Another strong day today which gathered momentum as the day wore on. Positive leads, confidence down so rates cuts back and commodity prices perking up all helped, plus no Chinese meltdown today! However once again volume was pretty light as financials led us higher yet again. It is a now familiar story with Westpac Banking (A$28.95, +2.2%), National Australia Bank (A$29.42, +1.9%), Australia and New Zealand Banking Group (A$28.66, +1.9%) and Commonwealth Bank of Australia (A$70.14, +1.7%) the standouts but thankfully today even BHP Billiton (A$31.61, +2.1%), RIO Tinto (A$52.04, +0.8%) and the consumer sector joined in. In fact it was hard to find any flies in today’s ointment. Only Telstra (A$4.76, -0.6%) and Caltex Australia (A$18.04, -3.6%) disappointed in the majors. Big gains in other financials stocks like Macquarie Group (A$43.51, +4.9%), Perpetual (A$40.42, +4.7%), Magellan Financial Group (A$11.69, +2.8%) and IOOF (A$7.86, +4.0%) also helped things along. In resource stocks only Newcrest Mining (A$9.74, -1.6%) were weaker which was surprising given the gold price improved although overseas Gold stocks were weaker so perhaps there is some selling of majors still around. Suspect we may see some buying return in this one tomorrow. Other Golds though were better with Evolution Mining (A$0.58, +2.7%), Silver Lake Resources (A$0.655, +8.3%), Regis Resources (A$3.18, +4.6%) and Sims Metal Management (A$8.44, +2.1%) all healthy and happy today.

In the industrial space CSL (A$64.66, +2.7%), Brambles (A$9.31, +0.9%), Amcor (A$10.74, +0.7%) and Leighton (A$16.96, +4.0%) did well and even Qantas Airways (A$1.32, +3.9%) found some frequent buyers. Media stocks were better with Fairfax Media (A$0.535, +4.9%) leading the way with Ten Network (A$0.285, +1.8%) and APN News & Media (A$0.275, unch) also better. Retailers were also better Harvey Norman (A$2.50, +2.5%), David Jones (A$2.54, +0.8%), JB Hi-Fi (A$17.15, +1.9%) and Myer (A$2.52, +2.9%) with foodies Woolworths (A$33.23, +2.2%) and Wesfarmers (A$39.48, +1.5%) also showing a clean pair of heels. Good gains too in the property trust sector led by Westfield Group (A$11.76, +2.2%), GPT Group (A$3.93, +2.6%), Dexus Property Group (A$1.09, +1.9%) and Stockland (A$3.52, +2.0%) whilst the sector everyone loves to hate, mining services, also showed some gains with Boart Longyear (A$0.49, +2.1%), Bradken (A$4.44, +1.6%), Cardno (A$5.37, +2.5%), Coffey International (A$0.145, +26.1%), Monadelphous Group (A$15.14, +1.3%), WorleyParsons (A$20.20, +0.1%) all digging themselves out of a hole.

Big grinners today included Fairfax Media (A$0.535, +4.9%), Henderson Group PLC. (A$2.72, +5.0%), Seven West Media (A$2.09, +4.0%), Charter Hall Group (A$4.01, +4.7%) and Wotif.com (A$4.72, +4.2%) whilst suffering from vertigo were Karoon Gas Australia (A$5.89, -2.2%), REA Group Ltd (A$29.11, -2.0%), Seek (A$9.20, -1.2%) and Cochlear (A$61.04, -0.9%).

Volume was light considering the big gains. A supermodel would probably make it out of bed but only just. Suspect we may see more upside in coming days… 4950 my target.

Stocks in the News

Good to see my favourite oil stock Buru Energy (A$1.50, +11.9%) improving as shorts suffering, with New Standard Energy (A$0.18, +16.1%) also doing really well plus AWE (A$1.40, +3.3%) following an announcement on their Arrowsmith project.

Cudeco (A$1.835, +1.1%) announced their high grade crusher is being tested in an effort to ship DSO to China. The interim product will be native Copper will some Cobalt and Gold attached.

Industrial real estate investment trust Goodman Group (A$4.86, +0.6%) has raised $775 million of new equity through its European operations. The latest equity raising completed a process which attracted total demand of $1.3 billion. The company said most of the equity was raised via a rights issue to existing investors, with additional equity raised through demand from new investors.

Henderson Group PLC. (A$2.72, +5.0%) issued a trading update today with a good lift in performance fees. This space has been doing well recently as seen in the Magellan Financial Group (A$11.69, +2.8%) share price rise.

Telstra (A$4.76, -0.6%) announced today more offshore jobs as it sacked 170 from its local operations.

Ramelius Resources (A$0.13, +23.8%) has had a golden day as it recorded record gold production from its Mt Magnet project and also a cost cutting exercise.

In other news Business confidence was at its lowest level since September 2012. A fall in the economic outlook for Australia also placed a damper on firms’ expectations, with only 52 per cent of the 2863 respondents saying they considered the next 12 months as being a good time to invest in growing their businesses. Of course this is helping punters focus on rate cuts to come in August.

China could not make up its mind today following some economic numbers  showing consumer prices jumped 2.7 per cent in June from a year earlier, up from a 2.1 per cent rise in May, and faster than the 2.5 per cent rise expected by economists. Producer prices are still falling in China, dropping 2.6 per cent in June, after a 2.9 per cent fall in May.

Tomorrows News Today

Europe set to open higher with FTSE up 30, DAX 35 and CAC 15 up.

More earnings from the US tonight but Alcoa was not as disappointing as recent years. Of course it may have something to do with low expectations. They certainly managed to achieve that!

Citi has downgraded China’s growth outlook from 7.6 to 7.4 per cent for 2013, and from 7.3 to 7.1 per cent in 2014, with risks of even slower growth if there are policy missteps amid a period of reform by the government.

Another reason to like gas stocks! China’s policy of giving free coal for heating to residents in the north has contributed to shaving 5.5 years off life expectancy there, a study says.

Looks like they are trying to bring in money laundering controls in Macau as they look to bring in requirements on how much money you can bring into the gambling hub of Asia. Visitors from China have flooded in carrying wads of cash, turning the city into the world’s largest gambling hub with $38 billion in revenue last year. Looks like the Governments are getting concerned at this huge growth. I am sure Jamie is lobbying them hard too for the status quo.

Hedge fund manager John Paulson’s gold fund has lost 65 percent of its worth so far this year after the portfolio declined 23 percent last month. Paulson & Co’s largest holding by market value at the end of the first quarter was the SPDR Gold ETF, with 21.8 million shares, according to a regulatory filing. The firm also had large stakes in gold mining companies through March, those filings showed.

Thank god for the US consumer Americans are once again spending more on credit, increasing their borrowing by $19.6 billion in May, according to the US Federal Reserve. It is the biggest increase in borrowing in more than a year and reflects renewed confidence among US consumers. Cars ,houses and college loans! No bubble here! Gotta love History repeating itself now interest rates are so low around the World. Apparently no one remembers the reasons we got into this mess in the first place!

 

Clarence

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