Another day that started with a bang and ended with a whimper. Highs around 5027 were seen early but again we saw lack of conviction and some profit taking creeping back in. At one stage we slipped close to the plimsoll line, however a big push on the close saw it rise 15 pts to 5017. We seem to be stuck in nowhere land despite positive moves from Asia on Abe’s win and Chinese moves to calm things down. Some of it is political of course as we wait for Kev13 to anoint the hour but some are the worries about where our economy is heading coupled with the recent underwhelming corporate and economic news from the US. Inflation numbers tomorrow.

Today we saw tepid gains with BHP Billiton (A$34.50, +1.1%) and Newcrest Mining (A$12.60, +5.4%) leading the way but failing to join the fun were Fortescue Metals Group Ltd (A$3.62, -1.6%) after their production announcement. Energy stocks were also suffering as oil prices pulled back overnight. Woodside Petroleum (A$37.72, -1.3%) led the falls followed by Oil Search (A$8.02, -2.6%) and Origin Energy (A$12.67, -1.3%). Financials naturally were better early today although the strong early gains evaporated a little with Westpac Banking (A$29.49, +0.3%) giving up its advantage and the others registering small loses except Commonwealth Bank of Australia (A$72.39, +0.7%). Macquarie Group (A$46.33, +1.8%) was a big winner again today in the run up to their meeting this week. Whilst insurers took a breather today as QBE Insurance Group (A$16.27, -1.4%) fell on the stronger dollar and AMP (A$4.65, -0.6%), Suncorp Group (A$12.47, unch), Insurance Australia Group (A$5.90, +0.2%) all gave up gains.

Industrials were better with consumer stocks Wesfarmers (A$39.75, +0.8%) and Woolworths (A$33.53, +0.1%) better as were Coca-Cola Amatil (A$13.25, +1.4%), Goodman Fielder (A$0.745, +2.1%), Brambles (A$9.07, +0.8%), Aurizon (A$4.54, +1.1%), Transurban Group (A$6.97, +0.9%), Leighton (A$16.65, +2.0%) whilst Telstra (A$4.96, +0.4%) managed a small gain .Media stocks like APN News & Media (A$0.27, +1.9%) and REA Group Ltd (A$31.13, +5.0%) tried hard but Seven West Media (A$2.13, -1.8%) eased although Ten Network (A$0.275, -1.8%) were unchanged as were Fairfax Media (A$0.505, unch). Mining services picked up a little with Bradken (A$4.88, +1.5%), Boart Longyear (A$0.575, +3.6%), Austin Engineering (A$3.88, +8.1%), ALQ and WorleyParsons (A$22.47, +2.6%) showing strength.

Making hay on the ‘Fun side of the island “ were inevitably gold stocks  with Newcrest Mining (A$12.60, +5.4%), Evolution Mining (A$0.82, +2.5%), Beadell Resources (A$0.77, +1.3%), Kingsgate Consolidated (A$1.755, +2.6%) plus sort assorted other resource stocks like Paladin Energy Ltd (A$1.08, +3.8%), Energy World  Ltd (A$0.55, -0.9%), Panaust (A$1.995, +5.6%), Energy Resources of Australia (A$1.62, +3.2%) and Whitehaven Coal (A$2.22, +1.4%) whilst over in “Neverland “were Atlas Iron (A$0.835, -6.2%), Resolute Mining (A$0.75, -6.3%), Bluescope Steel (A$4.91, -2.8%) and Linc Energy Ltd (A$1.915, -1.5%). Others having a good day were Macquarie Atlas Roads Group (A$2.34, +3.5%) and Automotive  Group (A$3.80, +4.7%).

Volume was again on the wimpy side which suggests that confidence is still low and despite Asian moves we remain skeptical.

Stocks in the News

Incitec Pivot (A$2.70, +0.4%) the latest to issue a small profit downgrade due to outage issues. After initially falling the required 7% or so they rallied back to a positive close. The company suggested that they would be $23m poorer following production problems at Phosphate Hill.

Fortescue Metals Group Ltd (A$3.62, -1.6%) recorded a 41 per cent jump in shipments last financial year. Fortescue says it shipped almost 81 million tonnes of iron ore during the 2012/13 financial year, up 41 per cent on the previous year.It expects iron ore prices to trade in a range of between $US110-$US130 per tonne for the remainder of 2013, citing steady demand from Chinese steel mills.

Billabong International (A$0.415, -1.2%) has sold another of its brands and completed a $325 million bridge loan in order to pay off looming debts. DaKine, a maker of backpacks, luggage and outerwear for snowboard, skiing, surfing and skating, was sold to US private equity firm Altamont Capital Partners for $70 million.

Welcome to the house of fun, Funtastic (A$0.175, -2.8%) today announced that it expects FY13 earnings to be between $20 million and $21 million, down from its previous prediction of between $23 million and $25 million.

Big gains in Shanghai today as punters speculated that Li Keqiang will pour more money into infrastructure projects to keep the growth rate at 7% or better. More bridges to nowhere? More railways? More ghost towns perhaps?

Chinese Premier Li Keqiang said China’s “bottom line” for gross domestic product growth is 7 percent and the nation can’t let growth go below that, Beijing News reported today, citing comments at a recent meeting with economists and businesspeople.

Tomorrow’s News Today

Tomorrow we get the CPI number, plus of course the Flash (ahaaa, savior of the Universe*) PMI number from HSBC.

The ‘Hamburglar’ underwhelmed Wall Street last night as the Golden Arches announced that the “Informal eating out experience” was “challenging” and it would remain so for the rest of the year. So do you want fries with that downgrade.

Third Point LLC, the hedge fund headed by activist investor Daniel Leob, has agreed to reduce its stake in Yahoo.Yahoo will buy back 40 million shares from Third Point, reducing its stake in the internet giant to less than 2%.

More fun and games in Zombieland to come in the following weeks. Portugal has announced that there will NOT be an early election and the junior coalition partner is going to lead negotiations with the Troika!In Spain the embattled PM Rajoy is now saying he will answer questions on his bribery scandal allegations in the coming weeks while in Greece the peasants are still revolting over job cuts to the civil service. And total Zombie debt is now 92% of GDP ! Roll on the German elections then Moaning Mertle can breathe a sigh of relief after keeping the crisis off the front page for a whole summer.

And here’s something to ponder..this time last year it was the London Olympics(seems a long time ago!) and Super Mario uttered those words that put the fear of god into every bear on the Euro Zone. ”Whatever it takes”..amazingly the mechanism that he put in Place the OMT (Outright Market Transactions) has never actually been used. Seems it’s a bit like Abbott’s invisible quotes last week..but it has certainly done the trick ….all has been quiet on the crisis front. Equity markets have surged ahead and borrowing costs for the debtor nations have collapsed. Yields on Spanish 10-year debt, have fallen from more than 7.5 per cent to 4.6 per cent. Italy’s have dropped from 6.7 per cent to 4.3 per cent. The decline is even more dramatic for eurozone countries under official bailout programmes. Greek government yields have dropped from almost 30 per cent to about 10 per cent; Portugal’s from 12 per cent to 6.4 per cent. Simples! Well for now anyway!

*Flash Gordon (Queen)

That is all..and not one mention of the new Prince.. doh! Was doing so well!

 

Clarence

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