Well that was a surprise, after a massive kick at the opening on the back of the Westpac Banking (A$33.55, -1.0%) and Macquarie Group (A$43.11, +10.9%) the market collapsed into apathy. Admittedly Chinese PMI numbers were a little disappointing and we have US Non-Farm payrolls (NFPs) tonight but the lack of follow through is showing the dilemma which is the market at the moment. The banks have run very hard and it’s hard to come to this party this late, while no one is brave enough to switch out of them too aggressively and into resources because maybe that is too early. So it was with some disappointment that the index actually flitted with going negative over the lunch break before managing a slight down and I do mean slight. Financials did suffer and it was a weird feeling not seeing the green blob of bank share price rises advancing across on my market map screen. Commonwealth Bank of Australia (A$71.06, -2.0%) and Westpac Banking (A$33.55, -1.0%) the worse. Sorry Gail and you tried so hard!

The big announcements today were obviously the bank results, Westpac Banking (A$33.55, -1.0%) announced a special dividend and Macquarie Group (A$43.11, +10.9%) confounded all their critics with a great number, a massive increase in Dividend and the shorts were made to suffer accordingly. Talking of shorts the perennial favourite to short has been JB Hi-Fi (A$16.75, +8.1%) which today gave the market some guidance ,the news was good and once again the stock spiked as the computers ran for cover.

Materials were better despite the fall in the iron ore price with BHP Billiton (A$31.97, +0.6%), RIO Tinto (A$54.49, +1.1%) and Fortescue Metals Group Ltd (A$3.41, +2.4%) all finding some switching friends from the banks.

Telstra (A$5.09, +0.6%) fresh from their market briefing at a conference this week continue to pile on the gains whilst the other staple defensives Woolworths (A$35.59, -0.2%) and Wesfarmers (A$42.71, -0.3%) were slightly weaker, although CSL (A$62.67, +1.6%) were making up ground.

Media stocks had a better day with APN News & Media (A$0.37, +1.4%), Fairfax Media (A$0.64, +0.8%), Seven West Media (A$2.04, +5.2%) and Ten Network (A$0.31, +1.6%) all feeling the love. Mining services tried to rally, not sure it was really enough to stave off the declines but at least a step in the right direction for Bradken (A$4.80, +0.6%) and Boart Longyear (A$0.935, +1.6%).

Some of the big winners today included Xero Ltd (A$10.96, +4.88%) Macquarie Atlas Roads Group (A$1.77, +4.7%) and Harvey Norman (A$2.90, +3.9%) helped by the run in JB Hi-Fi (A$16.75, +8.1%). On the negative side was Resolute Mining (A$0.85, -5.6%), Mount Gibson Iron (A$0.485, -4.0%) and Bluescope Steel (A$4.69, -1.3%).

In gold stocks Kingsgate Consolidated (A$1.825, -7.4%) continued to be butchered by the market and have now broken to new lows after dropping a massive 32% this week.

Once again volume was lacklustre given the big volumes in the banks and TLS. In fact 50% of the volume was done in 10 stocks! 60% of the time it works every time.

Stocks in the News

The big stories today were WBC, MQG and JBH but slipping quietly under the radar was the announcement of yet another resource infrastructure project cancelled with news that the Newcastle Coal Loader at a cost of $5bn was gone. Seems the resource boom has well and truly busted for service companies.

Macquarie Group (A$43.11, +10.9%) reported today that their equities business was back in the black having cut $223m out of the cost base.$223m cut, I was amazed they had a cost base of that to begin with! More than just cutting the Tim Tams I suspect. Maybe a party or two bit the dust. Their US counter parts are having their best years since 2011. As a share of the global total, U.S. institutions have the largest slice of that business in 11 years, according to the latest data from Dealogic. investment banking revenues have totalled $11.4 billion so far in 2013, 8 % more than in the same period in 2012, which was a pretty good year.

Couple of our favourite energy stocks looking better today. Karoon Gas Australia (A$3.99, +0.8%) and Kina Petroleum (A$0.38, +10.1%) both had updates today. And Buru Energy (A$1.715, +4.3%), one of my personal favourites finally went up. A bit anyway.

Flight Centre (A$39.85, +4.3%) continued their recent flight path as more and more Aussies are holidaying overseas. Good news travels it appears.

The massively overpaid CEO of Alumina (A$0.915, +1.1%) has received a first strike against his executive remuneration of $2.2m from angry shareholders. It must be especially galling for him, it’s a very responsible role collecting that money from Alcoa in the US. There is all that counting to do. Those dwindling profits won’t count themselves after all. He even got a 50% bonus for losing $US62.1 million in 2012.Just think what he would have got if they had made money! Talk about money for nothing and the chicks for free!

The Future Fund (Civil Service pension fund) has grown more than ten per cent in the past nine months and looks set to exceed its investment mandate of around 5.5% thanks to a global equities market rally. The fund increased by $8 billion since July 2012 to be worth $85 billion at 31 March. In past three months they increased its cash holding to nearly 13 per cent of assets, or $11 billion. Not a huge result given the market rally in banking shares. They could have just left it in TLS, but then they wouldn’t be able to justify such big salaries for looking after it.

Tomorrows News Today

Big focus will be on the NFP number tonight in the US. Economists expect to see 145,000 nonfarm payrolls added in April, and the unemployment rate steady at 7.6 %, after March’s disappointing 88,000 payrolls.

Next week we have the RBA announcement on rates. Now I am no high profile economist but I believe that the RBA will leave things just as they are. They may exert a little more pressure on the high street banks though to cut their rates. After all the RBA is really a sideshow in all this if the Banks do not pass on the rate cuts. Listening to Gail Kelly you would feel very sorry for these banks. They are doing it so tough they are only able to make record profits. Now there is an industry that makes Super Profits, usually come rain, come shine and not at the mercy of those pesky world commodity prices. Still they need to be protected, so no Super Profits tax here.

The Republican-led House of Representatives will vote next week on legislation that will allow the US government to borrow above the debt ceiling, in a move meant to stave off default. Suspect they will say Yes! $17 Trillion and counting!

From the BBC in London! In the world of computerised financial trading, every second counts and superfast fibre-optic networks may no longer be quick enough. Laser beam technology originally developed for the military is being rolled out to shave time off trades. HFT in Europe is believed to account for nearly 40% of total equities trading, generating 6.7tn euros (£5.6tn) a year. Other technologies that may be used in future to help make trades even faster include the use of drones as platforms for wireless links. Oh Please! Maybe the same drones will fire at you if you lose money!

And in a story we will hear more about from Holland is the rising crisis in the economy for one of the Germans staunchest partners in the austerity drive. Recession since 2011 and a doubling of unemployment as a house price crunch is hitting hard! The rate has doubled over the past two years, jumping from 7.7pc to 8.1pc in the single month of March.

And Warren Buffet has joined the ‘Twittersphere’ accumulating 10,000 followers in the blink of an eye. Me, I am still stuck on 108!….@henryj007.Love to get to 110!

Bank Holiday in the UK this weekend.

 

 

 

Clarence

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