Well, it was all going so well today, gold firmer, market perking up and hitting 5053 early before a quick one-two left us reeling a little. Dazed and confused. We have the local CPI which came in better than expected, as the much talked about Carbon Tax failed to lead to higher numbers. However core number was a little on the high side, so off the table went the rate cut and then that was followed in quick succession by the ‘Not so flash’ PMI from China which was horrible, 11 month low. Of course if that number had come out in the US they would have celebrated as the free money would be flowing longer but in the East where austerity is the new game in town, this was a bad portent for the region. Certainly knocked the wind out of our sails and flopped to a tiny 3 point rise at one stage before it staged a comeback to close up around 18 pts. Financials pushed ahead with the banks leading the way especially Westpac Banking (A$29.75, +0.9%) whilst Macquarie Group (A$45.72, -1.3%) suffered after recent rises. Telstra (A$5.01, +1.0%) was full of the joys of spring as results and more importantly dividends approach. In the next 13 months they will pay 42 cents in fully franked lovely dividends. Hard to ignore!

In the sectors, consumer discretionary were a tad weaker led by News (A$33.06, -0.4%), Crown (A$12.55, -2.0%), Flight Centre (A$43.13, -1.9%), Wotif.com (A$5.01, -2.5%), REA Group Ltd (A$30.80, -1.1%) and Seven West Media (A$2.07, -2.8%) whilst energy also took a hit with WorleyParsons (A$21.97, -2.2%), Caltex Australia (A$18.60, -1.4%), Origin Energy (A$12.46, -1.7%) down with Woodside Petroleum (A$37.86, +0.4%) a positive. Bulk Materials were decidedly green, BHP Billiton (A$34.73, +0.7%), RIO Tinto (A$57.68, +1.6%), Atlas Iron (A$0.91, +9.0%), Fortescue Metals Group Ltd (A$3.77, +4.1%), Orica (A$18.35, +3.4%) and Iluka Resources (A$11.29, +3.1%) all very well sought after, as were Gold shares like Newcrest Mining (A$12.69, +0.7%), Silver Lake Resources (A$0.865, +3.0%), Endeavour Mining (A$0.78, +21.9%), Alacer Gold Corp. (A$2.94, +5.0%), Resolute Mining (A$0.82, +9.3%) and Kingsgate Consolidated (A$1.83, +4.3%). Bit of buying in selective mining service companies like Bradken (A$5.02, +2.9%), Austin Engineering (A$4.04, +4.1%) and Boart Longyear (A$0.58, +0.9%) today.

Frolicking on the fun side were Atlas Iron (A$0.91, +9.0%), Oceanagold (A$1.80, +5.3%), Evolution Mining (A$0.855, +4.3%), Independence Group NL (A$3.40, +5.6%), Fortescue Metals Group Ltd (A$3.77, +4.1%), Panaust (A$2.06, +3.3%) and Oz Minerals (A$4.64, +3.1%). Notice a theme here? Whilst being a wallflower were Breville Group (A$7.48, -4.0%), Buru Energy (A$1.805, -3.0%), UGL (A$7.70, -3.8%), Magellan Financial Group (A$11.18, -3.6%) and Ansell (A$18.29, -3.4%).

Volume was slightly better ahead of option expiry day tomorrow Expect a squeeze tomorrow as strike prices beckon in the option market. Big swings in the Aussie dollar kept the computers busy. Love em!

Stocks in the News

More good news from the Pilbara, where cost cutting and production numbers are continuing to impress. Latest ,after Fortescue Metals Group Ltd (A$3.77, +4.1%) yesterday, was Atlas Iron (A$0.91, +9.0%) where they shipped a record 2.22Mt of Wet stuff and now have nearly $420m in cold hard cash sitting in their account. Cash cost of production was in line at around $50.Headline price received $107.Not a bad margin!

Wide Bay Australia Ltd (A$5.00, -12.3%) were given a very wide berth today as late news yesterday on provisioning levels due to actuarial advice was enough to wallop them down 12%.

BlackRock, the world’s biggest fund manager, said Australia’s dollar may drop as low as 80 US cents in the coming nine months after bets against the currency helped give one of its bond funds the nation’s best returns.

Former highly rated Banking analyst and recently the boss of Bank of America Merrill Lynch, Craig Drummond, has been appointed chief financial officer of National Australia Bank, replacing outgoing executive Mark Joiner. Sure to put a few long term NAB boys out of sorts!

Phosphagenics (A$0.115, +4.5%) has announced a huge hole in its accounts following the “resignation” of their former CEO. It is alleged that over the course of 8 years she and a few others have squirreled away nearly $6m of company money !Looks like they ought to have a little word with their auditors.

Tomorrow’s News Today

Austerity is the new black in China, China has banned the construction of government offices for the next five years, ratcheting up an austerity campaign that has already taken a toll on the economy. The State Council, China’s cabinet, and the Communist party late on Tuesday said the ban, which takes immediate effect, would also apply to the expansion of existing buildings.

UK recovery continues to gather post-Olympic pace… UK export activity has reached levels not seen since the financial crisis, according to a report from the British Chambers of Commerce (BCC).The Report also said that export orders for service firms hit a record, 42% of manufacturing firms reported higher export sales , 31% of firms expect to increase staff this year. And in a little know sort of QI fact, did you know that Whisky accounts for 25% of UK food and drink exports!! I am doing my bit, are you? We have Iron Ore and Coal, the UK has single malt!

Citing figures from the Greek ministry of finance, a newspaper said 1.1 million out of 4.8 million workers and pensioners declared an annual income of less than 6000 euro ($7939) that’s below the poverty line.. Soon World Vision will have to add the Greece to its list of where to sponsor children. It’s scary. Of course, it could just be that no one bothers to pay tax!

There’s a war on out there; sure is, a currency war and Japan looks to be running rings around China at the moment. Is it any coincidence that as Chinese Not so Flash PMI falls in a hole, Japan is exporting stuff like the good ol days! Japanese exports continue to recover, rising for a fourth month in a row in June, boosted by a weak yen and a revival in demand from Europe. Exports rose 7.4% from a year earlier. Sales to the European Union (EU) rose by 8.6% – the first jump in 21 months. At some stage China will have to answer fire with fire or risk the 7% line in the sand that Premier Li has drawn.

Ironic really that whilst the rest of the world is adopting the internet thingy as the biggest game in town to make money, Apple is set to go all main street and open a whole new bunch of high street stores ‘cos that’s where it is making so much money. They have 402 retails stores at the moment and looking to take it to 800…and still selling tons of iphones. Few fast facts.. Apple has now paid out more than $US11 billion to app developers since the App Store launched just more than five years ago 14.6 million iPads were sold in the quarter, down from 17 million in in the same period last year and 19.5 million in the March quarter.. and Apple now has $US146.6 billion in its cash hoard, up from $US144.7 billion in the previous quarter.

Surging house prices in Holland have left a nasty hangover and a bit of a property collapse. Home prices are nearly 10 percent cheaper in June than a year ago. The price drop is more substantial than in the preceding month when house prices fell by 8.2 percent. Leaving the country with the highest total household debt-to-income for the seventeen countries that share the euro, according to Eurostat. At more than 250 percent, it far surpasses the same figure for Ireland, Spain and Portugal.So the question is how hard is it to bail out a country already so far under water in more ways than one!

That is all

 

Clarence

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