Market Wrap

Another interesting day with the market powering out of the blocks to be up to nearly 5245 before profit takers and weariness in banks took its toll and closed only mildly better up 8 points. The great resource rotation continues as banks were sold whilst resource stocks continued to find favour. The overnight falls in the Aussie dollar shone the spotlight on US dollar earners and stocks such as QBE Insurance Group (A$14.56, +3.4%), ResMed Inc. (A$4.97, +2.7%), CSL (A$62.00, +2.1%), James Hardie Industries PLC (A$10.68, +1.1%) and Brambles (A$9.05, +3.1%). Banks and financials eased with Westpac Banking (A$32.95, -1.2%), Commonwealth Bank of Australia (A$70.57, -0.7%) and National Australia Bank (A$32.47, -0.6%) taking the hits, getting worse as the day wore on Macquarie Group (A$45.97, +1.3%), and Perpetual (A$43.98, +3.1%) and  were amongst the few financials to keep their heads above water, maybe their US exposure helps them.

ANZ chopped its rates by more than the RBA cut theirs so perhaps some nerves on that front too. The RBA issued its quarterly monetary policy statement today, also known as its best guess! The good news was they lowered their inflation estimates but that was about as exciting as it got and the GDP outlook steady, ‘below trend’ were their words. This was enough to take some of the gloss off the market and profit taking set in especially in the financials, which have run really hard. Finally the green blob on the market map turns red .Big resources continued to find friends with BHP Billiton (A$34.75, +0.6%), RIO Tinto (A$58.45, +0.4%) and Fortescue Metals Group Ltd (A$3.91, -0.3%) all better but as usual Newcrest Mining (A$17.40, -1.2%) down.

Defensives held relatively steady with Telstra (A$5.01, -0.4%) hovering around the 502 level whilst the W’s all were better, Woolworths (A$34.70, +0.3%), Woodside Petroleum (A$37.24, +0.7%), Wesfarmers (A$42.33, +1.0%) and Westfield Group (A$12.01, +1.4%) in the green.

I did call the market down 10 today so I was somewhat surprised about the up 40 period but feeling slightly less of a goose now with the market closing only slightly up! After 35 years in the market I am still a novice!

Big winners today were Lynas (A$0.66, +2.3%), Seven Group (A$9.66, +3.1%), Whitehaven Coal (A$2.21, +5.2%), Sandfire Resources NL (A$6.74, +4.5%) and Bluescope Steel (A$5.14, +3.2%) while in the naughty corner were Linc Energy Ltd (A$1.695, -3.7%), Evolution Mining (A$0.955, -4.5%) and Resolute Mining (A$0.88, -3.8%).

Volume was not too bad but still thin trading conditions considering the moves. Players still sidelined and being dragged reluctantly to the table. The FOMO (fear of missing out) and the short squeezes drags them in, but it is with caution still.

Stocks in the News

Wow, Karoon Gas Australia (A$6.69, +25.3%), long one of my favourites was starting to test my fortitude before the last two days and a good result at Bilby-1. BBY analyst and KAR guru, Scott Ashton suggested that there was more upside to come and boy was he right with a stunning performance today! Good call on Roc Oil Company (A$0.49, +7.7%) too Scottie, having their AGM today.

Good to see another house fave G8 Education (A$2.36, +4.0%) push back up today after a few down days.

US private equity firm Carlyle Group has submitted a bid for Anglo-Australian miner Rio Tinto’s 80 per cent stake in the Northparkes copper mine in Australia.

Primary Health Care (A$4.99, -5.8%) issued a trading update today and the market punished them accordingly.

Mighty River Power rose 4.8 percent to NZ$2.62 in Wellington. The New Zealand government raised NZ$1.7 billion (NZ$1.4 billion) from the IPO as Prime Minister John Key sells state assets to help reduce the need for borrowing after the budget deficit reached a record following the 2011 Christchurch earthquake.

Tomorrows News Today

Billabong International (A$0.455, unch) still in suspension but it is not looking good according to press reports that the private equity firm are walking and going to participate in some sort of recapitalisation. Not the outcome the shareholders were after!

Global Monetary easing continues with Vietnam the latest to cut its rates on the Dong. PM Dung was happy to see rates fall from 8% to 7% and has approved a master plan to revamp the economy.

At the moment the big game in town is currencies and the Yen is at a 4 year low against the US dollar.

Here’s an interesting plan from the UK, areas that allow Fracking for CSG production should be rewarded with extra resources for schools, police and hospitals. Interesting idea. Over to you Barry!