After last night’s Dow rally it was disappointing to see us open weaker and fall down 20 odd before current account numbers, Japanese markets rallying and a bit of bargain hunting before the RBA announcement ensured we clawed back the losses before closing slightly higher up around 12 at 4900.Coincidence, maybe?

The rise today was led by resources and banks fared less favourably with the exception of National Australia Bank (A$29.61, +1.1%) which has now made up its dividend and more. Who said yield stocks were dead. Commonwealth Bank of Australia (A$67.15, +0.3%) and Australia and New Zealand Banking Group (A$27.91, +0.2%) also were better but Westpac Banking (A$28.95, -0.2%) failed to launch. Other financial losers included QBE Insurance Group (A$15.61, -0.3%) and K2 Asset Management Ltd (A$0.50, -9.1%). Good to see resources recover with RIO Tinto (A$55.13, +2.5%) leading the way followed behind by BHP Billiton (A$34.26, +0.5%) and Fortescue Metals Group Ltd (A$3.46, +6.1%) whilst in energy stocks Woodside Petroleum (A$36.11, +0.6%), Oil Search (A$8.08, +0.1%) and Origin Energy (A$13.32, -0.1%) led the tiddlers like Senex Energy (A$0.60, +6.2%), Karoon Gas Australia (A$5.64, +3.9%) and Beach Energy (A$1.18, +2.2%). Former pin up stock Telstra (A$4.67, +0.2%) seems to have found a level after the bad news from its asbestos liability story collides with the undeniably attractive yield.

Good to see Cochlear (A$56.01, +5.9%) bounce today after yesterday’s overreaction. Seems no one was listening to the real story yesterday but today sanity returned. Although other healthcare stocks like CSL (A$59.26, -0.4%) and ResMed Inc. (A$4.94, -0.8%) remained under water.

Gold has managed to hold its recent gains and with it gold shares are on the rise. Silver Lake Resources (A$0.90, +3.4%), Kingsgate Consolidated (A$1.96, +4.3%), Evolution Mining (A$0.885, +4.7%), St Barbara (A$0.70, -2.1%) and Beadell Resources (A$0.765, +4.8%) were all strong as was Newcrest Mining (A$15.15, +0.2%) despite one large broker suggesting that only half of their Gold mines were actually making money. That seemed to come as a shock to the market as it had assumed that none of them were!!

Consumer staples like Woolworths (A$32.55, -0.5%) and Wesfarmers (A$38.91, -1.1%) were lacking impetus today although retailers were better despite no rate cut. Harvey Norman (A$2.60, +4.4%), David Jones (A$2.50, +0.4%), Myer (A$2.44, +0.4%) and JB Hi-Fi (A$15.20, +0.8%) all enjoyed their day in the sun. Media stocks were mixed as APN News & Media (A$0.29, +5.5%) were a poster child but Fairfax Media (A$0.60, -1.6%), REA Group Ltd (A$28.60, -0.6%), Carsales.Com (A$8.73, -1.1%) all fell.

Big winners today included Atlas Iron (A$0.83, +8.5%), Senex Energy (A$0.60, +6.2%), Energy World Ltd (A$0.435, +3.6%), Oz Minerals (A$4.24, +5.5%) and Independence Group NL (A$3.33, +3.4%) whilst being hit with the ugly stick were Codan (A$2.86, -3.4%), Trade Me Group (A$3.96, -3.2%), Downer EDI (A$3.54, -3.3%) and Computershare (A$10.53, -2.5%).

Volume was once again not exactly the stuff brokers dreams are made of at around $3.9bn.

Stocks in the News

Billabong International (A$0.23, -49.5%) came back on today after talks with its suitors fell through. The company is now in desperate straits after 18 months of opening its books to all and sundry. Now it is looking for Asset sales and refinancing to save its boardies. If you want to know whether to buy or sell this one. Ask a 16 year old boy on his thoughts on it. I did. They have some issues that’s for sure!

RBA has left rates unchanged. Now of course in this new normal that does not preclude the big banks from cutting their rates but looks like the Status Quo will be maintained for a little while, although the RBA did note that the AUD will still high. Need to get them down, down prices are down! The current account deficit narrowed to $8.5 billion in the first quarter, from $14.7 billion in the last three months of 2012, and a bit lower than expectations of a $9 billion deficit.

House favourite Buru Energy (A$1.405, -6.0%) continues to drift lower whilst SMS Management & Technology (A$4.72, -5.8%) presented and wished they hadn’t!

Yesterday’s bete noir, Transpacific Industries Group Ltd (A$0.75, -4.5%) continued its slide as one or two brokers started talking about bottoms being found.

Ten Network (A$0.28, -3.4%) appear to have won the rights for T20 cricket. Well it’s not really cricket, just a slog-a-thon but at least they have made NINE pay $500m for the rest of the sports rights. 118 % more than the previous five-year deal! Good idea to cripple your opposition with massive cost base. Seriously! Bring on the Ashes.

Nathan Tinkler, the Australian mining Ex billionaire, agreed to pay A$12 million ($11.7 million) to settle a dispute with Blackwood Corp. over a failed share purchase. Apparently he found the money down the back of the sofa.

Tomorrows News Today

Tomorrow we get the GDP print so we will see how we are really travelling. Of course we should be able to work it out from all the profit warnings that have been flying around recently. But expect some disappointment.

The US manufacturing sector struggled to grow in May, two surveys have shown, underlining worries over the pace of economic recovery. The Institute of Supply Management’s manufacturing activity index fell in May to its lowest since June 2009.

September seems a look way off and there is many a slip etc but Tony Abbott does look like a shoe in but let us not forget that in another hemisphere far, far away Angela Mertle is up for re-election as well. This one is probably going to be slightly more interesting given the parlous state of Zombieland. She will have to balance domestic with placating her partners in the grand experiment! Will be interesting given that things are pretty dire and riots are now starting in otherwise docile Sweden of all places.

Huge falls in Turkey as PM Erdogan blames extremists for the continuing unrest. This was the poster child of the region and the shining example of a Country that seem to be able to reconcile many groups within the country. Things don’t look quite so good now but if there was an ETF on Turkey I would be a buyer..

The European Central Bank is backing away from any “big bazooka” style intervention to revive lending within the euro zone, delivering a blow to some market hopes of ambitious action. Small and medium sized businesses that form the backbone of the Spanish and Italian economies have seen their borrowing costs rise to unaffordable levels during the crisis while interest rates charged to their German counterparts are near record lows, reflecting the ECB’s rates.

This is quite scary when its put like that, more than 200m people across the world are predicted to be jobless in 2015, a report from International Labour Organisation has claimed, with employment rates not expected to return to pre-crisis levels for another four years.

And as the UK follows the US down the fracking route,no it’s not a spoonerism, IGas,a UK gas company, said it now believed there could be as much as 172 trillion cubic feet (tcf) of gas within its drilling areas in Lancashire and Cheshire, equivalent to more than 50 years’ worth of UK usage. Good luck getting it out.

And the big question is can the Dow make it 21 from 21 Tuesdays in a row that the market has gone up, my money says no, there is only one Black Caviar!

Clarence

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