Well, welcome to the bull market of 2013 as a combination of expiry days squeezes, Chinese PMI data and just general optimism came to town(again). Chinese manufacturing came in with a PMI of 51.9 which is bullish for the turnaround story, so after fidgeting around for the first few hours, it was all systems go. Banks led the charge with Australia and New Zealand Banking Group (A$26.00, +0.2%),Westpac Banking (A$27.10, +1.3%) and especially National Australia Bank (A$27.09, +1.3%) showing a clean pair of heals. Commonwealth Bank of Australia (A$63.24, +0.9%) joined in the fun and even Macquarie Group (A$37.07, +0.9%) made hay while the sun shone. Telstra (A$4.56, +1.1%) was once again a stand out on the move as they appear to moving into new areas and almost becoming a growth story as well as the solid dividend story. All the themes of 2012 are still in force with yield being the standout stock performers. Defensives seems to be a little out of favour with Woolworths (A$31.17, +0.1%) and Wesfarmers (A$38.01, +0.4%) lagging as well as CSL (A$52.75, +0.2%). The S&P 200 has closed above 4800 and is defying the sceptics as we climb the wall of worry. There still seems to be a vast stash of cash on the sidelines waiting for the pullback. It may be a while at this rate and the ‘FOMO’ (Fear of Missing Out ) or just greed will continue to push stocks higher especially as rate cut mania starts up in February.
Stocks in the News
The biggest story in town today was Linc Energy Ltd (A$2.67, +23.6%) once languishing at 60 cents pre Xmas, hit $2.87 today as news of the massive potential of SA’s Arckaringa Basin continued to reverberate around the market. Undoubtedly there were some non-believers who have been caught very short on this one and its performance will pop it back in the ASX 200 the way it is going and that will cause those funds that sold to buy back in, only this time much higher.
News in the Adelaide Advertiser that the Basin contained $20 trillion worth of oil seemed a little over the top but Peter Bond ,who is a very happy man at the moment, did play down the possible dollar value of the basin although punters seemed to take little notice. It is big but they have a long way to go yet. But what a run.
Other good performers today included Aristocrat Leisure (A$3.51, +5.4%) and Cabcharge Australia (A$4.63, +2.9%) which are trying to claw back recent losses as the Taxi Industry has been out of the spotlight over Xmas.
In the naughty corner today were Discovery Metals (A$1.30, -7.8%) and Panaust (A$3.05, -9.0%) after some disappointing quarterly results together with Sims Metal Management (A$9.04, -1.7%) which has discovered that all is not well with its UK recycling business. Someone seems to have pulled a swifty on the poor Australian company and overstated the amount and value of its inventory in Wales. The CSI team have been sent in and the market will have to wait for more news with the release of their first half results but nothing good here.
In other news Newcrest Mining (A$23.98, +1.8%) were smacked earlier after their latest production report only to recover after some further reflection. Seems that this one is a permanent disappointment and although there were some signs of problems still was slightly better than their usual announcements.
In other Gold stocks Kingsgate Consolidated (A$4.68, -6.6%) continued to wag its tail and as another perennial disappointment liked up to its MO and did disappoint after all. Nothing to see here. Time to move on.
In the NT Energy Resources of Australia (A$1.41, +5.6%) has announced a long overdue deal with the local landowners to give them more return from their lands plus some social programs to help the local population.
Production numbers from Fortescue Metals Group Ltd (A$4.63, -0.6%) with shipments of around 19million tonnes in the quarter were pretty much in line and the stock went nowhere.
In house stocks it was good to see Nucoal Resources (A$0.185, +12.1%) starting to work its way higher again. Unfortunately another underwhelmer was Oz Minerals (A$6.85, -6.3%) which came out with worse than expected quarterly report showing cost blow outs in the longer term. Its seems to be a tough business this mining sometimes.
In the retail space no one can hear you scream as Noni B Limited (A$0.75 -13.79%) fessed up to the market that its pre-tax will be hit from $2.4m to around $1.8m.Although Myer (A$2.44, +1.7%) was a tad better on US reports that it made perfect sense to merge David Jones (A$2.39, unch) and Myer (A$2.44, +1.7%). Just as it made perfect sense for RIO to buy Alcan.
Tomorrow’s News Today
There are a few certainties in life, death, taxes and the US market is heading for an all time high. Despite the ‘dreadful’ Apple results infecting some US sentiment, the markets will continue to grind higher. In fact after the 11% fall in Apple after the market I suspect this one will start to attract buyers. There is nothing wrong with making $13bn in a quarter in profit. And they are stuffed with cash and they yield more than T bills and certainly have a better outlook than the Government .P/E of around 10 and buckets of cash. Still a great business and one I am sure Mr Buffet is looking at down here!
I find it amusing that the big hitting strategists from the ‘Mega Brokers’ are now calling the market ever upwards. Of course they have waited until it actually went ballistic to start changing their forecasts. They are forever looking in the rear view window, it’s like when Alan Kohler finally got bullish yesterday after being bearish for 2012.Nice one Alan.
Here we have been bullish for some time and this confidence will continue especially with the US Debt ceiling now not being a ceiling more a moveable polystyrene panel in the roof.
The World’s great thinkers are in Davos at the moment ,meanwhile North Korea has stated that it will conduct Nuclear Tests again with the US in its sights. This was enough to cause the Chinese markets to take a deep breath and some profits. Expect to hear more on this in the coming days. That and the results of a company that makes devices to listen to music and calls your friends.