, those gains were pared back and ended in the red at $33.74, down by a -0.35% decline.

Nevertheless, Santos gained +1.23% to $8.23, while Origin climbed +2.21% to $7.86, and Oil Search rose +0.63% to $6.42.

The Reserve Bank Governor Philip Low participated in a panel discussion this morning and said, “it is quite likely that we are going to be in this world of low-interest rates for years, if not decades because it is driven by structural factors.”

For now, he added that RBA is not “obsessed” with getting inflation back to 2-3% target in a hurry.

RBA Governor Lowe also urged more from the government to help the economy. “We have not had any fiscal stimulus in Australia,” he said.

“I would like to see both business and government use the opportunity to make investments.

The Australian governments and business can borrow at the lowest rates since Australia became a federation.”

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