What a difference a Dividend makes as Woodside Petroleum (A$37.96, +9.7%) leapt out of the blocks, dragging everything else with it, after announcing a special 67 cent dividend and more importantly a policy of 80% payout for the future. Overnight WPL has become a yield play and almost as attractive as the Banks. Other resource stocks will take note. Up nearly 10% after this move. A few mining boards will be watching with special interest. Tomorrow we may see some profit taking in WPL but its now in a different sphere to the other resources.
However the big miners failed to inspire, following a (not so) flash PMI number out of China at 50.5.Still indicating some growth but below expectations. BHP Billiton (A$31.36, -1.1%), RIO Tinto (A$53.96, -2.1%) and Fortescue Metals Group Ltd (A$3.77, -1.3%) were all easier on the news. The market did pull back but found some more reasons for optimism as the day wore on. Financials were again the big winners reversing Fridays falls as Australia and New Zealand Banking Group (A$29.25, +2.4%), National Australia Bank (A$32.07, +1.4%), Westpac Banking (A$31.71, +1.2%) and Commonwealth Bank of Australia (A$70.01, +1.0%) led the charge. Even Macquarie Group (A$37.05, +1.2%) joined in today with QBE Insurance Group (A$13.10, -0.3%) pretty much unchanged despite its ratings downgrade and a few brokers talking it down.
One of the big winners today was Telstra (A$4.84, +1.7%) as it pushes ever onwards towards $5.00. It will get there you can be assured of that. Other defensives were also strong as Wesfarmers (A$43.04, +2.8%), Woolworths (A$35.98, +1.7%) and Westfield Group (A$11.64, +0.3%) rallied hard as well. In fact most things in the garden were rosy with the exception of Golds. Yet another disappointment from two of our biggest in Newcrest Mining (A$16.45, -3.3%) and Evolution Mining (A$0.895, -6.3%) ensured the pressure was on and Silver Lake Resources (A$1.10, -16.0%) had a shocker today following their numbers a day or so ago.
Industrials also did well with Brambles (A$8.65, +3.1%), Crown (A$12.80, +3.3%) and CSL (A$60.87, +1.1%) firing. Retailers also did well with Harvey Norman (A$2.86, +5.9%) and Myer (A$3.17, +3.6%) in the green.
Media stocks were also better with Ten Network (A$0.325, +1.6%) Seven West Media (A$2.01, -1.0%) and Fairfax Media (A$0.645, +2.4%) of the old school better whilst REA Group Ltd (A$29.79, +2.7%) and APN News & Media (A$0.35, +7.7%) impressed.
Property stocks were also finding friends today with GPT Group (A$4.11, +0.7%), Dexus Property Group (A$1.14, +1.3%), Stockland (A$3.87, +1.6%) Charter Hall Group (A$4.17, +3.2%) and Australand Property Group (A$3.60, +2.9%) all better.
In mining services will the last one out please turn off the lights. Boart Longyear (A$0.915, -5.7%), Bradken (A$4.97, -2.9%), Coffey International (A$0.30, -7.7%) and NRW (A$1.195, -6.3%) being the worse. If, the Woodside move is followed by other miners, then the pipeline of projects will start to shrink very rapidly indeed. Good for shareholders of the miners. Bad for the services companies and jobs!
Asian markets were weaker on the Chinese data but then they do not have a WPL today.
Markets closing off its highs but still very positive up 50 odd points after the mid session wobble on the Chinese number. Volume was healthier with Woodside Petroleum (A$37.96, +9.7%) leading the numbers. I feel sorry for the shorts in this one. NOT!
Stocks in the News
Billabong International (A$0.48, -2.0%) denied talk that the suitors had walked away. Wouldn’t blame them if they had though. It’s been four months since this latest disaster started to unfold. Things will have only got worse with Management distracted by private equity looking over their shoulder.
Linc Energy Ltd (A$1.945, +5.1%) had a positive response to the news that Umiat flowed. Although details are scarce at the moment it seems the company is on track at this Alaskan project.
Newcrest Mining (A$16.45, -3.3%) announced ‘more trouble at mill’, at least they are now starting to look at some of their mines and what can be done with them. They have already cut 150 jobs in March and are now looking with “considerable focus” at a number of their mines. It’s about time! Bet they had wished they had never heard of Lihir.
Evolution Mining (A$0.895, -6.3%) has been hit hard after its March production failed to meet targets.Nothing new here. Everyone seems to be struggling to reach their targets.Cash costs also rose to $918 an ounce. Not good.
Discount retailer The Reject Shop (A$16.72, unch) has outlined plans to raise $40m to open 40 new two dollar shops! Seems they are not two dollar but $1m.
In house stocks G8 Education (A$2.35, +4.4%) continued to grind higher. This is a good story and the market is rewarding management for their success.
What do you get if you cross a Virgin with a Tiger? Well looks like more expensive fares as the regulator has agreed to the tie up. Taking out the competitors is always good for business. Ask Qantas Airways (A$1.81, +2.0%) after they killed Ansett off. The golden years!
Tomorrows New Today
One of the Worlds biggest Gold Miner Barrick is at a 20 year low as it struggles with a succession plan and rising costs. Down 54% for the year!
And some good news for exporters today as the little Aussie Battler has fallen to a level not seen since March around 1.022.Should have bought your holiday dollars sooner!
News (A$30.65, +0.7%) has reached a deal with shareholders of around $140m to settle its phone hacking scandal in the UK.
And news today that Australia is one of the most expensive places to live. Anyone who has bought a drink in the city recently will attest to that. NSW power prices have risen by 60% in the last three years! And sorry Tony, but you cannot blame the Carbon Tax for that! Crazy stuff!
S&P suggests that there is a 30% chance they will downgrade Japan as they do not believe their plan to re-inflate the economy is going to work. Me Too!
Suspect we may have a dose of reality after the falls in Asia. Bank holiday coming so expect some profit taking too.