Market Review

Whoosh, off we go. The merest sniff of all that cheap Japanese money was enough for us to kick significantly higher today. Great performance from S&P/ASX 200. News on Chinese inflation also added to the impetus providing a nice warm after burner glow before lunch as their inflation numbers came in below estimates. We live in a strange World, Japan is celebrating the huge stimulus to try and get inflation up whilst we applaud the Chinese for keeping it under control. Still the Global currency war continues and the potential tsunami of money flowing into Aussie equities was enough to ignite the blue touch paper. Even the poor old bombed out resource sector kicked as BHP Billiton (A$33.11, +1.4%), RIO Tinto (A$56.73, +3.4%) Woodside Petroleum (A$35.64, +2.2%) and even, say it is so Newcrest Mining (A$19.49, +1.6%) rallied. The resource sector has been looking very oversold and the demise of Iron Ore does not seem to be happening as fast as some have been predicting, thus helping the sector greatly. Atlas Iron (A$1.125, +9.2%) was a big winner as the head man suggested there would be no huge loss in the price as new projects were so darn expensive to bring on stream thus making the supposed overhang much less of an issue. Financials were as usual strong with Westpac Banking (A$31.30, +2.6%) and National Australia Bank (A$31.41, +2.7%) leading the charge with ASX (A$36.45, +0.9%) Challenger (A$4.08, +4.1%) and rebounding Macquarie Group (A$37.11, +3.1%) all looking good.

In industrials Woolworths (A$34.25, +1.1%), Leighton (A$20.09, +2.9%) and Coca-Cola Amatil (A$14.58, +2.0%) were some of the standouts with the only patches of red around in large cap land being CSL (A$58.35, -0.6%) and now not so large cap Sundance Resources (A$0.11, -47.6%).

Following the release of Big Mal’s NBN alternative which is slower, cheaper, sooner, Telstra (A$4.58, +2.0%) rallied hard with bigger gains in other Telcos such as Telecom  of New Zealand (A$1.97, +2.1%) and iiNet (A$5.60, +4.9%).

Couple of the Mining Services stocks had a day out with Bradken (A$6.23, +5.2%) and Boart Longyear (A$1.29, +12.2%) taking in the sunshine. Whilst even the Golds were slightly better despite a small fall in the gold price. Kingsgate Consolidated (A$3.68, +0.5%), Regis Resources (A$4.22, +4.7%), Silver Lake Resources (A$1.865, +3.9%) all to the fore.

Considering though what a firm day it was, volume was pretty pathetic. Will take the punters a while to wake up and realise they have missed the pullback and the BOJ has moved the goalposts!

Stocks in the News

Sundance Resources (A$0.11, -47.6%) had a shocker today as they formally closed out the bid process from Hanlong. Now China has amassed a formidable track record in failed mining stock bids of around $45bn worth of deals in the last five years.

In media land Ten Network (A$0.315, +6.8%) reported today and was officially crowned the Biggest Loser on dreadful results but at least they acknowledged that they would not chase promiscuous viewers with programs like Being Lara Bingle…so maybe there is some upside..If anyone knows Murdoch can you call him and suggest he focus on appealing to women more with the channel..& has mate why not Lachlan…might get half the audience! Anyway the stock rallied on the repositioning news.

One of our favourites Linc Energy Ltd (A$2.08, +14.6%) had a good day on a puff piece as they explained the convertible bond issue they recently completed. In other energy stocks we specialise in REY Resources (A$0.067, +9.8%),New Standard Energy (A$0.18, +9.1%) and Nexus Energy (A$0.14, +7.7%) all enjoyed themselves today.

Few economic bits and pieces today with business confidence improving slightly from 1 to 2 points, although confidence in the mining sector fell to four-year lows.

The owner of Sydney’s Star casino Echo Entertainment Group (A$3.72, +3.0%) has lodged a proposal to ensure it’s the only casino operating in NSW after 2019. The proposal, if accepted by the state government, would effectively rule out James Packer’s proposed $1 billion six-star Crown hotel and casino at Barangaroo.

Whilst business conditions have slid to their lowest level since 2009, with the manufacturing and retail sectors the hardest hit, a private survey has found.

Business conditions dropped from minus 3 to minus 7 points in March, the lowest since May 2009, as trading and employment conditions weakened.

China’s CPI declined sharply in March, largely because food prices retreated after Chinese New Year.2.1% much better than the 2.5% expected.. if you believe it that is!

Tomorrows New Today

Breaking news Billabong International (A$0.73, unch) have confirmed the proposal from the US is now 60 cents! The biggest shareholder Gordon Merchant looks like he is going to take scrip in the New Entity. Shareholders will also be able to take scrip in the NewCo. Good luck with that. Minority shareholder in a private equity company. This is now turning into a corporate farce of the highest proportions. They have a ten day period to go over the books again with accountants! Oh Please!

We will see more US numbers from corporates tonight and on Thursday we have unemployment figures here. Analysts are confused after last months huge rise in jobs.. suspect that we may not see quite such a good number this time out. Forecasts range from -40k to +10k….I reckon we are going to see a better number than we suspect and once again they will scratch their heads and wonder..

The Japanese reflation is probably turning into a game changer as the risks recede into investors memory .Cyprus, nah, Korea, nah, US employment number nah, Zombieland growth nah.. just focus on zero interest rate money kicking around in Japan looking for a return.. voila, come on down the waters beautiful here!

This is the new battleground.. currency…The Aussie is buying $US1.04 this afternoon. But the real change is against the Japanese Yen, with our dollar hitting 103.82 Yen, the highest since July 2008.

And it seems that one after one, the Fed Heads in the US are suggesting that the summer will see a pullback of QEIII. Probably just as well as US is flooding the world with money, as is Japan, Europe and UK, maybe it is a bridge too far perhaps for them all to do it at once. Both Fed Chief Yellen and Dudley are singing from the same song sheet so will be interesting in the coming months. I’m forever blowing asset bubbles, pretty bubbles in the air!

Maybe this is one Tsunami that we can enjoy for a while!

Clarence

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