Big trouble in little Cyprus. Overnight news from Cyprus ,combined with Goldman Sachs in London downgrading RIO Tinto (A$57.48, -2.0%) and BHP Billiton (A$33.62, -2.7%) ,scared everyone off early. The Index plunged to below my target of 4950 to 4937 before the bargain hunters and more rational heads stepped in, although it faded again in the afternoon. At lunch time we went positive at one stage. News from Fortescue Metals Group Ltd (A$3.80, -2.3%) on their view of the Iron Ore market helped things along and seemed to turn things around a little and of course the first stocks to rebound were our old friends, the banks ,defensives and Telstra (A$4.54, +0.9%). Shanghai also helped things look better but confidence has been dented and no one is going to go ‘all in’ before Cyprus is sorted. The real issue is contagion. Actually the real issue is unelected Eurocrats stealing deposit money to prop up the Zombie experiment. Actually the real issue is what are the KGB going to do about it!

Financials were easier with QBE Insurance Group (A$13.02, -1.6%), AMP (A$5.02, -1.0%) and Suncorp Group (A$11.50, -0.8%) not sharing the love with the banks. Westpac Banking (A$29.94, +0.3%) was the best of them but Commonwealth Bank of Australia (A$69.16, unch) overtook the Big Australian to become the number one company in the country. Big drum roll please.

Media stocks copped it today as the Government reforms are now going through piecemeal it seems. Ten Network (A$0.35, -2.8%) and Seven West Media (A$2.16, -4.0%) all suffered but jolly old Fairfax Media (A$0.65, +1.6%) still looking ok .Big winner today was Xero Limited (A$9.29, +9.29%) followed by a few Telcos, TPG Telecom (A$2.92, +3.9%) and iiNet (A$4.85, +3.0%). Retail stocks were in focus with results out from David Jones (A$3.08, +4.1%). Losers were NRW (A$1.76, -5.9%), Cudeco (A$3.38, -4.0%), following a placement, Mount Gibson Iron (A$0.55, -5.2%) and Oz Minerals (A$5.41, -3.7%).

Energy stocks were easier as the Oil price slipped with Woodside Petroleum (A$36.25, -0.8%), Santos (A$12.65, -0.7%),Aurora Oil & Gas (A$3.74, -2.9%), Linc Energy Ltd (A$2.62, -4.0%) and Origin Energy (A$12.78, -1.1%).

Stocks in the News

Good news from David Jones (A$3.08, +4.1%) today, at least better news, as things are not so dire. Once again they are looking at the property they have on their books and what to do with it .The stock pays 5.9% fully franked yield so it has some attractions. The company is continuing with electrical and hard goods but making all its money from soft stuff like fashion and cosmetics. Big mark ups! Myer (A$3.03, -0.7%) have proved successful with their strategy of no computers or CDs etc. so maybe there is hope for David Jones (A$3.08, +4.1%).

Fortescue CEO Says China’s Steel Demand Won’t Fall for Decades Sees Iron Ore Price at $120-130/Ton as ‘Sustainable’- Doesn’t See Supply Rising Enough to Push Iron Ore to $100/Ton.

Iron ore is the new analyst battle ground. Everyone has an opinion and now the Bureau of Resource and Energy has upgraded its forecast to $119 a tonne over 2013.Of course Goldmans is suggesting a higher price whereas the share prices are pricing in a much lower price than anyone at the moment but while RIO and BHP trade at such a huge discount in London.. why buy them in Australia!

House stocks in the news today included Nucoal Resources (A$0.11, -15.4%) which announced it is phrasing its opening address, to ICAC on its Doyles Creek property, very carefully. I bet they are!

More woe in the Mining Services space today with Boart Longyear (A$1.29, -3.0%), Decmil Group (A$2.37, -2.1%), Mastermyne Group (A$1.44, -6.5%) Swick Mining Services Ltd (A$0.375, -1.3%) and Resource Equipment Ltd(A$0.21, -2.3%) all suffering as the resource sector suffered.

Market darling Sirius Resources NL (A$4.20, -3.45%) has passed another milestone by today releasing its maiden JORC resource estimate for the Nova deposit in WA. Sirius reported a short time ago that Nova is estimated to contain 242,000 tonnes of Nickel, 100,000 tonnes of copper and 7700 tonnes of cobalt.

The boss of Sims Metal Management (A$10.08, -3.1%) operations in Europe has left the company, but no reason for his departure has been given. The fraud investigation continues.

Australia imported a record 5.4 million bottles of champagne in 2012, to become the world’s 7th biggest market for the French sparkling wine and a bright spot in a year when global sales fell by 4.4 per cent. Seems we have something to celebrate after all!

Tomorrow News Today

How long can the banks stay closed in Cyprus? Going to be an interesting question. The UK is already parachuting cash into the country for its troops there. As soon as they open it will be a bigger bank heist than Die Hard! The one with Jeremy Irons I think, was that 8 or 9 can’t remember! And you have to love the German Finance Minister Schaeuble who has said Cypriot Banks may never reopen!

UK Budget tonight will be closely watched by FX markets and taxpayers. Markets will concentrate on Chancellors comments on the UK economy.

North Korea getting the US B52’s in their sights! Obama in Israel.

And Freddie May is suing a dozen banks in the ‘LIEBOR’ scandal, including Bank of America and J P Morgan.

And in a great article in the FT, it talks about how difficult it is going to be for the Fed to stop its QE program. Thoughts of 1994 where everyone was complacent about low interest rates going forever. At some point rates will start to rise around the World and then it will be a rush to the exit for bond funds!

Off to Springsteen, will be deaf tomorrow!