Market review

Felt a bit like the Grand Ol’ Duke of York today as he marched them up to the top of the hill again after yesterday’s rout. Volatility is back and volume too, so that’s a good thing for the traders. Right? Well it may be but feels like the computers are in charge of the asylum a little. After feeling that yesterday was the start of a healthy pullback everything was just ‘Get back in there and buy Mortimer’. Once again concerns were shrugged off in the US and this fed through into a very strong day again with the market opening strongly and then just kicking again before the euphoria subsided on the RBA decision to leave rates unchanged. Once again financials led the way with the banks front and centre, Australia and New Zealand Banking Group (A$28.87, +1.8%) Westpac Banking (A$31.25, +2.9%), National Australia Bank (A$30.59, +1.6%) and Commonwealth Bank of Australia (A$68.68, +2.3%) all piled on the gains after bearing investor wrath yesterday. Other financials also powered ahead with AMP (A$5.30, +1.5%), Bank of Queensland (A$9.30, +3.4%), Bendigo and Adelaide Bank (A$9.98, +3.9%) and Insurance Australia Group (A$5.75, +3.4%) all very positive. Resource shares improved with Sirius Resources NL ($3.34, +6.03%), Sandfire Resources NL (A$6.80, +5.6%) and Kingsgate Consolidated (A$3.66, +4.9%) leading them higher. BHP Billiton (A$35.40, -0.5%) resisted the temptation to join in but RIO Tinto (A$63.60, -0.1%) bucked earlier weakness and pushed into the black but Fortescue Metals Group Ltd (A$4.34, -0.7%) failed to hang in to small gains.

Better retail figures also helped our department stores with David Jones (A$2.97, +3.5%) and Myer (A$2.85, +2.5%) all seeing green and the most shorted stock in the market still, JB Hi-Fi (A$13.44, -0.8%), managed a small gain. Even Political football Telstra (A$4.57, +1.1%) had a good day today with other defensives also strong again as Woolworths (A$35.15, +3.1%), Wesfarmers (A$42.20, +2.7%) and Westfield Group (A$11.24, +1.2%) all improved. In other industrials Brambles (A$8.46, +0.1%) and Amcor (A$8.92, +3.1%) were also in favour. Media stocks had a positive day too with Southern Cross Media Group (A$1.63, +3.5%) continue to improve as rumours swirl around about Channel Nine looking at some sort of deal. Looks like the media landscape is set to change this year being an election year, APN News & Media (A$0.30, -1.6%) was feeling the love as was Seven West Media (A$2.36, +0.9%).

With better economic times Seek (A$10.25, +1.8%) improved as did other net favourites Flight Centre (A$33.38, +2.9%) and Carsales.Com (A$9.20, +3.5%), however Wotif.com (A$4.97, -1.0%) continued to suffer the slings and arrows. Worse performer was Boart Longyear (A$1.525, -9.2%) after its recent appointment of a new CEO. Seems the big bounce has finished for this one and maybe more downside to come.

In energy stocks today Woodside Petroleum (A$36.63, +0.3%) and Santos (A$13.11, +1.0%) were the stand out. Smaller energy stocks were on show at the Petroleum Conference at the Wentworth today. Building stocks were also in favour with James Hardie Industries PLC (A$9.95, +3.9%), CSR (A$2.02, +4.7%) and Boral (A$5.13, +2.4%) all strong today. Even small resource stocks found some friends after the big sell offs yesterday. St Barbara (A$1.135, +3.2%) were the best of them but others at least stabilised.

Stocks in the News

In house stocks today, Buru Energy (A$2.42, -3.6%) continued to slip on a weakening oil price and Nexus Energy (A$0.15, -6.3%) continued their falls from yesterday whilst New Standard Energy (A$0.20, +2.6%) picked up some of the recent losses. Karoon Gas Australia (A$6.65, -1.3%) also had a day out as positive feelings re-emerged on its upcoming Emu 1 drilling program.

Mining services stocks in our universe suffered today with Macmahon (A$0.28, -6.7%),Maca (A$2.90, -2.0%) and Maca (A$2.90, -2.0%) plus NRW (A$2.00, -3.8%) suffering.

Nufarm (A$4.85, -12.1%) suffered today as their agreement with Monsanto for Roundup was terminated with extreme prejudice. Roundup sales for 2012 were around $100m which is a lot of weed killer. I suspect the margins were pretty thin but it’s still a blow to them none the less.

Sky Network Television (A$3.95, -4.6%) also suffered today as News (A$29.24, +2.6%) sold out of their 44% holding at NZ$4.80.

In economic news today we had retail sales which were better than expected together with the Current Account Deficit which again was ok. Of course the big event of the day was the RBA meeting which as predicted resulted in no change to the rate. Surprise, surprise. And SUVs continue to sell very well, with sales of new vehicles up 5.2% in February with light commercial vehicles up 27%.

The largest contributor to the surprise lift in retail sales was “other retailing” (pharmaceuticals, recreational goods etc.), which rose by 2.6 per cent. More consumers bought household goods (up 0.3 per cent), food (up 0.3 per cent) and ate out (up 1 per cent).Australia’s current account deficit narrowed to $14.678 billion in the December quarter, seasonally adjusted. This followed an upwardly revised deficit of $15.048 billion in the September quarter.

Overseas China confirmed a growth target of 7.5% and an inflation target of 3.5% as outgoing Premier Wen finally hands over the reins to the new kids on the block.

And as Google shares touched a lifetime intraday high of $US822.84 overnight and closed up 1.9 per cent at $US821.50, shares in Apple hit their lowest level in more than a year, continuing a decline hastened by the company’s last quarterly earnings report. Not sure the ‘iwatch’ is going to do it this time.

Tomorrow’s News Today

Looks like the Dow will have a go at the all-time high this afternoon .Having been a siege campaign much like an Everest assault it looks like it’s time for Mallory and Irvine to head off for the top and stand on the summit! Take lots of pictures guys. And get back down safely!

And there was me thinking that the Government was cutting back on its spending but no.. Australian government spending on consumption and investment jumped 4.9 per cent in the fourth quarter of 2012 to an inflation adjusted $86.39 billion, the Bureau reported today. This series feeds into gross domestic product (GDP) figures, due on Wednesday, and implies government spending made a significant contribution to economic growth in the quarter.

Stimulus, stimulus all around and not a drop to drink. The Nikkei is now at a five year high as the traders bet on the BOJ pumping in huge amounts of money to get their economy off the ropes. The Topix has surged 37 percent from Nov. 14 as of yesterday on optimism a new government will push for bold policy to beat deflation, with Prime Minister Shinzo Abe nominating easing proponent Haruhiko Kuroda to lead the central bank.

Bank of Ireland has recorded a loss of 1.8bn euros (£1.6bn; $2.3bn) for 2012.The lender saw little respite in the rate at which it had to write off bad loans due to the property crash.

Shale oil production could boost the world economy by up to $2.7tn (£1.7tn) by 2035, according to a report. The extra supply could reach up to 12% of global oil production, or 14 million barrels a day, and push global oil prices down by up to 40%, PricewaterhouseCoopers said. Of course here in NSW the Government is looking at stopping fracking. Not sure if this is a viable long term policy given the World needs clean cheap energy and this looks like a better way to than Nuclear for instance.

Clarence

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