Another day another 32 points off as we now enter official correction land. 5250 to 4725 in a month. Bang on 4725, coincidence, probably. Once again, the poor old ‘bubble banks’ were hit harder than most. Westpac Banking (A$27.47, -1.2%) led the way down again with Commonwealth Bank of Australia (A$65.12, -0.4%) the best of the bunch whilst other defensives/yield stories also got walloped as Wesfarmers (A$37.23, -1.7%) announced job cuts at Target and Woolworths (A$31.93, -0.2%) gave up in sympathy. Resource stocks seem to be finding some friends given the parlous state of the Aussie Dollar with BHP Billiton (A$32.97, -0.4%) and RIO Tinto (A$52.83, -0.3%) slightly better than the banks. Once again Newcrest Mining (A$11.93, -0.8%) fell, nothing new there, as they gathered a speeding ticket. NCM appeared to be like a Italian footballer who dives in the box and then gets up and acts all innocent, what me! We had no idea that we were about to write off $6bn. Really, must have been in the back of your mind for a while. Great dive NCM, but will do nothing for your credibility! Other resources also fell with Fortescue Metals Group Ltd (A$3.28, -3.2%), Kingsgate Consolidated (A$1.725, unch), Lynas (A$0.495, -2.9%) and Evolution Mining (A$0.825, -2.4%) faring badly.

The one green spot today was Telstra (A$4.61, +0.2%) which are groping in the dark for a bottom. They may have found it in the mid 50’s. A couple of other industrials also turned in a good performance with Amcor (A$9.79, +1.1%) and Brambles (A$9.23, +2.9%) finding friends. Energy stocks were again weak led by Woodside Petroleum (A$34.67, -2.0%) and Oil Search (A$7.75, -1.8%) although Santos (A$12.74, +0.8%) did buck the trend. Mining services continued to fall out of favour as Macmahon (A$0.13, -7.1%) NRW (A$0.99, -2.0%), Boart Longyear (A$0.62, -6.8%) and Bradken (A$4.38, -2.7%) led the way.

Retail stocks took no heart from the consumer confidence figures out today, as David Jones (A$2.38, -3.3%), Myer (A$2.24, -2.2%), JB Hi-Fi (A$15.55, -0.4%) and Harvey Norman (A$2.43, -1.6%) all fell away. And in property trusts we once again had weakness led by GPT Group (A$3.75, -0.3%), Mirvac Group (A$1.575, -0.3%) and Stockland (A$3.51, -0.6%).

In the winner’s circle today, yes there was some, were Hutchison Telecommunications (Australia) (A$0.041, +10.8%), M2 Telecommunications Group (A$5.60, +3.7%), Treasury Wine Estates (A$6.05, +3.2%) and REA Group Ltd (A$29.00, +2.4%) whilst the biggest losers were Senex Energy (A$0.535, -7.8%), Skilled Group (A$2.34, -5.3%), AP Eagers (A$4.19, -4.6%) and Bluescope Steel (A$4.46, -2.6%). Volume was again on the low side but we are all getting used to that now!

Stocks in the News

Lend Lease Group (A$9.03, -3.8%) hit the headlines today with news in the paper of a JV they had with Service Stream is about to be terminated and the $1bn contract they had with NBN in jeopardy.

Big winner today was Gindalbie Metals Ltd (A$0.14, +21.7%) which had a spectacular day after announcing a funding agreement with Ansteel which will see them emerge cashed up and debt free.

Wesfarmers (A$37.23, -1.7%) announced 260 jobs will go at their Geelong head office. Talk about raining and pouring in Geelong at the moment. At least the Ford workers have three years notice! Someone must have shattered a mirror down there!

Seems to be a lot of conferences at the moment, must coincide with big sporting events like the Lions tour as CSR (A$1.95, -3.0%) joined the list of presenters.

GrainCorp (A$12.54, +0.7%) continue higher whilst other stocks we follow like G8 Education (A$2.46, -2.4%) gave up some more gains, along with Fairfax Media (A$0.54, -3.6%) and Seven West Media (A$2.06, -2.8%). Linc Energy Ltd (A$1.235, -5.7%) have found no buyers despite it being announced they are going into the ASX200 and continued to slip along with Buru Energy (A$1.355, -4.6%) and Karoon Gas Australia (A$5.40, -1.1%), Nexus Energy (A$0.084, -4.5%) and Roc Oil Company (A$0.475, -3.1%).

In economic news, the Westpac/Melbourne Institute index of consumer sentiment in June rose 4.7 per cent to 102.2 points. It was above the 100 mark for the first time in two months, indicating that most of the people surveyed were optimistic about the economy. Must have got them at a good time around 6 as they watched Friends!

Australian banks posted the best risk-adjusted returns among global peers in the past 10 years, attracting investors with rising earnings and the highest dividend yields of the world’s biggest lenders. Commonwealth Bank of Australia had the highest returns when adjusted for price swings of the largest companies in the MSCI World Bank Index.

Once again the Nikkei swooned and stumbled below 13,000 before buying emerged and up she went with another 350 point range today! Looking forward to hearing Abe growth strategy on Friday. Should be a doozy!

Tomorrows News Today

Lots of talk about a recession in Australia but worth bearing in mind that the last time this occurred consumer sentiment was in a range of 65 to 75 points; now 102.2 points.

It will be all about unemployment tomorrow as the jobs numbers are out here. I am no economist but I reckon they will be bad!

Coal producers in Indonesia are looking very worried as China moves to ban low energy coal from its power stations. Roughly 20% of its imports at 50m tonnes would be affected! Indonesia is a big supplier of low quality coal. Big ramifications all round.

June 19th sees Benny and the Inkjets back in the FOMC hot seat as they mull over the end of QEIII. Traders will be watching every tick and twitch to see which way he is going to jump. However whether it is in two months three months or twelve months it is going to happen.US bonds are already saying that, CDS spreads on Aussie banks are rising as funding costs start to creep up around the globe.We need to get used to the new playing field where money isn’t free anymore!

A sign of the times as ‘Zombieland’ debt rise once again, Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. (MSCI) after the local stock index plunged 83 % since 2007.And just to cap it off, the Greek Government has closed down its public broadcasting service to cut costs. Everyone gone in a heartbeat!

And in the UK, Wages have fallen more in real terms during the current economic downturn than ever before, according to a report. One third of workers who stayed in the same job saw a wage cut or freeze between 2010 and 2011, said the Institute for Fiscal Studies (IFS).

The promise by the European Central Bank to do “whatever it takes” to save the euro is being challenged in Germany’s constitutional court. The ECB’s vow to buy up the bonds of Eurozone countries if they come under severe pressure has been credited with arresting the Eurozone crisis. There are fears that a court ruling against it could reignite market panic. Even the head of Germany’s own central bank is expected to tell the court that the policy breaches Germany’s constitution.

In more news that won’t help a Euro recovery, floods that have devastated parts of southern and eastern Germany could briefly impede growth in Europe’s biggest economy, an industry body said, while ratings agency Fitch said the economic cost could be as high as 12 billion euros.

Clarence

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