Market wrap

Once again another good start to the day and positive leads overnight gave way to the 11am rout as profit taking in financials and aggressive selling in the resource sector took their toll. From a positive up 20 start to a down day is once again disappointing but hardly surprising given the falls in commodity prices again overnight. Falls were accelerating into the close with banks getting hurt.

Once again BHP Billiton (A$33.76, -0.8%) and RIO Tinto (A$54.68, -2.0%) were leading the charge lower with Gold’s absolutely smashed again. Gold has fallen the most since March 2009 with six straight sessions of downs. I was starting to think they couldn’t go much lower but no they can! Newcrest Mining (A$15.02, -5.3%), Kingsgate Consolidated (A$1.645, -10.4%), Silver Lake Resources (A$0.825, -8.3%), St Barbara (A$0.62, -6.1%), Regis Resources (A$3.70, -3.4%) and Evolution Mining (A$0.83, -11.2%) all nasty. Newcrest has now lost 65 per cent of its market capitalisation from the 2010 highs and yet still the majority of analysts have a buy/hold on them. Bet they are glad they bought Lihir!

Defensives, though, shrugged off the negative vibes and Wesfarmers (A$44.20, +3.3%), Woolworths (A$34.71, +0.9%) and Telstra (A$5.07, +1.2%) all slowed the falls in the market, together with other yield stocks like Woodside Petroleum (A$37.70, +0.7%), yes they really are and Westfield Group (A$12.28, +1.2%). Financials were nowhere near as bad as resources except for stocks like Macquarie Group (A$44.88, -4.5%) and QBE Insurance Group (A$15.05, -3.0%) which came a crashing back to Earth. Commonwealth Bank of Australia (A$72.83, +0.2%) continued to find buyers as did National Australia Bank (A$33.05, -0.1%) but Westpac Banking (A$31.40, -0.9%) succumbed to the kiss of death after I talked them up on Sky Business yesterday! Insurers also had claims made against them with AMP (A$5.54, -2.3%), Insurance Australia Group (A$5.73, -1.0%) and Suncorp Group (A$12.33, -1.2%) all weaker.

In media stocks, Ten Network (A$0.295, -6.3%), Seven West Media (A$2.29, -3.4%) and Fairfax Media (A$0.62, -6.8%) took a breather today along with high flyer REA Group Ltd (A$30.80, -7.5%) whereas its internet rival Seek (A$11.10, +8.7%) had a good day out in the sunshine. Market darling CSL (A$61.68, -2.6%) fell hard as some profit taking took its toll.

Industrials were mixed Amcor (A$10.08, -1.1%), Brambles (A$9.18, -1.2%), CSR (A$1.99, +2.1%), Boral (A$4.54, +0.7%) and James Hardie Industries PLC (A$10.76, +0.1%) whilst retailers Myer (A$2.69, -2.9%), David Jones (A$2.79, +0.4%) and Harvey Norman (A$2.74, -1.8%) fell slightly.

Once again mining services were terrible as the selling continues, Macmahon (A$0.215, -4.4%) gave back their gains whilst Ausdrill (A$1.345, -11.5%), Bradken (A$4.98, -7.9%) and Boart Longyear (A$0.77, -6.7%) all looked woeful. One of this weeks disasters in that sector Coffey International (A$0.155, +29.2%) had a bit of a dead cat bounce but from a very low base these days!

Volume was pretty much in line with recent days.

Stocks in the news

Biggest faller today was Australian Infrastructure Fund (A$0.17, +5.3%) as it went ex capital return. Having handed shareholders back nearly $3.20 today it’s hardly surprising but sure some may look at the price with shock!

Following yesterdays somewhat worryingly look at its UK business Sims Metal Management (A$9.77, -6.8%) felt the full force of an unhappy market.

Evolution Mining (A$0.83, -11.2%) also fell hard today following a site visit and presentation to their Cracow Project.

Another biggest loser today was Virgin Australia (A$0.38, -17.4%) having issued a profit warning after hours yesterday. These warnings are starting to become a little too regular in this market for my liking.

In AGM news, good to see Sydney Airport (A$3.69, +0.8%) pushing up towards record highs following an increase in divs to 22.5c and parking charges! You may get a cheaper flight these days but the parking is ruthless.

In house stocks Linc Energy Ltd (A$1.53, -2.5%) fell a little after announcing their oil and gas results for the third quarter, whilst other house energy stocks also fell Buru Energy (A$1.63, -2.4%) and Karoon Gas Australia (A$6.15, -3.1%) easing again today.

Investment in Australia’s resources sector is expected to peak at a record $85 billion this year, led by unprecedented spending in the oil and gas sector according to an analyst at Wood Mackenzie. Fine thoughts, but may not resonate too well with the service companies he went on to say “The outlook for the next three years confirms the strength of the Australian resource sector, as we see investments being made based on decisions taken during the boom years”.

On a positive note today Japanese GDP rose way more than expected to 3.5% showing what can be done with a load of stimulus and a falling yen! Abenomics works 60% of the time, every time.

Zombieland continues to implode with numbers last night showing output of goods and services, or gross domestic product, fell in the first three months of the year at an annualized rate of 0.9%. That was the sixth-straight quarter of losses. Worse recession since WWII.

Tomorrow’s News Today

Few nasties out of Asia today with Japanese banks falling after their results, foreign investment in China no where near as good as expected, falls on valuation concerns in the Philippines.

BP urging the UK Government to intervene in its Gulf Oil Spill claims issue as seems there are some rorting the system and the company is worried that it is hampering its recovery, making it a takeover target.

The US has lost its acting head of the IRS amidst a scandal after admitting tax staff were picking on conservative groups.

And watch out for further falls in Apple as Google looks to be eating its lunch in a subscription music channel and pretty much everywhere else. One analyst has a $240 price target.

Amazon’s UK unit paid £2.4m in corporation tax last year on sales of £4.3bn – a rate of less than 0.1% – its accounts show.

Seems that a lower Aussie dollar isn’t good for the market after all!

And finally spare a thought for John Paulson.. still long lots of Gold.Boy that has gotta hurt!

Clarence