A firm day after a lackluster start gave way to apathy and drifting around to finish slightly positive, at 6 up. The big green blob of the banks marches relentlessly onwards. Commonwealth Bank of Australia (A$73.65, +0.2%) hit a new record high with Westpac Banking (A$30.52, +1.5%) also firing on all cylinders as Macquarie upgraded their outlook and pointed out their relative underperformance. There were however a few dull spots in financials with Macquarie Group (A$43.01, -3.7%) continuing to reel following yesterday’s AGM and Perpetual (A$39.51, -3.9%) also came in for some selling following their FUM report, showing a small fall in the money they are holding for punters. The market brushed off Asian concerns on growth and pushed towards 5050, albeit cautiously with its sights set on 5100.The big drivers were banks and industrials whereas resource stocks were somewhat easier with falls in Iron Ore stocks, BHP Billiton (A$34.60, -0.5%), RIO Tinto (A$57.24, -0.5%), Atlas Iron (A$0.85, -2.3%) and Fortescue Metals Group Ltd (A$3.61, -1.1%) whilst others to suffer a similar fate included Oz Minerals (A$4.13, -4.0%),Iluka Resources (A$11.05, -2.8%), Mount Gibson Iron (A$0.56, -3.4%) and Bluescope Steel (A$5.05, -0.2%).

Consumer stocks were mixed as News (A$33.15, -0.7%) fell, REA Group Ltd (A$30.85, +0.2%) rose and Flight Centre (A$43.98, +1.0%) and Echo Entertainment Group (A$2.69, +2.7%) also put on some cents. Consumer heavyweights Wesfarmers (A$40.34, +0.8%) and Woolworths (A$33.61, +0.2%) were also better as were industrials like Brambles (A$9.14, +0.7%), Transurban Group (A$6.99, +0.3%), McMillan Shakespeare (A$9.80, +11.4%), Asciano (A$5.15, +1.6%) (it’s off to work we go), Qantas Airways (A$1.295, +0.8%) and Als (A$8.88, +2.1%).

A few on the podium today included ,McMillan Shakespeare (A$9.80, +11.4%), Panaust (A$2.11, +5.5%), JB Hi-Fi (A$18.02, +5.1%), Myer (A$2.66, +3.5%) and Ansell (A$18.56, +2.4%) whilst round the back smoking behind the bikes sheds were Sigma Pharmaceuticals (A$0.70, -6.0%), Oz Minerals (A$4.13, -4.0%), Acrux (A$3.36, -2.3%), Energy Resources of Australia (A$1.505, -3.5%), Energy World  Ltd (A$0.575, -0.9%) and Platinum Asset Management (A$6.14, -2.5%).

Volume was boosted by option expiry yesterday but apart from that nothing to get out of bed for I am afraid. Waiting for earnings to confirm or deny. Thin trading conditions continue to push prices around. Beware the downgrade!

Stocks in the News

House stocks in the press today included Buru Energy (A$1.75, +3.6%) bucked the trend on some squaring up pre the weekend and Boart Longyear (A$0.535, -4.5%) continued to fall despite announcing a new director.

After yesterday’s rout in McMillan Shakespeare (A$9.80, +11.4%) today some sense returned and the stock rallied hard again. Judging by the markets’ reaction yesterday they are of the belief that Labour will win the election. Two hopes!

Couple of downgrades today from Sigma Pharmaceuticals (A$0.70, -6.0%) and Platinum Asset Management (A$6.14, -2.5%), just to finish the week. Nice to finish on a positive note!

Shares in Perth-based liquefied natural gas company LNG Ltd have soared 33% after it secured funding for its plant in the United States. US investment firm Stonepeak has agreed to provide the full $US660 million ($718.25 million) of project equity finance needed to develop LNG’s Magnolia project in Louisiana, in exchange for a stake of about 50 per cent in the plant. The project has a total estimated cost of $US2.2 billion.

Looks like Japan is inflating its way out of their problems as the CPI rose today, 0.4%, which is being taken as a sign that the money printing is working and this is the most it has risen since 2008. Go Abenomics!

Tomorrows News Today

Big week next week as we have more US numbers, news from the ECB and UK and of course the FOMC minutes from our mates at the Fed.

And yet another M&A in the US as the Activision CEO leads an $8.2bn investor buyout from Vivendi in the World’s largest video game company.

China has ordered more than 1400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more- sustainable economic growth. Steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement.

Lloyd ‘Blankcheque’ was in town today talking all things ‘Master of the Universe’  as head of Goldmans. He joked that the rest of the world would be ecstatic to have the economy that we in Australia are so worried about. Goldman Sachs has been described by Rolling Stone in a very dramatic way as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Not sure they are fans!

New supplies of washed Arabica beans are coming in to a market that is already saturated. The benchmark coffee contract – down 60 per cent from its May 2011 peak – ranks as the world’s worst performing commodity this year. Yet still the Sydney Cappuccino goes up! Must be the $1 milk they are using.

400 manufacturing workers at Holden’s Elizabeth plant clock-off for the final time today, as part of the same cost saving measures announced by Holden in April.

The changes will see Holden’s manufacturing workforce whittled down to 1700, coinciding with car maker’s production already being reduced from 400 cars per day to 335.

Singapore home prices climbed to a record in the second quarter as gains in suburban housing values accelerated, prompting the government to implement new measures on property loans. The island-state’s private residential property price index rose 1 percent to 215.4 points in the three months ended June 30, extending a 0.6 percent increase in the first quarter.

Samsung Electronics, the world’s biggest smartphone maker, reported a second quarter net profit that jumped 50 percent from a year earlier, but its mobile business shrank, underscoring concerns about flagging growth in the division. The South Korean firm posted a net profit of 7.77 trillion won ($7 billion) for the April to June period from 5.05 trillion won a year earlier, in line with estimates.

And in case we forget, on this day a year ago Super Mario pledged to do “whatever it takes” to save the Euro. Since then our market has rallied from 4200 to 5050(most of that after Kev13 came to power!)The US has rallied from 12,600 to 15,600,the DAX has gone from 6500 to 8300 and the UK has gone from 5700 to 6600.Not bad! Take a bow Mario! Shame about unemployment and the economy but at least the stock market is up!

And finally congratulations to our research team in being voted the best non-bank research house in Australia. Fine effort guys. Maybe my little wrap is gaining a few fans along the way too!

That is all

 

Have a great weekend

 

Clarence

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