Overnight: And We’re Back

By Greg Peel

Fighting Back

Trade on the ASX these past three sessions suggests the market considers the index-wide sell-off that was triggered by the Westpac ((WBC)) debacle was unnecessary. The sharp two-day sell-off actually bottomed on the afternoon of the second day and the ASX200 has rallied back ever since, ex Westpac, which is now copping it from all sides as ASIC weighs in.

Traders were a bit overexcited yesterday morning nonetheless, sending the index racing up 50 points by late morning before an afternoon drift-back.

Telcos (+1.1%) topped the boards yesterday, ahead of Telstra’s ((TLS)) investor day tomorrow. Energy (+1.0%) ignored a dip in an otherwise recovering oil price while materials (+0.6%) are enjoying the slow grind back for the iron ore price and healthcare (+0.9%) has resumed its upward push.

Sigma Healthcare ((SIG)) rallied 9.0% yesterday after announcing a deal with Chemist Warehouse, although the stock is not in the index. Sigma was not the only stock to see a big move yesterday.

In the mire that is banking and AUSTRAC scrutiny, Afterpay Touch ((APT)) was given a clean bill of health from the independent auditor, implying BNPL was not being used to launder money or fund terrorism. A low-hanging cloud has thus been lifted from over Afterpay and the stock rallied 7.0% to top the index leaders’ board.

Taking the silver was Caltex Australia ((CTX)), after the company announced it would IPO a 49% stake in its convenience store property portfolio.

Yesterday’s biggest loser was Nufarm ((NUF)), which had been enjoying a reprieve from the depths of the drought after selling its LatAm business, but yesterday announced a -$9m accounting whoopsy, which was bad enough, but this was backed up by a profit warning relating to difficulties in all regions, not just east coast Australia, to the point earnings will be “significantly lower” in the first half. The stock plunged -17.5%.

It’s beginning to look a lot like Christmas, in that investors appear to be assuming December as always (except last year, and several other years), will bring a Santa Rally. But the ASX200 is not likely to return to giddy heights without the banks. Westpac fell another -1.3% yesterday and the only Big Four not to close in the red again was Commonwealth Bank ((CBA)).

Meanwhile, Bank of Queensland ((BOQ)) has bitten the bullet and is looking to raise capital.

Wall Street is back at new all-time highs once more after last night brought some more encouraging news on the trade front, hence our futures are up 29 points this morning.

You better watch out, you better not cry…

Intellectually Speaking

“Strengthening IPR [intellectual property rights] protection is the most important content of improving the IPR protection system and also the biggest incentive to boost China’s economic competitiveness,” said a document released by the General Offices of the Communist Party of China Central Committee and the State Council, yesterday.

Dow Jones reports the guidelines advise “speeding up the introduction of a punitive compensation system for infringements of patents and copyrights, and strengthening the protection of trade secrets, confidential business information and their source codes.”

In addition, it also says China needs to step up international cooperation in IPR protection and help communication between domestic and foreign rights holders and provide support in overseas IPR disputes.

Now that’s what we’re talking about, said the White House. Buying agri-products is all well and good but it ain’t going to get your tariffs rolled back.

To that end, White House national security advisor Robert O’Brien suggested a phase one deal is still possible before year-end but, wearing his security advisor hat, also warned the US would not “turn a blind eye” to Hong Kong, the South China Sea or anywhere else Chinese activity raises concern.

Wall Street was happy, sending all three major indices once more to new all-time highs.

And when Wall Street is happy, it likes to put together big M&A deals. The proposed merger between major discount brokers Charles Schwab and TD Ameritrade is set to go ahead, Wall Street learned last night, and the much anticipated acquisition of Tiffany’s by French luxury giant LVMH was also confirmed.

LVMH stands for Louis Vuitton Moet Hennessy, which sort of gives you an idea.

The biggest winning sector on Wall Street last night were nevertheless the chip-makers, which are the first-movers in either direction on good/bad trade news. Clearly IP is critical in the tech game, so any hint of a breakthrough is a positive, hence the Nasdaq’s outperformance.

Commodities

Look out, iron ore is gaining momentum, while base metal prices slumber.

Any positive trade news is positive for the oils and negative for gold.

The Aussie is off -0.2% at US$0.6777.

Today

The SPI Overnight closed up 27 points or 0.4%.

The RBA governor will speak today for the first time since the shock October jobs numbers.

A slew of US data tonight includes consumer confidence and new home sales.

Today’s list of AGMs includes those of Beach Energy ((BPT)), Bravura Solutions ((BVS)), Lynas Corp ((LYC)) and Seek ((SEK)).

The Australian share market over the past thirty days…