The song remains the same. Buy banks and defensives and avoid resource stocks. This strategy has been an absolute winner for the last 18 months and shows no sign of abating. The market opened positively and then rambled about the up 40 mark all day before an afternoon surge pushed it up 50 to around 5000. Coincidence perhaps? Standouts were financials as the yield argument continues to be the only ones investors are listening too. Commonwealth Bank of Australia (A$69.29, +1.7%) led them higher with National Australia Bank (A$32.24, +1.3%) and Westpac Banking (A$31.82, +1.0%) not far behind. Other defensives to benefit from the flight to yield and safety included as usual Telstra (A$4.82, +2.8%), Woolworths (A$35.60, +2.4%), Wesfarmers (A$41.89, +3.0%) and Westfield Group (A$11.56, +1.7%). Weakness once again in BHP Billiton (A$32.06, -0.3%), RIO Tinto (A$54.59, -0.7%) and to a lesser extent Fortescue Metals Group Ltd (A$3.72, -0.8%) after production numbers from the big two failed to ignite any enthusiasm at all. And this is scary WBC is only $6bn away from surpassing BHP’s capitalisation. Total bank value is around $360bn… Nearly the same size as Apple! My maths may be a bit dodgy but they make around $25bn from 25m people, that’s $1,000 from every man woman and child in this country!

Gold was bouncing around like a beach ball at the Ashes, probably with the same result, a few buyers emerged in Newcrest Mining (A$17.10, +0.6%) but others remained under pressure with Kingsgate Consolidated (A$2.71, -3.2%),Silver Lake Resources (A$1.43, -4.0%),St Barbara (A$0.785, -7.1%), Evolution Mining (A$0.99, -0.5%) all looking red and sore.

Property trusts were again in demand with GPT Group (A$4.07, +1.8%), Dexus Property Group (A$1.16, +4.0%) and Stockland (A$3.90, +1.8%) all finding favour. Insurers also did well with QBE Insurance Group (A$13.38, +1.4%), Suncorp Group (A$12.22, +3.4%) and Insurance Australia Group (A$5.80, +2.5%) finding the back of the net.

The big winner today was a huge move in Telstra (A$4.82, +2.8%) as the trundled up towards 4.85.This stock alone was nearly 6 points of the rise. Seems the win-win from the NBN is a big attraction. Even if the coalition wins, which they will, they are still holding all the cards in the fibre to the node hand. Other telcos also filled the podium with iiNet (A$6.09, +5.0%), TPG Telecom (A$3.52, +4.5%) and M2 Telecommunications Group (A$5.44, +5.2%) whilst in media stocks Ten Network (A$0.30, +5.3%) gained some strength from its negotiations with Cricket Australia on TV rights.

Other winners included industrials like Crown (A$12.86, +2.7%), Brambles (A$8.47, +2.3%), Seek (A$10.81, +4.3%), in the dog house today were a couple of mining services with Monadelphous Group (A$20.36, -2.1%) and Clough (A$1.16, -3.3%) whilst energy stocks ran out of gas with Woodside Petroleum (A$35.08, -0.8%) and Santos (A$12.07, -0.5%) falling in the majors.

Volume was pretty average given the moves in the market as once again investors withdrew to the sidelines leaving the Algos and Robots to it. Who can blame them!

Stocks in the News

Big one today with BHP Billiton (A$32.06, -0.3%) announcing that despite a lacklustre quarter for oil and iron ore they are still on track for their production guidance for the year. It said it shipped 37.7m tonnes of iron ore from its Pilbara mines in the March quarter, up 6.7 per cent on the same period last year but below market expectations. Commentators had forecast BHP to ship 39.5m tonnes of the steelmaking ingredient in the quarter.

Harvey Norman (A$2.75, +3.8%) has announced better third quarter figures suggesting that things are still challenging in electronics and computers but white goods and furniture are benefitting from the stable economic climate.

Paladin Energy Ltd (A$0.775, -3.1%) is testing eight-year lows, after producing an underwhelming set of March quarter results today. Shares in Paladin are down more than 3 per cent at 77.5 cents, matching the recent low which was set on November 16, 2012.

Atlas Iron (A$0.96, -5.0%) is on track to meet its shipping targets for the year after enjoying a record March quarter. Atlas says it shipped 1.86 million wet metric tonnes (WMT) of iron ore in the quarter and is confident of meeting its target of shipping 7.4-7.7 million WMT this year.

Ausdrill (A$1.93, -9.0%) said its profits have been affected by the slowdown in Australia since September. Stock copped it hard after this latest downgrade.

Incitec Pivot (A$2.84, -1.7%) has announced that is going to build a World class ammonia plant in the US. Its subsidiary Dyno Nobel has signed up for an $850m project in Louisiana funded by debt and internal cash flows.

The price of carbon in the European emissions trading market – the world-leading scheme that will link with the Australian scheme in 2015 – has collapsed after a key vote to shore up the scheme failed overnight. The Coalition is talking a $7bn hole in the Federal Budget due to this fall.

Tomorrows News Today

Starting to look like the Boston Bomber was home-grown. Lovely to see Alan Jones suggesting ways to combat this in Australia.

After all the volatility in the gold market it appears that buyers of physical gold have flooded back into the market with the Perth Mint overwhelmed with demand. Indians are snapping up the solid stuff faster than you can say Bollywood Wedding and the Chinese are on a buyers rampage taking advantage of the bargain basement prices for their ‘precious’. And looks like Cyprus is looking to sell its Gold after all as their Government seeks approval to do so. They have around 14 tonnes of the stuff to shift from one vault to another. Always puzzles me how we spend a fortune finding it and digging it up only to bury it in the ground again! Maybe it’s just me that thinks this is weird!

Australian Treasurer Wayne Swan criticized Europe for acting as a “hand brake” on global growth and urged governments there to slow the pace of austerity, saying Asia could no longer afford to prop up the world economy.

John Paulson has dusted $1.5bn in the last week on his bet in Gold. Let’s hope he doesn’t have a margin call!

And goodbye to Mrs T in London tonight. Love or hate her she was an idealist and she did change the UK.

Clarence
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