Stocks rally as Santa prepares his sleigh (PRN, SIQ)

James Gerrish

Market Matters

A booming session for the ASX today well and truly outpacing other regional markets while US Futures were also fairly muted during our time zone – it was simply a case of some aggressive catch up with buying across the board. All sectors closed higher today, even the more defensive areas like consumer staples and real-estate managed to cop a bid tone in what’s very typical of a Christmas style rally – i.e. fuelled by a lack of selling more than aggressive buying.

Banks can often be the difference and today they were up strongly, around ~1.70% a pop for the big four bouncing nicely from oversold levels, Westpac now knocking on the door of $25 after hitting a recent low of $23.86, however it wasn’t all beer and skittles, Smart Group (SIG) tanked 15% while the old Ausdrill, now called Perenti (PRN) fell by 19% after losing a contract, more from Harry on those below.

Overall, the ASX 200 added +110pts /1.63% today to close at 6849. Dow Futures are trading marginally higher up 7pts/0.02%

ASX 200 Chart

ASX 200 Chart


Smart Group (SIQ) –15.21%; the salary packaging stock business took a big hit today after receiving notice from the company’s underwriting partner of changes to the various products terms. The contract with the underwriter is up for renewal in May next year with the new terms coming into effect from July with all authorised representatives impacted – including Smartgroup. SIQ expects a $4m hit to earnings, or around a 5% impost – which doesn’t seem like a lot, but it results in no growth in earnings in FY21 based on consensus expectations.

Smartgroup (SIQ) Chart

Perenti (PRN) -18.9%; mining services firm Ausdrill has had a tough time trading since changing its name to Perenti with the slide picking up pace today. Shares were off after the company announced an equipment hire contract with Ghana Manganese Company (GMC) had been terminated. The decision by GMC was a result of pressure from the Ghana Government to limit production at the mine. While Perenti remained confident it could recoup some of the lost payments out of the contract and redeploy the capital and equipment to other mines in the area, the company downgraded NPAT guidance around 15% to $115m-$120m for FY20. Not one to catch the falling PRN knife at this stage.

Perenti (PRN) Chart

Broker moves;

  • Z Energy Raised to Outperform at Forsyth Barr; PT NZ$4.68
  • Z Energy Raised to Neutral at Jarden Securities; PT NZ$4.35
  • Bluescope Raised to Overweight at JPMorgan; PT A$17
  • Bluescope Raised to Outperform at Macquarie; PT A$16.50
  • Pushpay Raised to Outperform at Macquarie; PT NZ$4.61
  • Decmil Cut to Hold at Argonaut Securities; PT A$1.10
  • QBE Insurance Raised to Buy at Bell Potter; PT A$13.60

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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