Weak commodity prices and profit taking plus of course the not so flash PMI from yesterday combined to cause weakness in the resource stocks. Having hit a low around 5007 the market clawed its way back as the day wore on and even went positive in the run up to the close. Maybe news from China on more money to be spent on infrastructure helped. Years ago Japan seemed to concrete everything, now China wants to cover everything in steel. Good for us I guess. Newcrest Mining (A$12.53, -1.3%) led the way following their production report as BHP Billiton (A$34.77, +0.1%), RIO Tinto (A$57.50, -0.3%) and Fortescue Metals Group Ltd (A$3.65, -3.2%) joined the fun, although they did claw back most of their losses by the close. Naturally with resource stocks weak the money sloshed to financials again and the big green blob of the four banks was back. Westpac Banking (A$30.06, +1.0%), Cabcharge Australia (A$4.45, -0.4%), National Australia Bank (A$30.87, +0.7%) and Australia and New Zealand Banking Group (A$29.12, +0.5%) all to the good. However disappointing days for Macquarie Group (A$44.65, -2.3%) which have been pretty good recently as the Holey Dollar boys updated the market at their AGM.I thought it looked ok but they have run hard so maybe a little buy the rumour sell the fact in play.
Telstra (A$4.94, -1.4%) eased back today with defensives mixed after good end of day rallies in Wesfarmers (A$40.03, +0.2%), Woolworths (A$33.54, unch) and SP AusNet (A$1.19, -3.6%). One bashed and left as carrion today was Ausdrill (A$1.085, -14.9%). Not sure why? Sure someone will tell me. Probably lumped with AAX.
Gold took a beating again after falls in the price overnight. Silver Lake Resources (A$0.815, -5.8%), Kingsgate Consolidated (A$1.705, -6.8%), St Barbara (A$0.515, -20.8%) and Regis Resources (A$3.40, -4.0%) led the way and Iron Ore stocks fell away too with Atlas Iron (A$0.87, -4.4%), Arrium (A$1.035, +1.0%) weaker too. Energy stocks were softer led by falls in Origin Energy (A$12.08, -3.0%) on rumours of a downgrade and Woodside Petroleum (A$37.88, +0.1%), Santos (A$13.73, -0.9%), Oil Search (A$7.96, +0.1%) and Linc Energy Ltd (A$1.765, -6.4%) fell on the lower oil price. Mining services again struggled with Bradken (A$4.70, -6.4%), Boart Longyear (A$0.56, -3.4%), Coffey International (A$0.125, -7.4%), NRW (A$0.955, -13.2%), Macmahon (A$0.145, -3.3%) and Swick Mining Services Ltd (A$0.305, -1.6%) easier.
Big winners today included Sirius Resources, United Overseas Australia (A$0.51, +7.4%), CSR (A$2.21, +4.7%), Treasury Wine Estates (A$4.92, +4.0%) and Magellan Financial Group (A$11.48, +2.7%) whilst sitting in the corner feeling sorry for themselves were McMillan Shakespeare (A$8.80, -42.7%)(obviously)Energy World Ltd (A$0.58, -6.5%), Linc Energy Ltd (A$1.765, -6.4%), Mount Gibson Iron (A$0.58, -4.9%), Evolution Mining (A$0.82, -4.1%) and UGL (A$7.16, -7.0%).
Volume was still on the low side and if you take out the day traders in MMS was nothing to write home about. Asia was down on growth concerns and the Aussie battler stabilised around .9160.
Earnings season should be interesting. Expect lots of comments with ‘challenging’ in them!
Stocks in the News
In house stocks, Buru Energy (A$1.69, -6.4%) eased as did other energy stocks today with Karoon Gas Australia (A$5.80, -1.4%), New Standard Energy (A$0.16, -3.0%) and REY Resources (A$0.052, -8.8%) down.
There has been a rude awakening for a few today. McMillan Shakespeare (A$8.80, -42.7%) which resumed trading today after a long suspension were decimated after the Kev13 announcement on FBT for leases. The shares opened at under $7 which was pretty silly really. Let’s face it this is not even been passed by the Parliament yet and Tony will repeal it anyway. Some sense did prevail for the stock to bounce big time to a high of $8.55 which is still a huge fall today. Of course it doesn’t help that the company is now not talking to analysts about the impact. Unfortunately when you base a whole business on a loophole in the FBT tax laws it is a bit vulnerable…
Others having shockers today were Ausenco (A$1.485, -30.9%) after a profit downgrade. Looks a tad overdone but once you are in the computers sights it’s all over red rover .In resource land they had their own issues as Oz Minerals (A$4.30, -7.3%) reported their quarterly. Not pretty.
They were in the bears’ sights as the conference call did nothing to calm analysts fears. Apparently management failed to give clear answers to some of the questions on costs at Prominent Hill. Naughty management. Maybe they don’t know.
Commonwealth Property Office Fund (A$1.17, +3.5%) enjoyed their time today as they announced in the last few days the moves to internalize their management and Dexus Property Group (A$1.05, +1.9%) have used this as an opportunity to grab 15% of CPA. Looks like its game on for these assets from CBA.
Few other announcement first thing this morning as Newcrest Mining (A$12.53, -1.3%) and Macquarie Group (A$44.65, -2.3%) updated the market. The Millionaire factory suggested that they expected better things to come. They always say that and as has been the case for a while their FUM business was doing particularly well. Such a dull business but such a great one! Newcrest Mining (A$12.53, -1.3%) were easier but considering the gold price falls overnight it was hardly surprising. Numbers weren’t bad and guidance maintained.
Tomorrows News Today
China has unveiled a series of moves aimed at boosting growth, indicating that policymakers are concerned about the slowdown in its economy. The steps include tax breaks for small businesses, reduced fees for exporters and opening up of railway construction.
Bo Xilai, the former high-flying Chinese politician whose dramatic purge sparked the most serious political upheaval in the country in decades, was charged on Thursday with several counts of corruption and abuse of office.
While we are on China, The chief executive of GlaxoSmithKline has insisted the British drugs group had no knowledge of the alleged cash and sexual favours bribery scandal which has engulfed the company in China before the police arrested four of its senior Chinese executives last week.
Fabulous Fab took to the witness box on Wednesday in the US, so expect some more stuff to come out on Goldman’s involvement in the GFC.
South Korea posted its best growth number in 12 years. Seems they are doing well too. Japan and Korea in a pincer movement on China perhaps.
In big(well biggish) news top forecaster Capital Economics, based in London and Toronto has quietly surrendered its idea that the stock market was in for a substantial second half selloff, they had targeted 1500 as their year end guess.. Their forecast now is for the S&P 500 to end this year at 1,600, and then for it to climb to 1,750 by the end of 2015.
Tony Abbott has today announced his border protection policy called Operation Canute. Looks a winner to me. Last fella who tried it struggled though!
Finally Clive Palmer has been given permission to build Jurassic Park in Queensland. Now there are so many potential jokes here. But a Dinosaur park in Queensland, who would have thought! ““God creates dinosaurs, God kills dinosaurs, God creates man, man kills God, Clive brings back dinosaurs.” Simples.
That is all