Well the year ended, not with a bang but with a whimper despite the rest of Asia being positive, especially Japan which posted a very strong day following good economic news from both the US and Japan. Hardly surprising given the huge run we have had in the market on the last two days. We closed slightly down for the day on the match out after being up pre the close. In fact the whole of this year’s performance has been in the last two days (160 pts) whilst for the 12/13 financial year we have had a pretty good time. Ok, I know it’s the financials that have made the running but we are still up around 700 points for 12/13 financial year. Once again today banks led the way with Westpac Banking (A$28.88, +0.2%) the standout, however not all financials joined in with QBE Insurance Group (A$15.09, -1.5%), AMP (A$4.25, -3.2%), Insurance Australia Group (A$5.44, -1.3%) and Suncorp Group (A$11.92, -0.8%). Resources remain under a cloud especially the gold sector which is now in crisis mode, but there are some bargain hunters sniffing around RIO Tinto (A$52.37, +1.1%), BHP Billiton (A$31.37, -0.3%) and Fortescue Metals Group Ltd (A$3.04, -1.9%) as the Iron Ore price remains stable. There were some big moves, plus and minus, in some of the second tier resource stocks like Lynas (A$0.375, +4.2%), Panaust (A$1.825, -5.9%), Cudeco (A$2.00, -11.5%), Iluka Resources (A$9.99, -0.6%) and Discovery Metals (A$0.135, +12.5%). The gold sector is starting to find a few friends in places despite everyman and his dog hating the shiny stuff. Silver Lake Resources (A$0.595, +4.4%), Evolution Mining (A$0.57, unch) defied the down drafts but Regis Resources (A$2.89, -5.6%), St Barbara (A$0.45, -4.3%) and Beadell Resources (A$0.50, -4.8%) were weaker.
Other sectors to do well today included property trusts with Dexus Property Group (A$1.07, +2.4%), GPT Group (A$3.84, +1.1%), Stockland (A$3.48, +0.3%) and Mirvac Group (A$1.605, +1.3%) putting on the glitz while consumer spending improved as Wesfarmers (A$39.60, +0.3%),Coca-Cola Amatil (A$12.71, +1.2%) rallied and other quality industrials like Brambles (A$9.34, +0.3%) and G8 Education (A$2.46, +1.2%) saw good gains.
Sharing the winners spoils were Paladin Energy Ltd (A$0.875, +6.7%), Atlas Iron (A$0.745, +4.9%), Virgin Australia (A$0.425, +3.7%), Arrium (A$0.78, +4.0%) and Whitehaven Coal (A$2.30, +2.7%) whilst sitting all alone in the corner were Ansell (A$17.63, -4.7%), Independence Group NL (A$2.26, -5.0%), Metcash (A$3.52, -4.3%), Sims Metal Management (A$8.26, -4.4%), David Jones (A$2.55, -2.7%) and Metcash (A$3.52, -4.3%).
Looking back over the year that was the top five performer for the financial year in the ASX 50 are a mixed bag:
Macquarie Group: 62.95%
Insurance Australia: 61.58%
New Corp – CDI B: 57.23%
Suncorp Group: 53.56%
While the losers include
Iluka Resources: -10.51%
Fortescue Metals: -36.48%
Newcrest Mining: -54.9%
Volume was solid at over $6bn, however some of that was down to options expiry yesterday which bumps up the volumes on exercises. However all up it’s been a very positive week for the market as we have recovered some confidence following the May sell off. Fed comments and the Chinese money markets have calmed the savage beast of the market and led us higher.
Stocks in the News
Today’s downgrade came from Kingsgate Consolidated (A$1.265, -7.0%) which made a $300m write down on its Challenger purchase from a few years ago. Challenged indeed. It is pretty close to what the company paid for the mines in the first place.Production cuts don’t help either back to 70-80,000oz a year.
The other shock downgrade came from Caltex Australia (A$18.05, -11.8%) as it blamed the higher Aussie dollar for a $50m hole in its books. They call it refining and supply profit impact!
Woodside Petroleum (A$35.01, +0.9%) announced today their continued overseas expansion with a farm in to some offshore Irish prospects. The area is known as the Porcupine Basin. I am sure there are some good jokes in there somewhere!
Heavy machinery dealer WesTrac is cutting 350 jobs in NSW and the ACT as part of a restructure, because of ‘‘challenging market conditions’’ The company, a division of Seven Group Holdings, which is chaired by Kerry Stokes, provides Caterpillar machinery such as bulldozers and trucks to miners and builders.
The long-serving chief executive of blood products and vaccine supplier CSL will take home $4.9 million in one-off payments when he severs ties with the company in October. Plus he will get $18m in shares ..not bad for 23 years at the helm but he is one of the few that can really point to that period as a massive success.
Japan’s Topix index and the benchmark Nikkei 225 Stock Average both jumped more than 3 %, extending gains for a second week. Reports today showed the economy strengthened in May as industrial production rose the most since 2011, retail sales climbed and consumer prices halted a six-month slide, bolstering Prime Minister Shinzo Abe’s push to end a deflationary malaise.
Tomorrows News Today
EU summit in the next few days as the mandarins grapple with ways to boost youth employment. Hope no one suggests National Service. Great idea to arm a disgruntled youth!
Worse four week losing streak for US bond funds with a massive $8.6bn pulled out recently. And John Paulson has had a rough time too as Gold has taken a heavy toll on his billions.
Chinese central bank Governor Zhou Xiaochuan said the nation will maintain market stability and adjust policies at the right time, his first comments since a record cash squeeze hit the world’s second-largest economy.
You say potato, I say potato, The UK economy did not experience a double-dip recession at the beginning of 2012, official figures have shown. Updating its historical data, the Office for National Statistics (ONS) said growth was flat in the first quarter of 2012, revised from an earlier estimate of a 0.1% contraction. Big difference to the man on the Clapham Omnibus.
RBA meeting on Tuesday…rates on hold still.