Market Wrap

Another good day in the market as positive vibes from overseas fed through to give us an up 30 day. An absence of bad news has given the bulls a reason to punish the shorts and those pesky bears. Options expiry also helped as some of the short call sellers were active buying back their stock positions. Next Tuesday we have the RBA rate decision and the consensus appears to be delicately balanced as to whether they will cut rates. We shall see, but the market is looking for positives and finding them at the moment. The ASX 200 cruised through 4500 ensuring a good finish to the month and importantly make it six months in a row of rises this year. Rio Tinto (A$58.75, +2.7%) led the charge following their cost cutting announcement yesterday with BHP Billiton (A$34.39, +0.5%) and Fortescue Metals (A$3.91, +1.3%) joining in for good measure. Macquarie (A$32.76, +2.7%) had a great day with the stock knocking on $33.Other banks also partied hard with Westpac (A$25.50, +1.1%) ANZ (A$24.36, +1.1%) and even NAB (A$24.30, +1.5%) performing strongly. The people’s favourite Telstra (A$4.31, unch) had a dull day as rotation into risk continues.

Mining services were mixed today with Maca (A$2.15, -1.8%) one of the worst whilst Bradken (A$4.66, +4.5%) and Boart Longyear (A$1.435, +3.6%) bucked the weeks negativity and Resource Equipment (A$0.32, +3.2%) were pumping.

Media stocks were a little weaker with Fairfax Media (A$0.485, +2.1%),Seven West Media (A$1.625, +0.3%) and Ten Network (A$0.365, unch) all in profit taking mode whilst retail stocks were pretty lacklustre and hoping for a good Xmas.

Turnover was far healthier today at $6.7bn with option expiry yesterday adding to the numbers (unfortunately).

News out of Asia also helped the tone with Japan’s factory output unexpectedly rising the most since December on production of parts for devices including Apple’s iPhone, providing a bright spot in an economy poised to shrink for a second straight quarter. Even news of North Korea testing some rockets was overlooked in the rush to get the blue order slips filled in.

Stocks in the news

Amongst today’s winner are some of the previously unloved like Whitehaven Coal (A$2.97, +4.2%) as Big Nathan looks to be ok at the moment as his financier is happy to wait apparently and Alumina (A$0.95, +3.3%) long in the dog house.

Newcomer Xero (A$5.50, +8.9%), which is a cloud based accounting software company, has continued to build on its strong debut in November.

Metcash (A$3.43, -2.3%) was a loser today as comments on lower earnings hit the market. Blaming it on deflation in its stores and closure of more Franklins stores ,the company suggested that a fall of 2-6% of underlying earnings may be on the agenda. One of yesterday’s big losers was Biotech Company Starpharma (A$1.16, +0.9%) which failed to recover today despite moving to clarify their comments about the success of their treatment and their AGM today.

Big crossing today in Southern Cross Media (A$1.12, +2.8%) with 36m shares going through the market at 1.08.Maybe Gina is looking at other media assets to add to her empire.

In house stocks today Buru Energy (A$2.87, -0.3%) continued to feel a little pressure after the latest drill results were mildly disappointing to the market. We remain very positive on this one and this week’s presentation at our Energy conference was very interesting and positive. Another conference participant Roc Oil (A$0.465, +5.7%) looked good today drawing in the buyers.

Aquila Resources (A$2.32, -3.3%) said it had not yet reached an agreement with its partners on their $7.4 billion WA iron ore project but was hopeful of a resolution early next year.

Qantas Airways (A$1.325, +0.4%) continue to hold off the Barbarians at the Gate from breaking the company up but today’s release of traffic numbers will do nothing to help the besieged Joyce troops. Qantas’s monthly traffic figures published today showed an increase in the number of domestic passengers, the extra seats that have gone into the market in recent times has resulted in a fall in revenue. Virgin seems to be taking it to them hard and fast.

Lynas (A$0.64, -5.2%) the rare earths miner has started production at its controversial Malaysian plant, prompting shares in the rare earths miner to rise initially before wilting in the Sydney heat as the day wore on..

Metcash (A$3.43, -2.3%) downgraded its earnings guidance for the current financial year blaming loss of operating leverage due to price deflation in its grocery business as well as the closure of more Franklins stores than expected thanks to delays in the acquisition caused by the competition watchdogs legal challenge to the transaction.

Tomorrow’s News Today

It’s a new month Monday as we wind down into the Xmas lull. Also the upward pressure from punters covering option positions will abate somewhat. Expect more grandstanding from the US and the markets to remain volatile as computers trade the latest headlines. Next week will start slowly and then we will wait for news from the RBA. Of course it is really up to the big banks what they pass on, if anything! Assuming the RBA does cut that is.

There does seem to be a slightly better feel to the markets heading into Xmas so let’s hope that lasts. Expect some consolidation next week before it tries to push higher again 2% this week and above 4500..not too bad…Remember 76% of December are up and by an average of 3.5%.That would put us at 4650!

And here’s a scary and sobering thought to ponder over the weekend 47m Americans are on food stamps!

Have a great weekend

Clarence