Australian Market:

A surprisingly good day in relative terms after the initial compulsory 50 point sell off early. Weak leads kicked us off but as the day wore on and the sky did not fall in, the market clawed back some of the losses for the day and at one stage looking like we may even get to square before easing back into the close and closing down 0.5%.Pretty impressive considering that the Ex Dividends in WBC and NAB were to blame for 18 points of the fall. After the last two days, where Wall Street has fallen over 430 points, it was a great performance from the ASX 200.Chinese data at lunch time helped the sentiment with lower than expected inflation numbers coming in at 1.7% against analysts expectations of 1.9%.As the once in a decade leadership change trundles along it seems like there is scope for some stimulus of their Tiger economy. Or that’s the theory!

The Big Australian #BHP# together with its little brother #RIO# picked themselves up and dusted themselves off but still closed weaker despite the Chinese numbers. Volume was far better today at over $6bn but then there were some exercises from the bank dividend season and significant trading in the Cum Dividend markets of NAB and WBC which crept into that number, but if we continue to get $5bn plus days then brokers all over Australia will eat again.

Next week will be quieter on the Political front but suspect Greece will still be the word as the Troika drags it out before giving them the money. Volatility looks like it will be increasing as we run into the holiday season.

Stocks of Note today: 

  • #ORG# covered itself in glory last night trying to sneak a profit downgrade through to the keeper at 7.10pm.Never going to fool anyone I am afraid, and the stock responded badly. No one likes surprises.
  • Also on the surprise front, #EHL# issued a profit warning with their forecasts falling from $29m to between $23-26m. A 10% cut in forecasts leading to a huge 16% drop in the share price looks a little overdone and maybe we will see bargain hunters emerge in this one next week.
  • In other corporate news #LYC# announced that they had raised $200m just days after they were given the all clear from the Malaysian Government on their controversial treatment plant. The capital raising was done at an attractive 75c (to LYC perhaps) which was where they were before they got the green light.
  • The best sector in the market was Gold shares as buyers were happy to pick up a few bargains as the Gold price has been one of the few bright spots in the markets this week. The theory runs that now Obama is back ,so is Uncle Ben to charge up the printing presses, and this coupled with the problems that continue(and will continue) in what is fast becoming ‘Zombieland’ , have helped the price of hard commodities.
  • #PIR# led the way with #EVN# and #SLR# chasing behind along with #SBM#. Not all that glistens was Gold however as #NCM# and #KCN# underwhelmed.
  • In other hardly surprising news #ANZ# has decided to leave rates unchanged at their fortnightly meeting. They are hardly setting the pace as news this week that #YBR# have linked with the ‘Millionaire’s factory’ to offer cheap home loans at a rate 1.15% below the headline rate offered by the big four. It remains to be seen how effective this strategy will be but it certainly puts some of #MQG# cash to use. Although it  is a sign of the times that they are only hoping to get 5.5% for their money.
  • In the Dog House today in Large Cap stocks were #ILU# and #AGI# on some profit taking after such a good run on word that their machines are the ones of choice for upgrading hotels. Mid Caps also had their share of casualties with #LNC# running out of energy after rumours of moves from Russian Football owners dissipated. In house stocks #NMG# eased as well after the #RSG# finance injection this week.
  • Top mover today was tiddler #GME# on high Gold intersections at its ‘NiWest’ project in WA whilst long time darling #SIR# had a volatile day hitting $2.43 before bouncing back to the joy of the true believers to close little changed on the day.
  • The other big story on the Macro front was the RBA downgrading their forecasts for 2013 due to a slowdown in the Mining sector and Government spending. The RBA predicted year-average GDP growth of 2.25 percent to 3.25 percent in 2013, lower than its August estimate of 2.75 percent to 3.25 percent. They also saw the inflation dragon well and truly vanquished, at least for the time being, and no threat to the economy although jobs growth slowing. They also noted the strength of the currency and the pressures that it brings
  • #CSL# had a good day and continued their climb. ‘Obamacare’ is positive for this one we suspect and the safety of this continues to attract fans. And talking of safety #TLS# is as usual solid as a rock in a crisis as were other defensives like #WES# and #WDC#.On the discretionary spending sector #MYR# stood out and have rallied hard in the last few days, well hard for them. Large volume today also in #CRF# as lines were changing hands in the market around $215.5
  • #CBA# continued to draw strength from its quarterly results this week and showed why they ‘CAN’ whilst #NAB# certainly ‘CANT’.
  • Having been beaten around the head in recent days, #CAB# bounced as the week drew to a close on book squaring. The poor taxi company has been on the nose all week as teh NSW Government dithers as to how to deregulate the Taxi business and the battle of the Taxi ‘Apps’ looks set to make it easier for competitors to muscle in on the lucrative Taxi buisness in Sydney. It appears that this is another industry to add to the list of those that are getting ‘fundamentally’ changed by the growth of Smartphones and ‘Apps’.
  • It has been a big week this week with a US election where Wall Street seems to have gone into a sulk over ‘Wrongney’ losing and we have had a change in leadership in our biggest trading partner and an economy that is far more important to us these days.
  • And the biggest loser of the week award must go to Karl Rove in the US as he managed to spend $1bn of donors money on Mitt, with absolutely nothing to show for it. Although there are a lot of US media companies that will be inviting him to Thanksgiving parties and Xmas. After all he spent most of it on traditional TV advertising. If ever there was a bell ringing for the sector that is it. Maybe someone should tell him about this new thing called Social Media. Obama seems to have got that covered though. And in an aside when is Microsoft Word going to stop trying to spell ‘Osama’ every time you type in Obama. It has been a while now. Perhaps they voted with Karl as well.

Have a great weekend

Clarence!