Market Roundup

Another horrible day in resource land with Oil and commodity stocks taking it very badly. I am starting to get a little over this resource boom. It seems to be the only boom where shareholders go bust. Whereas in the economy that we are constantly told is struggling the banks just continue to go higher! I am not sure that I understand anymore. Bullet proof banks and defensives, Kryponite everywhere else. The Copper stocks seem to be in the firing line today as BHP Billiton (A$30.65, -4.4%) have led them further into the red, RIO Tinto (A$52.07, -4.6%) has followed and Fortescue Metals Group Ltd (A$3.43, -7.8%) has hit the skids following its production report. News of a giant Fertiliser plant explosion in the US with potential terrorist implications also upset the market. But the real damage is being done in commodities as they plunge levels not seen since 2011. The falls in the index accelerated, after the blast and falls in Asia, closing on its lows. However if you took out the ten stocks that have been driving this market it looks really ugly. Get the feeling there was some margin calls and some enforced liquidations today. So much for the boom!

Gold shares took another hit again today with Kingsgate Consolidated (A$2.40, -11.4%) falling sub $2.50, Newcrest Mining (A$15.89, -7.1%), St Barbara (A$0.715, -8.9%), Silver Lake Resources (A$1.275, -10.8%) Beadell Resources (A$0.625, -6.0%) and Energy stocks took it badly too with Woodside Petroleum (A$33.86, -3.5%), Oil Search (A$6.86, -5.0%), Santos (A$11.38, -5.7%) and Origin Energy (A$12.02, -3.8%) also weaker. Mining services took a hit Austin Engineering (A$4.57, -6.7%), Ausdrill (A$1.715, -11.1%), Bradken (A$5.05, -5.6%), Boart Longyear (A$0.825, -14.9%), Cardno (A$6.16, -5.2%) and NRW (A$1.155, -5.7%) all in the dog house.

Stocks that enjoyed today included Westpac Banking (A$31.85, +0.1%) and Wesfarmers (A$42.22, +0.8%) but other financials are slightly easier. Industrials were nowhere near as bad with Harvey Norman (A$2.80, +1.8%) and Carsales.Com (A$9.55, +5.1%) looking good with the market approving the growth strategy that CRZ seems to be taking and the better numbers from HVN yesterday.

The dogs of the day were Western Areas Nl (A$2.49, -13.5%), Oceanagold (A$1.71, -10.9%), Ausdrill (A$1.715, -11.1%), Sandfire Resources NL (A$5.20, -10.3%) and Atlas Iron (A$0.865, -9.9%) all registering double digits falls.
w Telstra (A$4.79, -0.6%) were in profit taking mode following their great run yesterday. Volume across the board was slightly better than yesterday but Index option expiry may have added to the equation.

Stocks in the News

Looks like the big Cheese Warrnambool Cheese & Butter Factory Co.Hold.Ltd (A$4.60, +15.6%) is on the cheese board for Murray Goulburn as they have moved to nearly 15% and a potential takeover looms. Says it has no plans though to take-over the company. Yeah right they would say that!

The BHP management revamp was not enough to counter any weakness in sentiment as Copper slid 4% coupled with the fall in the Oil price, not helping .Looks like the incoming CEO doesn’t get quite the same remuneration as Marius did. Down about 25% on his package.

BBY darling Buru Energy (A$1.79, -14.8%) was hit hard today after a quarterly report. Seems the guys shorting the stock for the last few months have been vindicated with the stock looking shaky after today’s fall.

Fortescue Metals Group Ltd (A$3.43, -7.8%) said daily Chinese steel production was matching demand, despite a broader slowdown in economic growth. Fortescue said it shipped 20.2 million tonnes of iron ore in the quarter ended March 31, up 3 per cent from the previous quarter and 60 per cent from a year ago, underscoring the company’s expansion work in Australia’s Pilbara iron belt.

Australia’s online betting operators, including Tom Waterhouse, spent $90 million on marketing their services last year, according to their representative body the Australian Wagering Council. At least he knows what media companies want! His dollars and face on a bus!

ANZ Bank has cut its forecast for Australia’s investment pipeline by $34 billion, as uncertainty continues to hang over resources companies’ massive spending plans. The bank today said it thought the value of projects underway and on the drawing board was $440 billion, down from $474 billion in October and $498 billion in July.

And in economic news Average actual hours worked hit record lows in the year to March. The proportion of people working more than 41 hours a week is the lowest in almost 30 years said the ABS.

Tomorrows News Today

Commodities are collapsing as finance ministers from around the world travel to Washington to discuss policies aimed at sustaining the global recovery. Data this week showed slower- than-expected Chinese economic growth and European car sales sliding to a 20-year low, while U.S. stocks dropped yesterday after disappointing results by companies from Bank of America Corp. to Textron Inc.

Growth forecasts for China being cut by some of the big brokers .Now call me old fashioned but as the rest of the World enters a distinctly bearish phase the bullet proof Dow continues to trade near its highs. Something has got to give if World growth is slowing and commodities are stuffed, the US is not exempt from this ,despite Ben bankrolling things. ”They do not have a get out of jail free card.”

Group of 20 nations will affirm a commitment to avoid weakening their currencies to gain a trade advantage, according to a draft statement prepared for a meeting this week in Washington.

Tesco’s annual profits have fallen for the first time in almost 20 years, as the UK’s biggest supermarket confirmed it was pulling out of the US. Tesco is exiting its US chain of 199 Fresh & Easy shops, which have never made a profit, at a cost of £1.2bn.

And high profile pundit Charlie Aitken has today abandoned his high conviction buy on BHP and RIO. Thought I would never see that day. Not sure if it’s a sign of an end to the rout. But it’s a red letter day for Charlie.

Back on Sky TV tomorrow morning at 6.30 am as confused as ever!

 

Clarence

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