The fence sitting of Uncle Ben last night in the US, where he suggested that any change in QEIII will be dictated by the economic numbers, was not enough to really set our market on fire. It was once a again a lackluster day with light volumes and little volatility. We tried really hard to push through 5000 early but lack of follow through and conviction meant that we drifted back as usual. Today it was the turn of the banks to shine. The big green blob was back, Australia and New Zealand Banking Group (A$28.95, +0.5%), Westpac Banking (A$29.68, +1.0%), National Australia Bank (A$30.34, +1.0%) and Westpac Banking (A$29.68, +1.0%) all strong as were AMP (A$4.73, +1.5%), while insurers were a little weaker after yesterday’s run, Suncorp Group (A$12.65, -0.2%), Insurance Australia Group (A$5.85, -1.5%) and QBE Insurance Group (A$16.31, -1.2%). BHP Billiton (A$34.22, +0.1%) consolidated after the last few days run but went from plus to minus and back to plus all day. RIO Tinto (A$56.70, +1.0%) was also strong with energy stocks benefiting too from a more positive sentiment around the oil price rise. Santos (A$14.26, +2.3%), Woodside Petroleum (A$37.46, +unch), Karoon Gas Australia (A$6.25, +2.6%) and Linc Energy Ltd (A$1.65, +3.4%) all better. Gold stocks were easier in line with the underlying shiny stuff lead lower by Newcrest Mining (A$10.95, -4.5%) and Evolution Mining (A$0.695, -4.1%). Others to suffer included Kingsgate Consolidated (A$1.595, -4.2%), Silver Lake Resources (A$0.73, -2.0%), Sims Metal Management (A$9.00, -0.6%) and Regis Resources (A$3.30, -1.8%).

In the industrial space Telstra (A$4.87, +0.8%) continued to draw fans however the healthcare sector was a little off colour today with CSL (A$64.46, -0.7%), Ansell (A$18.55, -3.0%), ResMed Inc. (A$4.86, -1.8%) and Primary Health Care (A$4.89, -1.0%) all down. Retail was also a little mixed with Harvey Norman (A$2.50, unch), Myer (A$2.48, -1.2%), David Jones (A$2.44, -1.2%), JB Hi-Fi (A$16.45, -0.5%) showing no clear direction for the sector. Discretionary stocks also suffered with Flight Centre (A$43.40, -2.2%) leading the way, Crown (A$12.80, -1.5%), Ainsworth Game Technology (A$3.61, -4.0%) and Corporate Travel Management (A$4.30, -3.4%) all weaker.

The grinners today in larger cap land included Technology One (A$1.955, +2.9%), Beadell Resources (A$0.72, +4.3%) and Mirvac Group (A$1.655, +2.8%) whilst sitting in the corner were Acrux (A$3.46, -8.5%), Evolution Mining (A$0.695, -4.1%), Ardent Leisure Group (A$1.74, -4.9%), Charter Hall Group (A$3.84, -3.8%) and CSR (A$2.16, -4.0%).

Volume was light as usual.

Stocks in the News

Biggest story today was the Woolworths (A$33.32, -1.1%) announcement on its losses from the Hardware startup which only seemed to confirm what the market had long suspected. It was costing them big time. How big was revealed today and looks to have been around $157m so far. “Too Ambitious” and “Too Optimistic” by far. The good news was that they reaffirmed the forecast for the group so it wasn’t all bad and they look to be taking steps to reduce the losses at Danks and Masters. Scarily though the management admitted they didn’t really know how to run a hardware chain! One afternoon at Bunnings would give you a few clues! Cheap Chinese tools that break, customer service by your Grandad and running away as soon as you ask a question. Simples!

Woodside Petroleum (A$37.46, +unch) suffered a slide in revenue in the second quarter of the year due to a drop in oil prices and lower production.The company also expects its half year earnings to include up to $US140 million ($152.26 million) in writedowns, mostly due to scrapped projects. Woodside’s revenue in the June quarter of $US1.35 billion ($1.47 billion) was down six per cent from the same period last year.

House fave G8 Education (A$2.63, -1.1%) announced the indicative pricing of their Corporate Note offering 7.35% to 7.75% in the book build. Meanwhile Pharmaxis Ltd (A$0.17, -8.1%) announced their Bronchitol treatment had gained simplified access through the PBS scheme here in Australia. Didn’t help though!

In other Biotech news Mesoblast (A$5.67, -2.2%) announced they had received another $4.3m from the Federal Government for its R&D activities.

Australia’s largest listed rail company, Aurizon (A$4.55, +3.6%), plans to shave more than $230 million in costs from its business over the next two years, in a move which will include job cuts and property sales.

The company formerly known as QR National also disclosed that it had hauled almost 194 million tonnes of coal in the year to June, which was within its latest guidance.

Ratings agency Standard & Poor’s has reaffirmed Australia’s triple-A credit rating, despite a recent fall in the country’s terms of trade and a steep decline in the dollar in recent months.

The main reasons for Standard & Poor’s vote of confidence include Australia’s public policy stability, economic resilience, and flexible fiscal and monetary policy.

Business confidence fell from the first quarter of this year as fears about falling equity and commodity prices took hold, while a weakening Australian dollar and lower interest rates failed to boost sentiment, NAB’s quarterly business survey released this morning found. The business confidence index fall from 2 in the first quarter to minus 1 in the second quarter.

Tomorrows News Today

Happy Birthday Nelson Mandela. 95 today. And the second test starts tonight at Lords!

Chinese importers are negotiating deals to buy at least half a million tonnes of Australian wheat for January-March shipment as the world’s top consumer scrambles to fill a shortfall in domestic supplies following extensive crop damage. China’s wheat crop has suffered more severely than previously thought from frost in the growing period and rain during the harvest, and import demand to compensate for the damage could see the country eclipse Egypt as the world’s top buyer.

And as if Spain didn’t have enough problems.. State support for Spain’s ship building industry will have to be repaid following a ruling by the European Commission. The scheme gave tax advantages to groups of investors that financed ship purchases. The Commission says the scheme made shipyards more competitive by cutting the price of ships by up to 30%.It has ruled the arrangement “unlawful” and said investors will have to pay back tax gains made from April 2007.

Bernie Ecclestone has been indicted in Germany for bribery in the sale of a motor racing business some 8 years ago. The man is 82 and is looking more and more like Ronnie Wood’s older brother these days.

You would have thought that a bad economic climate would be good for eBay. Picking up all those second hand goods for sale but it appears not as the group announced reduced numbers and blamed Zombieland and South Korea for headwinds. The stock slipped 6% after hours in the US.

And as the Greek Parliament votes in favour of yet more job cuts a survey has found that 120,000 professionals, including doctors, engineers and scientists, have left Greece since the start of the crisis in 2010.And emigration to Germany has risen by 40% in a year. Who could blame them!

And finally in a unique role reversal the Chairman of Korab Resources is suing his shareholders. Usually it is the other way round but he is suing for defamation for comments and letters posted to the Hotcopper web site! Strange days indeed!

That is all

Clarence

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