Well, yesterday was all about selling resources to buy banks and today was the reverse with resource stocks outperforming despite a very bullish Japanese market. The Nikkei rallied over 13,000 for the first time since 2008 on the massive BOJ stimulus package. This seemed to take everyone by surprise and could be a ‘whatever it takes moment’ for the Japanese market. Soros hit the press expressing his concern over the measures, saying what Japan is doing is “actually quite dangerous” and that the falling yen may become like an avalanch. Our market was stuck in the doldrums as investors looked to the Government for the changes to their Super but most were happy to sit on the sidelines with Korea rumbling around and the US jobs number tonight. There did seem to be a move to sell Australia and Buy Japan from the big global players and with the 10 year Japanese long bond yielding 0.375% seems that is where the money flow is going at the moment. The fall in the Yen was fabulous for exporters which were up strongly in both overseas and local markets. China was again closed today for ‘Ching Ming’ Festival.

Highlights in our market included a much needed rise in BHP Billiton (A$32.24, +1.5%), RIO Tinto (A$55.60, +1.8%) and Newcrest Mining (A$18.80, +1.7%) which did look a little hard done by yesterday. Gold shares also reversed some of yesterday’s horrendous falls with Silver Lake Resources (A$1.72, +5.5%) leading the charge. Kingsgate Consolidated (A$3.50, +4.5%), Perseus Mining (A$1.56, +3.3%), Medusa Mining (A$4.02, +4.4%) and Panaust (A$2.29, +4.6%) also joined in. In financials the Banks lost ground with the exception of QBE Insurance Group (A$13.72, +0.1%) and Challenger (A$3.93, +4.0%) which was seen as a beneficiary of the changes to Superannuation.

There has been a huge thud of dividend cheques hitting investors door mats in the last few days and this money will start to find its way back in to the market at some stage. We have also got the banking sector results season coming up so we get to see how much they have ripped out of the poor unsuspecting public. Only way to get your own back is own bank shares.

Defensives were easier across the board with past favourites Wesfarmers (A$39.86, -1.5%) and Woolworths (A$33.79, -1.8%) copping a pasting. Telstra (A$4.53, -0.2%) defied the trend and held pretty steady.

Certainly today was a quieter day than the panic selling of yesterday but it remains to be seen if it is safe to go back into the water on the mining sector for any thing other than a quick short covering trade.

Stocks in the News

The decline of Atlas Iron (A$1.005, -1.0%) shows no sign of stopping, with the stock falling below $1.01 today for the first time since December 3, 2008. Atlas is no longer a ”billion dollar company”, with its market capitalisation now calculated at $914 million.

One of our house stocks we follow Cockatoo Coal (A$0.10, +69.5%) had a pretty good day following news of optimisation of their Baralaba Project. In more house stock news we saw continued pressure on Karoon Gas Australia (A$4.45, -2.0%) despite an exploration update.

Phosphagenics (A$0.125, +4.2%) traded higher after announcing that the company will return to clinical development on its oxycodone TPM transdermal patch.

Woodside Petroleum (A$34.79, -2.0%) were also under pressure today following Shell announcement that it has put its refinery in Geelong up for sale. Thoughts may have drifted to what Shell is doing with its Woodside Petroleum (A$34.79, -2.0%) stake and I am sure that there are many investment bankers hoping to pick up any sell down. Times are desparate!

Tomorrows news today

Tonight will be all about the US jobs numbers. Expectations are weak for the report given the disappointing ADP and ISM readings released on Wednesday. Estimates are that employers are likely to add 200,000 jobs to their payrolls last month after hiring 236,000 workers in February. The unemployment rate is seen steady at a four-year low of 7.7 per cent.

US service industries expanded in March at the slowest pace in seven months, indicating that while the US is still in a growth phase, the rate of expansion is moderating to a tepid pace. The ISM’s non-factory index fell to 54.4 from 56 in February, missing expectations for only a modest decline to 55.5. Fifteen non-manufacturing industries, including real estate, construction and finance, reported growth in March, while three signalled contraction. The biggest upsets in the report were perhaps the sharp declines recorded in the new orders and employment subcomponents, which respectively tumbled to 54.6 from 58.2 and to 53.3 from 57.2. In fact, the employment decline was the biggest in four-years. Curbing expectations for Friday’s jobs report, ADP said 158K private jobs were added, below the 200K expected.

Should the US produce data tonight that’s in line with or a touch above Bloomberg reported consensus, then the US dollar and US treasury yields will likely rally and further curb demand for precious metals. If the report is good tonight, it will lend further support to recent commentary by US central bankers that the pace of QE may have to be trimmed as the economy and inflation outlook strengthens. The net result is a negative one for gold.

Competition among potential offshore Yuan centres is escalating as Australia quickens its efforts to snap up a piece of the rapidly growing business. China and Australia will launch direct trading between their currencies in Shanghai and Sydney within weeks, a foreign bank source with direct knowledge of the matter told Reuters.

We may see a little bounce from the Zombie zone after the rally on the Dow and the huge run in Japan. Expect to see some bargain hunting around but the jobs numbers will hold back real enthusiasm.

Enjoy the weekend I will be back next week sports fans. Back on Sky TV this afternoon at 5.30.

Clarence

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