The market bounced hard today as news of an agreement on Cyprus was greeted with a surge in futures prices which dragged the usual suspects with it. Volume was relatively light and the index topped out at 5023 before settling down around 5000.After the good rise in the Dow on Friday we should see Europe slightly firmer and our market to continue higher unless we get more bad news from Cyprus. Being a shortened week before Easter, it is unlikely any major decisions will be made by fund managers. Not much out on the economic front either.
Stocks improving today were led by Commonwealth Bank of Australia (A$69.00, +0.5%), Australia and New Zealand Banking Group (A$28.83, +1.0%), National Australia Bank (A$30.85, +0.7%) and Westpac Banking (A$31.01, +1.7%) again the stand out. However the biggest winner in the financials was Macquarie Group (A$36.22, +2.2%), interesting that they are advertising on Foxtel, their mortgage business at the moment. Big resource stocks tried hard but couldn’t match the banks with RIO Tinto (A$58.25, +0.6%) and BHP Billiton (A$33.40, -0.1%) slightly better but Fortescue Metals Group Ltd (A$3.88, +1.8%) had a really good day. Small resources also had a better day with Beadell Resources (A$0.945, +3.8%) out the front with Paladin Energy Ltd (A$1.01, +3.1%) and Resolute Mining (A$1.415, +3.3%) up behind. Losers today included AWE (A$1.265, -1.6%), Alumina (A$1.125, -3.0%) and Mount Gibson Iron (A$0.505, -3.8%).
In Industrials Leighton (A$21.07, +4.3%) bounced back after Friday’s trouncing following a mass corporate suicide by the board, Transurban Group (A$6.35, +0.5%), and Sydney Airport (A$3.23, +0.9%) also did well. Healthcare was mixed with CSL (A$58.92, +0.7%) up strongly whilst ResMed Inc. (A$4.25, -0.7%), Sonic Healthcare (A$13.87, +0.2%) and ResMed Inc. (A$4.25, -0.7%) all underperformed.
Stocks in the News
Karoon Gas Australia (A$5.61, -8.9%) had a shocker today with an update from their Emu#1 well which looks more like a Turkey than an Emu, as they seemed to have found more water than oil.
In house stocks today, Linc Energy Ltd (A$2.76, +2.2%) were in favour with an update on the Unimat Well, whilst the flea bitten canine Pharmaxis Ltd (A$0.385, -10.5%) were in more trouble today. Others we follow suffering included Arafura Resources (A$0.145, -3.3%),Bullabulling Gold (A$0.059, +3.5%),BC Iron (A$3.16, -4.5%) and Cokal (A$0.18, -5.3%).
Funtastic (A$0.235, unch) has shrugged off a tight retail market to deliver a 68 per cent jump in first half profit. The $9.3 million net profit for the six months to January 31 included a $3.3 million payout to the company as part of its distribution of Lego toys. Also paid its first dividend since 2006.
Forge Group (A$6.10, -2.9%) confirms that it has received notice from Clough Limited that approximately 30.9 million Forge shares for gross proceeds of approximately $187 million have been sold by a leading Australian Investment bank.
China’s total iron ore demand is expected to rise by 50 million tonnes in 2013, but it will not be enough to soak up a supply glut on the world market, the country’s state planning agency said today.
The chairman of China’s Hanlong Mining, which is bidding for Australia’s Sundance Resources, is under police investigation for harbouring his brother before the latter’s arrest on suspicion of murder, local media reported on Saturday.
Tomorrows News Today
News from Cyprus will be closely watched. It appears that the deal has been done and it doesn’t rely on a vote from Parliament. So apparently, now non-elected officials from an outside member nation are able to force depositors to take a 40% cut on their savings. This is an ugly precedent and will ensure that every wealthy individual in the Zombie Zone will be looking for a new home for their money. Sovereign risk has just taken on a new meaning. Suspect that by Friday there will not be any money left in Cyprus… This has been handled as well as the great homework debacle in Australian Cricket!
Still it was good to see that the German Finance Minister will be telling Russia about the new deal. These boys are going to be delighted. Would expect some interesting developments come the Autumn/Winter in Germany when their grateful Eastern Neighbours just turn the gas off!
“This solution we reached tonight doesn’t have the downsides that the solution of last week did,” said Dutch Finance Minister Jeroen Dijsselbloem, chairman of the euro ministers’ panel. He said the deal was beyond the range of “political possibilities” a week ago. The Cypriot parliament won’t have to vote again because it has already passed laws on bank restructuring, officials said.
I am not sure the Euro Officials should be going to Cyprus for their holidays. Or Russia either!