Henry Jenning’s Market Wrap

Once again a quiet day for the market with volume struggling as the Xmas wind down starts. At this rate it will not be worth opening in the last days before Xmas. Surprisingly good unemployment figures out today showing a headline rate of 5.2% did little to pull the market out of its funk. I get the feeling that those numbers would have come as a surprise to Uncle Glenn down in the Shire. There he was cutting rates this week in anticipation of weaker numbers then along comes this one and whoa..what was that! Maybe that will be the last cut for a while, certainly does nothing to take the pressure off the dollar which I am sure he was keen to do. It appears that the Aussie dollar was caught in a short squeeze and continues to be stubbornly at around that 104.6 level.

Financials were weaker across the board following a report that said Moody’s had forecast a lack of growth for profits in 2013.Commonwealth Bank (A$60.36, -1.2%) led the way with ANZ (A$24.72, -0.2%) and Westpac (A$25.47, -0.4%) following whilst the black sheep in the family NAB (A$24.25, -0.2%) was slightly up! Other financials like QBE (A$10.25, +1.5%) were better as AMP (A$4.77, +1.1%) also continues its recent run. “The Risk On” players were keen again on BHP Billiton (A$34.41, +0.3%) and Rio Tinto (A$59.92, +1.0%) and Macquarie (A$33.33, +1.4%) surprisingly.

Big winners today in large cap stocks were Xero (A$6.06, +6.32%) and Sirtex Medical (A$12.17, +5.1%) which never seems to go down plus Beadell Resources (A$1.11, +3.3%) again soaring as Gold production approaches.

One of the continuing stories is the lack of productivity and the cost blow out in Mining projects. Today we saw Chevron announce that the massive Gorgon project just got bigger but not for the right reasons .Once again we see lack of cost control from major miners, escalating with news it had blown the budget on this one to $52bn.Going to have to find another $9bn down the back of the sofa.

Gold shares had a bad day with Northern Start (A$1.20, -5.88%) continuing to slide as St Barbara (A$1.64, -3.2%) slid despite getting to the business end of their merger with Integra Mining (A$0.505, -1.0%).

Media stocks took their cue from TEN which remained in a trading halt (probably best place for it!!) ,Fairfax Media (A$0.47, -1.1%) ,Seven West Media (A$1.58, -2.8%) and APN News & Media (A$0.285, -5.0%) all suffered

Volume was again an issue again despite a big pick up in the last hour of the session it still is underwhelming, to say the least.

Stocks in the news

The big story today was Ten Network (A$0.325, unch). Now not only is that the company name but it looks like it will soon be the share price too, as they have announced more problems and a super dilutive rights issue at 20 cents. This has been a Billionaire’s Graveyard and continues to focus their minds. It seems a strange situation where management seem to have clung on while all around have been wasted. I guess someone has to go down with the ship!Shuffle those deck chairs and bust out the violins.

In House stocks Karoon  (A$4.52, -4.8%) continues to slide whilst Linc Energy (A$0.805, +3.9%) has enjoyed another good day as it builds upon its recent deal success and looks like it still wants to move a little higher. Mesoblast (A$5.31, -1.5%) seems to have levelled out after the last few days of falls as Pharmaxis (A$1.20, -3.2%) also suffered in silence today.

One of the big brokers in Asia has upped its forecasts on China to 8% and is saying the economy has pulled out of a possible hard landing.

In a sign of what is more to come, Premier Investments (A$6.56, +1.2%) an emerging Aussie Gold Miner has agreed to merge with Canadian Keegan Resources, to create a leading West African Gold company. This area has definitely fallen from favour recently with Papallon Resources (A$1.40, -7.89%) down today and Ampella Mining (A$0.305, -4.7%) suffering in a big way. It wasn’t that long ago that this sick puppy was trading over 3 bucks! They still have $35m in cash and a market cap of around $80m plus a resource of over 3m oz at their Konkera Prospect. Ok they have had some metallurgical problem but still….

Tomorrow’s News Today

The market appears to be going into stasis earlier and earlier every year. As the Xmas decorations get earlier so does the lack of volumes. It does not take too much to push things around. Expect to hear more optimistic noises from the US tonight and potentially more from the whistleblowers on a suggested $12bn loss covered up in Deutsche Bank during the GFC.

Expect more commentary regarding the Greek downgrade overnight and the languishing state of the UK economy. The new Canadian BOE chief is going to have a lot on his plate! The big story for 2013 will be the AAA rating in the UK going the same way as the Empire.

And if there is some really smart analyst out there, I would love to see an index of Hilux (and maybe Ute) sales numbers against GDP growth. I bet there would be a huge correlation. First thing a miner cashed up and bullish needs is a fleet of sparkly Hiluxes..first sign of a housing recovery every ‘tradie’ upgrades his ute..love to get this as an indicator much like the Big Mac indicator of costs around the World.

The market still feels underpinned albeit on low volumes but the Xmas push is on the cards, Congress willing!

 

And tomorrow is Friday…TGIF ..

Clarence

XXX

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