Another big down day today (-1.4%), down the same amount as the Australian Cricket team scored last night! Losses were fuelled by weaker US and Asian markets, and an underwhelming GDP print from the local economy. To be fair our market was actually worse before the GDP figure came in at 0.6% rather than the best guess from the Astrologers at 0.7%. However the rally didn’t last as selling on the close whacked it down to near the days’ worse levels. Once again Fed stimulus worries coupled with Japanese weakness were the culprits. PM Abe announced that he will fight the deflation monster and slay it, think he is auditioning for Game of Thrones. He gave a major speech today and announcing his quest to find the mother of dragons and slay her children and the Nikkei promptly looked like a GOT wedding ceremony. Broad losses across all sectors as the index tried to find some support around 4850. Failed and closed down 65 points at 4835. Crunched on the close again. For those that read my morning newsletter that was the level I had been targeting. So here we all are then. Now what? Wish I knew!

The big red blob on the market map that is the banks were once again weak with Westpac Banking (A$28.19, -2.6%) the worse followed by Australia and New Zealand Banking Group (A$27.20, -2.5%) and National Australia Bank (A$28.95, -2.2%) and Commonwealth Bank of Australia (A$66.25, -1.3%) bringing up the rear. In other financials Macquarie Group (A$40.75, -3.3%) also fared pretty badly as did Henderson Group PLC. (A$2.60, -1.9%), AMP (A$5.03, -2.3%) and Suncorp Group (A$12.28, -2.0%). QBE Insurance Group (A$15.52, -0.6%) was once again bucking the trend as a big beneficiary of the US bond market and the falling Aussie Dollar. In resource land, BHP Billiton (A$33.79, -1.4%) and RIO Tinto (A$54.36, -1.4%) got slightly mangled whilst the third force in Iron Ore Fortescue Metals Group Ltd (A$3.55, +2.6%) managed to eke out a rise after the price of the underlying rose over 4 bucks last night.

Defensives proved otherwise as Woolworths (A$32.32, -0.7%) and Wesfarmers (A$38.58, -0.8%) slipped. But Telstra (A$4.68, +0.2%) started to find some friends after the asbestos scare. Industrial shares Brambles (A$9.30, +2.9%) bucked the trend as did News (A$33.51, +0.6%) and some of the Telcos like Singapore Telecommunications (A$3.11, +0.6%) and Telecom of New Zealand (A$1.93, +2.7%).

Property Trusts had a weaker day with GPT Group (A$3.75, -1.6%), Stockland (A$3.55, -1.9%), Dexus Property Group (A$1.065, -1.8%), Charter Hall Group (A$3.85, -3.5%) and Mirvac Group (A$1.575, -2.2%). Retail stocks though were better with JB Hi-Fi (A$15.66, +3.0%), Kathmandu (A$2.25, +3.7%) and Myer (A$2.43, -0.4%) all stronger whilst Harvey Norman (A$2.53, -2.7%) suffered.

On the podium today were Linc Energy Ltd (A$1.53, +6.3%), Oz Minerals (A$4.45, +5.0%), Atlas Iron (A$0.86, +3.6%) and Cochlear (A$57.31, +2.3%) (again!) whilst taking an early bath in the dressing room were Newcrest Mining (A$14.35, -5.3%) (Again!), Magellan Financial Group (A$8.35, -3.5%), Seek (A$9.22, -4.0%), Qantas Airways (A$1.475, -5.8%) and Bank of Queensland (A$8.49, -3.4%). Mining services were back in trouble today as Macmahon (A$0.16, -11.1%) and Bradken (A$4.58, -1.9%) fell.

Volume was once again on the low side around 4.3bn as more players moved to the sidelines ahead of US Non-Farm numbers on Friday.

Stocks in the News

Some good news for ASG Group (A$0.335, +19.6%) as they have won a new contract worth $25m with more to come for its New World Computing solution.

Macmahon (A$0.16, -11.1%) has more bad news at its CSA project with the shaft sinking terminated with extreme prejudice by the client. It was hoping that this contract would be contributing $80m of revenue in 2014! Not now!

First quarter GDP growth has come in slightly below expectations: the economy expanded 0.6 per cent in the quarter, matching the previous quarter, and 2.5 per cent over the year, down from 3.1 per cent. WA though looks like it is falling into a pit of despair.

It’s on. Trade wars come to town when China’s Commerce Ministry said today it had begun an anti-dumping and anti-subsidy probe in European Union wine after the EU said it would impose duties on imports of Chinese solar panels.

Seems our obsession with new cars shows no signs of abating. The Australian Federal Chamber of Automotive Industries VFACTS report showed total vehicle sales in May were 96,788, a 12.6 per cent increase on April’s 85,117. After adjusting for seasonal factors, sales were up 5.1 per cent, said VFACTS

Tomorrow’s News Today

Apple has lost a ruling by a US trade panel in a patent dispute with its rival Samsung. The International Trade Commission (ITC) ruled that Apple infringed on a Samsung patent, which could mean some older models of the iPad and iPhone are banned from sale in the US.

Big US number on Friday will focus investor’s minds.

In Brazil, the government has slashed its new transaction tax because it is worried that the REAL is falling too fast!

The markets have quivered as Abe has announced he will use his third arrow, back to GOT’s again. Japan’s Prime Minister Shinzo Abe on Wednesday unveiled a long-term plan to revive the Japanese economy, pledging to raise incomes by 3 % annually over the next decade and set up special economic zones to attract foreign investment. Abe said the government would also fully liberalize the retail electricity market and aim to boost power related investment to 30 trillion yen ($300 billion) over the next 10 years.

Alex Friedman one of the senior talking heads at UBS wealth has suggested that “Abenomics” could turn into “Abegeddon” if the growth his arrows are aimed at go astray. Investors may end up getting nervous about Japanese Government debt and “stampede out the door”.

And finally much talk starting to emerge about the so called “Hindenberg Omen”. This according to the chartists and tea leaf readers is a sure sign that the US market is about to crash and burn much like its name sake in 1937.It really is an obscure technical indicator which relates purely to the US market .Last time the indicator reared its ugly head was in 2010.Then the market rallied 24% in nine months. It is about as scientific as a black cat crossing in front of you. But keep hold of your lucky rabbits paw just in case.

Clarence
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