Come on is that the best you can do? Today was all about Telstra (A$4.74, -0.6%) and the banks as commentators, brokerage houses and talking heads on telly came out against these guys. Is that it? Is that all you can throw at us, well it wasn’t enough. Despite all the talk about the end of the yield trade it still looks pretty well supported from where I am sitting. Westpac Banking (A$28.64, -0.8%) was the worse with Australia and New Zealand Banking Group (A$27.54, +unch) the best in the majors whilst the QBE Insurance Group (A$16.01, +0.5%) juggernaut rolls on and Insurers like AMP (A$5.18, +0.4%) and Insurance Australia Group (A$5.68, +1.8%) and Suncorp Group (A$12.47, unch) all stayed positive today. The big winners in index land were the likes of BHP Billiton (A$34.88, +1.2%),RIO Tinto (A$55.18, +2.3%) and Fortescue Metals Group Ltd (A$3.35, unch) despite the price of Iron Ore falling towards that $110 level . Golds’ were also in demand, there is a phrase that hasn’t left my fingers for a while. Evolution Mining (A$0.805, +3.2%),Kingsgate Consolidated (A$1.63, +3.2%),Silver Lake Resources (A$0.81, +3.2%),Newcrest Mining (A$14.51, +0.6%), all to the good. After a strong start the market gave back all its gains to be down at one stage before closing down 4!Most of the fall was in the 4.10 crunch. It was up 13 before that!!The Nikkei drew some bargain hunting back in to the market especially in resources.

In other defensives Woolworths (A$33.00, -0.5%) continued to fall whilst much maligned Wesfarmers (A$39.24, -0.1%) took a breather from the selling to post a gain today. Suspect it’s just short covering pre the weekend but welcome none the less .However Leighton (A$17.59, -4.9%) fell away today following a news announcement of contracts for its mining investment in PNG.

Energy stocks were mixed with Santos (A$13.08, +1.1%) and Woodside Petroleum (A$35.99, -0.9%) heading in opposite directions while small one like Beach Energy (A$1.215, +4.7%), Central Petroleum (0.10, +19.05%) and Aurora Oil & Gas (A$3.13, +1.6%) plus Karoon Gas Australia (A$5.68, +2.3%) going well. Utilities were strong as AGL Energy (A$14.40, +1.9%),Transurban Group (A$6.92, +0.7%),Duet Group (A$2.32, +1.8%),SP AusNet (A$1.205, +1.3%),Spark Infrastructure Group (A$1.75, +1.7%) and APA Group (A$6.45, +0.8%).

Healthcare stocks CSL (A$59.60, -1.3%) fell, Ramsay Health Care (A$34.57, -1.5%)  and Cochlear (A$64.54, -2.2%) all followed suit. While Wesfarmers (A$39.24, -0.1%) improved after a torrid week and Woolworths (A$33.00, -0.5%) saw some small selling.

Big winners today in large cap land included Sirtex Medical (A$11.50, +7.0%), Oceanagold (A$1.99, +7.6%), Western Areas Nl (A$3.06, +4.8%). Incitec Pivot (A$2.92, +3.9%), Independence Group NL (A$3.23, +1.9%) and Xero (A$11.75, +4.91%) whilst the dogs of war were Leighton (A$17.59, -4.9%), TABCORP (A$3.29, -2.7%), Ainsworth Game Technology (A$3.70, -2.1%) and Premier Investments (A$6.93, -3.8%).

Volume was healthy at over $6bn but still a lot of players on the sidelines for whatever reason.

Stocks in the News

House stocks in the sunlight included Buru Energy (A$1.53, +4.4%), New Standard Energy (A$0.145, +7.4%) and unfortunately Cockatoo Coal (A$0.038, -7.3%) in energy stocks. Mining services are again the subject of downgrades with Mastermyne Group (A$0.78, -6.0%) suffering after we downgraded them to doh! Pharmaxis Ltd (A$0.155, -13.9%) fell back into oblivion again today. Looking pretty awful from this desk.

ASX (A$37.40, -0.2%) fresh from telling the Stockbrokers Association annual beer fest that high frequency trades, computer trades will not  be slowed down artificially.

Elders (A$0.10, -13.0%) has slumped to a hefty first half loss after poor weather and depressed livestock markets affected its agribusiness bottom line. The company posted a net loss of $303.2 million for the six months to March 31 compared with net profit of $47.1 million for the same period a year ago.

From the Mid May highs, Japanese shares have had a fall of 13%, Australian shares -5.5%, Eurozone shares -2% and US shares -1%.

Private sector credit has grown 0.3 per cent (as expected) in April, slightly up from a 0.2 per cent rise in March. Housing credit is up 0.4 per cent, matching the March rise.

Yancoal Australia (0.70, Unch), one of the largest remaining listed coal miners, has warned of continued ‘‘difficult’’ conditions in the global coal market, with sluggish demand and rising export volumes which is forcing all producers to cut costs.

The Nikkei has been the focal point of Asian trade this week, the pullback has been quite severe and the sentiment has spilled over to our market.

Tomorrows News Today

Expect to see another disappointment over the weekend as Chinese PMI due to be released on Saturday comes in below 50! I mean come on why release these numbers on a Saturday. No wonder no one believes them anymore!

Don’t forget sports fan we have a RBA meeting next Tuesday. I am expecting no change as the RBA will work through the numbers and ignore some of the recent negative indicators.

The entire photography staff at a historic Chicago tabloid newspaper and its suburban subsidiaries has been laid off, the photographers have said. The Chicago Sun-Times will instead rely on reporters to shoot photos and video, with freelancers also filling in. Fairfax Media (A$0.62, +1.6%) are you watching?

Inflation appears elusive in Japan.. Does need more work. C+ Could do better! The key to “Abenomics” in this jigsaw puzzle environment is having the power to pump up the real economy. Have to say that looks to be a struggle.. Abe talks about increasing workers pay and reducing unemployment which is already 4.1% .He wants to ignite the economy. Good luck. It has not even smouldered for two decades! Actually nearly three decades!

So has May proved to be a ‘Sell in May and go away’ month.. well yes.. the index is down 5% for the month but importantly the index in US dollars is down 11% for the month. Looks like George Soros has killed it again!

The Dow industrials, in particular, have seen a 17 % jump in 2013 alone even as earnings in the past two quarters have grown little. Is this a sign?

Have a good weekend

 

Clarence

XXXX

Advertisements