Daily Report

The local market initially bucked the overnight weakness seen in the US to chop around par for the morning before selling picked up at lunch to see the ASX200 close 0.34% lower, tracking back towards the 6700 level. The selling kicked in around the time China inflation data came in, with inflation running hot for November at 0.4%, above the 0.1% expected. Aussie house prices were also solid, with prices rebounding in the quarter by 2.4%, ahead of the 0.2% consensus. The Aussie battler caught a bid on the back of this, and the equity market found a seller.

Iron ore names were solid thanks to some strength in the commodity – word is China is targeting 6% growth and plans to run fiscal deficits for the near term to help build the economy. This is good for steel, and what is good for steel is good for iron ore. This helped materials top the sectors. REITs were the worst hit, falling 1%. Much of the selling here stems from fundies making room for yet another Centuria cap raise in their metro REIT (CMA).

Overall, the ASX 200 fell -23pts /-0.34% today to close at 6706. Dow Futures are trading marginally higher by +17pts/+0.06%

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE

IOOF (IFL) +0.64%; started the day strong thanks to APRA putting the final stamp of approval on the OnePath acquisition from ANZ. The prudential regulator spoke to IOOF’s progress towards managing conflicts in signing off on the deal. The rally was short lived – at one stage IFL was up 5.8%, only to close just marginally higher – with UBS pouring some cold water on the stock. The analyst there was keen to point out the headwinds facing the industry with additional compliance costs to be incurred. They did keep their outperform rating however. MM likes IFL and would be keen to buy around $7.50.

IOOF (IFL) Chart

Bank of Queensland (BOQ) -2.01%; the regional bank held their AGM today with the bank trading lower as they continue to talk down earnings. All banks have struggled with tightening margins and slow loan growth, but the regionals in particular are facing a difficult time on costs. BOQ talked to further tech investment crimping earnings in the short term but eventually helping the bank handle further regulation requirements and an increase in loans. They will be back in front of investors in February to unveil their new strategy. One positive takeaway was reiterating there were no anti-money laundering concerns at this stage. Not one for MM here.

Bank of Queensland (BOQ) Chart

Broker moves;

· Estia Health Raised to Buy at Moelis & Company; PT A$2.78

· Estia Health PT Cut to A$2.40 from A$2.60 at Morgan Stanley

· Newcrest Raised to Hold at Morningstar

· Magellan Financial Cut to Sell at Morningstar

· Bluescope Cut to Sell at Morningstar

· OZ Minerals Cut to Underperform at RBC; PT A$9.50

· MMS AU Raised to Neutral at Evans & Partners Pty Ltd

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