Today we partied like its 2007! Kev is back, everything in the World is fine, bad news in the US was actually good news as then Ben keeps spending. So with the end of the tax year looming off we went to the races. Up another 1.7% today after a 1.6% rise yesterday. That’s a whopping 160 points in two days led predictably by the financials. Who said the banks were dead, not me. As it was in the beginning of the year, is now and ever shall be. Banks are king. They make $26bn from us in this country. That’s 3 bucks a day from every man, woman and politician. Scary. The big laggards on the market were the much talked about resource stocks BHP Billiton (A$31.47, -0.5%) and RIO Tinto (A$51.79, -0.2%). It does seem that as long as the Aussie dollar goes up the market performs ok. Whenever we have had falls in the currency the market has come under pressure. Overseas investors the key to the market as usual.
All sectors performed well today apart from materials and the big green blob of banks was exceptionally strong. Reports in the papers this morning on how they will do well given a 92 cent dollar certainly didn’t hurt their cause. Telstra (A$4.78, +2.8%) were also strong as the asbestos scare fades into the background and the yield argument and safety wins through. We also saw big gains in News (A$31.15, +2.2%), Woodside Petroleum (A$34.70, +1.1%), Wesfarmers (A$39.48, +2.4%) and Woolworths (A$33.09, +3.1%). The big surprise today given the massive falls in the Gold price yesterday was Newcrest Mining (A$9.90, +6.3%). Seems that the market is now starting to look beyond the current management and the issues they have had and more to the corporate appeal. Of course a bounce in the Gold price did help too but the move to get Dr Newman to investigate disclosures has helped to some extent as well.
So to the sectors, Media perked up with Fairfax Media (A$0.50, +4.2%), Ten Network (A$0.275, unch) and Seven West Media (A$1.93, +3.8%) better although APN News & Media (A$0.26, -8.8%) fared badly. Property trusts also had a good day out with Stockland (A$3.47, +1.2%),GPT Group (A$3.80, +1.9%), Goodman Group (A$4.80, +2.1%), Dexus Property Group (A$1.045, +1.0%) and Charter Hall Retail Reit (A$3.75, +2.7%) and other financials like AMP (A$4.39, +0.9%) and Suncorp Group (A$12.02, +1.3%) also did well. Gold shares found a little support on a slight rally in the gold price with Kingsgate Consolidated (A$1.36, +1.5%), Silver Lake Resources (A$0.57, +2.7%), Regis Resources (A$3.06, +2.0%) and Evolution Mining (A$0.57, +1.8%) doing well.
Energy stocks also enjoyed solid gains today led by Woodside Petroleum (A$34.70, +1.1%) ably backed up by Santos (A$12.41, +0.6%), Origin Energy (A$12.44, +1.6%) and Caltex Australia (A$20.47, +3.8%). Consumer discretionary stocks like JB Hi-Fi (A$16.75, +5.7%), Crown (A$12.28, +2.3%), Tatts Group (A$3.20, +3.2%), David Jones (A$2.62, +4.4%) and Harvey Norman (A$2.58, +3.6%) all gained as confidence post Gillard seems a little higher. The honeymoon period no doubt.
Asian markets helped spur things along as well with the Nikkei up over 300 and Shanghai also in the black but more marginally.
Big winners today included Senex Energy (A$0.565, +7.6%), AWE (A$1.24, +6.9%),Panaust (A$1.94, +5.7%),REA Group Ltd (A$28.30, +4.8%) and Qantas Airways (A$1.345, +4.3%) whilst in the bad boy corner Independence Group NL (A$2.38, -6.3%), Bradken (A$4.38, -2.0%), Lynas (A$0.36, -4.0%), Paladin Energy Ltd (A$0.82, unch) and New News Corp (A$16.30, -1.15%).
Volume was a little insipid considering the moves and again I get the feeling that the touch up for the end of year is helping things along. Option expiry today also helped pull some stocks up a little.
Stocks in the News
Toll (A$5.35, +1.9%) announced a write down today but survived the savaging that others have felt. The good news was they affirmed their guidance for the year.
Glencore Xstrata has cut back coal production and slashed jobs at two of its Queensland coal mines due to lower coal prices, high costs and the strong dollar. As part of the production cuts at its Newlands and Oaky Creek mines, the company said it will lay off about 450 employees at the two mines by the end of the year.
Also GrainCorp (A$12.54, unch) put on some pounds after ASIC said it won’t oppose the $3 billion-plus takeover of Australia’s largest grain-handler GrainCorp by American food giant Archer Daniels Midland.
In local economic news Net household financial wealth per capita rose from $73,352 to $75,955 in the March quarter, up 22.1 per cent over the past year and up 14.6 per cent over the past three years. Over the past decade per capita wealth is up 103.7 per cent.
China’s benchmark interest-rate swap and interbank lending rate fell for a fifth day, the longest runs of declines in at least two months, on signs the central bank is adding funds selectively to ease a cash squeeze.It all sounds so organised but bear in mind there were only 10,yes 10, of these interbank loans organised! And China industrial profits jumped 12.3 per cent in May from a year ago, up from 11.4 per cent in April.
And Big Nath has confounded his sceptics by paying a day early $12 million owing to small coal explorer Blackthorn to settle outstanding litigation.
Tomorrows News Today
Reckon we may see some catch up tomorrow in the bulk commodity stocks.
European Union finance chiefs struck an agreement on how to handle failing banks, a step they said would bolster investor confidence and help overcome the euro-area financial crisis. In seven hours of emergency negotiations in Brussels that wrapped up. Today, ministers settled on guidelines for assigning losses to private creditors and regulating public assistance. They also spelled out when governments can step in and established a role for the European Stability Mechanism, the euro area’s 500 billion-euro ($651 billion) firewall fund.
South Korea has started offering what are billed as the fastest ever 4G data speeds made available to consumers. SK Telecom says its LTE-Advanced network allows files to be downloaded at up to 150 megabits per second. That is twice as fast as before and 10 times the rate of its 3G service.
Britain’s finance minister George Osborne unveiled his plans for another round of government spending cuts on Wednesday as he tried to keep his deficit reduction drive on track despite stiff opposition to his policies. Osborne unveiled details of 11.5 billion pounds ($17.7 billion) of spending cuts during a parliamentary speech in London. The cuts will take effect in the 2015/2016 fiscal year, when national elections are due in the U.K.
The Italian derivatives loss is starting to gather a few more headlines as Rome launches an inquiry into the potential huge loss. And as it is other people’s money the Government has announced it will spend 1.5bn euros ($2bn; £1.2bn) to try to boost youth employment. The funds include tax breaks for companies that hire people aged 18-29, and will target the country’s deprived southern areas. Two in five young Italians are out of a job, while the national unemployment rate is about 12%.
For those early birds I will be guest hosting Sky Business tomorrow morning at 6.30 am. Be seeing you.