Market action

After a slow start today the index moved from positive to negative then gathered confidence as the day wore on with the Resource stocks looking better than the financials. There I have said it. Finally the Financials are looking a little tired and the likes of BHP Billiton (A$36.09, +0.8%) and RIO Tinto (A$64.36, +1.8%) are perking up. The big banks were lacklustre with Westpac Banking (A$31.25, -0.1%), Australia and New Zealand Banking Group (A$29.12, +0.4%), Commonwealth Bank of Australia (A$69.83, +0.2%) and National Australia Bank (A$31.10, +0.1%) all registering small gains or losses. Some of the former dogs were in the winners enclosure today with Fairfax Media (A$0.62, +6.9%) up on large volume as the media stocks in general enjoyed a day in the sun. Ten Network (A$0.37, +1.4%) were also in demand, it’s hard to believe that pre Xmas Ten was languishing around 23 cents and FXJ was around 40 cents. The World has changed indeed. Other winners today included Linc Energy Ltd (A$2.70, +5.9%), Senex Energy (A$0.75, +10.3%) and Sandfire Resources NL (A$7.20, +4.3%) with miners like Kingsgate Consolidated (A$3.71, +4.5%) and Evolution Mining (A$1.38, +4.2%) also turning in a good show. Telstra (A$4.48, -1.3%) was a big loser today and will continue to underperform as it becomes a political football due to the NBN and the upcoming election. Although the downside is limited I would suggest that so is the upside at this point. Other losers in big cap land included Mesoblast (A$6.40, -2.6%) after its capital raising. Retail stocks were also in demand with the much shorted JB Hi-Fi (A$14.65, +4.2%) a stand out as more normalised trading conditions return to the retail sector. Let’s face it the economy is still growing at 3.1%,Inflation is under 2%,Unemployment is 5.2% and interest rates are 3%.. what is not to like. Of course the Government is getting blamed for this state of affairs but really are things so bad. I think not.

The index has had a great week and finished on its highs buoyed by the resource sector. We finished last week at 5086 and closed at 5123This theme looks set to continue, energy stocks improved with Santos (A$13.38, +1.3%) Woodside Petroleum (A$37.14, +0.1%) Linc Energy Ltd (A$2.70, +5.9%) all better. Overnight the oil price seems to have caught on that the World is not coming to an end and that growth is pushing up especially in the US. It must be a bull market in commodities as even Newcrest Mining (A$21.88, +1.4%) were better. That is a shock given their recent form. Other Goldies improved as St Barbara (A$1.205, +4.8%), Silver Lake Resources (A$2.22, +2.8%) and Intrepid Mines (A$0.275, +3.8%) looked better.

Stocks in the News

Resource stocks generally were in the spotlight with Beadell Resources (A$0.925, +19.4%) leading the way on takeover rumours pushing up over 20% before they were issued with a Pauline Hanson, or please explain, rumours of a takeover bid from a US company were hosed down but as they say where there is smoke there is something..anyway the stock drifted after the late announcement but expect further speculation next week.

Energy stocks looking better included AWE (A$1.34, +2.3%) and Karoon Gas Australia (A$6.75, +1.2%) and Nexus Energy (A$0.17, +13.3%) following their half year results.

Echo Entertainment Echo Entertainment Group (A$3.62, -1.1%) shares have fallen more than 1 per cent today after the AFR quoted NSW Premier Barry O’Farrell saying Crown won’t need a casino licence for Barangaroo, a gaming licence would suffice.

The competition watchdog has delayed its decision on Virgin Australia’s proposed takeover of Tiger Airways Australia. Virgin requires approval from the Australian Competition and Consumer Commission (ACCC) to buy 60 per cent of the loss-making airline.

In house stocks today stand outs included APN News & Media (A$0.33, +10.0%) running on the better media sector, Boart Longyear (A$1.47, +3.5%) as buyers emerged to cover their shorts pre-weekend and Xceed Resources Ltd (A$0.10, +16.3%) despite being in a trading halt pending an announcement on funding for its Moabsvelden project. Back Tuesday.

Tomorrow’s News Today

Looks like we shall see more of the same next week as the sector rotation continues and the shorts in some stocks get punished. Not a nice place to be at the moment being short industrials. Ooouch!

In September 2011 you could buy all four High Street banks for $100 and the big three miners at $100.(BHP,RIO and FMG)..now look at them $160 for the banks and $104 for resources…now the value is not on the side of the banks and if I was looking for a pairs trade it would involve selling one of these baskets and buying the other.. no marks for guessing which way!

China’s Shanghai Composite Index swung between gains and losses. The nation’s exports increased 21.8 percent in February from a year earlier, the customs administration said today in Beijing. The growth in overseas shipments compares with the median estimate for an 8.1 percent gain in a Bloomberg News survey of 33 analysts and a 25 percent increase the previous month. Imports fell 15.2 percent, almost double the 8.5 percent drop forecast by analysts.

Expecting US payroll number tonight.. a rise of 170,000 looks like the call.

Have a good weekend.

Clarence xxxx