Market action

After disappointing Chinese numbers over the weekend it seemed like we needed some reassurance from improving Asian markets to kick the buying off although it was once again concentrated on the usual suspects. The banks once again led us higher with Commonwealth Bank of Australia (A$70.13, +0.4%) touching $70, National Australia Bank (A$31.64, +1.7%), Suncorp Group (A$11.76, +0.5%) and Macquarie Group (A$39.49, +1.8%) also had a positive day yet poor old Westpac Banking (A$31.25, unch) languished. Defensives were again on the rise with Woolworths (A$35.71, +1.0%) (record high), Wesfarmers (A$42.85, +0.5%) and Coca-Cola Amatil (A$15.25, +2.3%) all strong however the warm and fuzzy feelings did not extend to the big gorillas BHP Billiton (A$35.82, -0.7%) and RIO Tinto (A$63.10, -2.0%). Melbourne having a holiday today did nothing to help volumes which were down on previous sessions.

In the winner’s circle today were Xero Ltd (A$7.75, +6.9%), St Barbara (A$1.305, +8.3%), Ten Network (A$0.38, +2.7%) and JB Hi-Fi (A$15.32, +4.6%) as the shorts once again got squeezed. Mid cap resources were a huge bright spot today with other Gold shares in demand, Perseus Mining (A$1.805, +2.8%), Silver Lake Resources (A$2.31, +4.1%) and Medusa Mining (A$4.20, +2.9%) were all well bid. The people’s choice Telstra (A$4.53, +1.1%) enjoyed a late run despite looking heavy all day as the Labour chances of re-election look about as promising as finding Glenn Miller, Lord Lucan and Shergar all in the same week.

Industrials were stronger with Amcor (A$9.35, +3.5%), Brambles (A$8.62, +0.8%), Incitec Pivot (A$3.25, +1.9%) and Orica (A$25.90, +1.0%) better as were energy stocks like Woodside Petroleum (A$37.39, +0.7%), Oil Search (A$7.88, unch) and Origin Energy (A$12.66, +1.1%).

Big volumes today in Linc Energy Ltd (A$2.95, +9.3%), Lynas (A$0.62, +1.6%) and Beadell Resources (A$0.94, +1.6%) which quashed takeover rumours on Friday but looks to be gathering some punters working on the where there is smoke there is fire principle. Let’s face it the companies are usually the last to know anyway!

In the naughty corner were Blackmores (A$29.01, -4.3%), Sirtex Medical (A$11.24, -2.7%), Super Retail Group (A$11.89, -3.6%) and Mount Gibson Iron (A$0.65, -3.7%) and no good news for Big Nath as Whitehaven Coal (A$2.53, -1.9%) again came under pressure. Mesoblast (A$6.20, -3.1%) was also on the nose as profit takers stepped in after the capital raising last week.

Stocks in the News

Pretty quiet day on the news front but looks like Private Equity operators TPG has won the hearts and beaks of Inghams. Love Em! Not quite the billion dollar price that the company hoped but a respectable $880m none the less. Certainly not chicken feed!

Australian government 10-year bond yields have risen to their highest point since May last year. Yields are currently at 3.613 per cent.

Sirius Resources (A$4.40, +5.01%) led the large caps (it sure is a large cap now!) with further good results from their Nova Discovery. This one is now capped at around $1bn.Certainly has been an amazing journey from 5c to $4.50! Nearology also help minnows Sheffield Resources (A$0.74, +7.25%) and Buxton Resources (A$0.53, +3.92%) too.

Few others running on news today included Kingsgate Consolidated (A$4.06, +9.4%) as Allianz lodged a substantial shareholder notice. And BBY favourite Linc Energy Ltd (A$2.95, +9.3%) announced that it had spudded its Umiat Oil Field today.Also good to see Buru Energy (A$2.53, +4.1%) better today after the landslide WA election, things should start to move their way now.

Building products company CSR (A$2.16, +2.9%) is cutting 150 jobs from its glass business in response to the high Australian dollar and low construction activity. CSR will close its glass manufacturing facility at Ingleburn, in Sydney’s south west, in July.

Domino’s Pizza announced their ‘game changer’, new toppings and square. Wow, after the huge advertising campaign that was it. Social Media went into overdrive and the stock which had pushed as high as $11.70 felt the wrath of the cheesy crust.

In house stocks today APN News & Media (A$0.36, +9.1%) continued its recovery as did Ten Network (A$0.38, +2.7%). In energy stocks Kina Petroleum (A$0.49, +7.7%) have been doing presentations in Sydney and Melbourne and are gathering fans on the PNG wet gas story. Other energy stocks fared less impressively with Nexus Energy (A$0.165, -2.9%) and New Standard Energy (A$0.19, -2.6%) still suffering from the negative vibes.

In biotech land Pharmaxis Ltd (A$0.595, +12.3%) had a great day which is about time as the downside risks seem to be abating. It’s a long road back after the potential FDA ruling but they are doing all the right things at the moment to ensure continued strength.

Tomorrows News Today

Aurizon (A$4.06, unch) (formerly QR National) and the GVK Hancock joint venture between India’s GVK and Gina Rinehart’s Hancock Prospecting, have signed a non-binding agreement to build rail and port infrastructure to unlock the Galilee Basin coal province, including the massive planned Alpha, Kevin’s Corner and Alpha West mines. Nice to have some positive news from the Coal sector for a change.

News from Japan today, which commemorates the two year anniversary of the Fukishima meltdown, on machinery orders which plunged 13% in January, the biggest decline in eight months, signalling limits on corporate investment as Prime Minister Shinzo Abe tries to drive an economic revival. Bank of Japan governor nominee Haruhiko Kuroda said that the central bank will consider buying derivatives if he’s confirmed as governor and signalled a readiness for a quick expansion in monetary stimulus. Good way to get the job!

Increasing labour costs in China will push up consumer prices, researchers Xu Lianzhong and He Xiaoying with the National Development and Reform Commission’s price-monitoring affiliate, wrote in a research report published on China Securities Journal today. China’s economy is now in a “stabilization and rebound” mode, the research report says.

Expect to see some sabre rattling over North Korea as the US and South Korea begin their annual naval exercises.

I know we have the misnamed Future Fund but these Norwegians know how to squirrel money away. Norway’s oil fund, one of the biggest investors in the world, rose in value by 13.4% last year, its second-best performance ever. The central bank said the fund’s investments in shares jumped by 18.1% in 2012, boosted by soaring equity indexes around the world. It is now worth 3.8tn krone (£450bn; $670bn), up from 3.3tn krone in 2011.

Norway’s fund invests the money from its huge oil industry in the nation’s future. The sovereign wealth fund is now 40% bigger than the value of the entire Norwegian economy. If it was invested inside the nation, this would cause distortions like massive inflation…Now if John, Kevin or Julia had used some of the boom from resources in the last five years to establish something like this, wouldn’t we be a lot better off.

And looking forward to the Technical Analysis seminar tomorrow. Always nice when someone gives you a road map!

Clarence