Massive, massive dummy spit today as the reality of the economy finally caught up with the aspirations of the yield driven market. The tsunami of money is staying firmly in deposit accounts today! Despite yesterday’s rate cut the market focussed on the end of the cutting cycle, the imminent tapering in the US and the weakness in Asia, mainly from Japan as they had their own tapering issues! Seems that yield alone will not be enough. As the day wore on things went from worse to worser and it looked at one point as if we may get the 100 up, a fine captain’s knock, but some sense prevailed, only just though. The big green bank blob became a nasty shade of blood red crimson today as the financials bled us down. WBC was the worst but not far behind came the other three bears dragging the other non-banks behind them with falls in MQG, SUN, AMP and IAG prominent. Resources stocks were not spared the sword either as BHP, RIO ,FMG and of course NCM were thrown to the wolves.
There were no sectors unscathed from the assault of the bears, consumer stocks like TLS,WES,WOW,CSL all got blasted whilst the only bright spot was FOX in the majors.
Gold and other commodity stocks remained under extreme pressure with EVN, KCN, LYC, SLR, ARU and AGO all woeful. Mining services also copped it today again(!) with ASL,BLY and BKN all showing a dirty pair of heels.
Volume was hardly the stuff of convincing moves, but slightly better than the last few days. Big winners were CNU, APE, FSF, ERA, SGN and FOX whilst looking like exhibits from Crufts were SIR, BDR, PDN, EVN and SFR. Note any similarities?
Asian markets were weak too led by Tokyo as fears that the Bank of Japan won’t spend as much as usual in the markets hit sentiment. Japanese Tapering to boot!
Stocks and Stories
KAR was our top story today from house stocks as they sought $150m to fund further expansion and take advantage of securing long term rig contracts and long lead items. The placement is being done at $5.10.
Results today took pride of place as FOX announced their 4th quarter earnings with a 9% increase in operating income on revenue of $27.8bn. Good to see Lord Rupe making his opinions known too. Lucky he can’t vote!
FXL also announced some good numbers today but news of an executive resignation took a little of the gloss off the results especially given the high multiple that this one trades at.
News from Diggers and Dealers was mixed with a focus on cost cutting and asset writedowns . A group of seven one-time Australian favourites including Alacer Gold, Oceana Gold and Silver Lake Resources and Evolution Mining have clocked up $2.5 billion in write-downs this year, as Alacer looks to offload a couple of its projects to anyone with deep pockets.
A decade after he blocked a takeover bid from an unwanted US group, Peter Gray who is the founder of Sirtex Medical, a cancer treatment company, appears to have sold the bulk of his stake in the company. A block of 7.27 million SRX shares was sold at $12 a share late on Tuesday, a slight discount to the market price. Sirtex shares are currently down 2.1 per cent at $12.29.
Andrew Forrest lost his high court challenge on the MRRT-Mining tax today .Not happy!Still he doesn’t pay it anyway and Mr Rabbit will abolish it forever anyway so no biggie!
It seems that the huge build-up of deposits is not going into the stock market but the housing market as figures yesterday confirmed the property bubble is back. Whilst today a CBA report suggested that the number of loans to owner-occupiers rose by 2.7% in June and is 12.7% higher over the year. The total value of all loans for housing rose by 1.2% in June to be 13.5% higher over the past year.
Good to see four year old Joseph Lee ‘photobomb’ Kev13 today. Should all do it, may make this election campaign slightly more interesting than a “who can promise the most and deliver the least when they get in” contest.
Tomorrow’s News Today
Big news from London as new kid on the block, Mark Carney is looking to a new strategy of “Forward Guidance” from the Bank of England. Hopefully he will be as clear as Uncle Ben.
Looks like the Fukushima Nuclear reactor is leaking into the Ocean in what is fast becoming another crisis .Tepco has been widely castigated for its massive failures in this.
Japan has also this week launched a massive new aircraft carrier called the Izumo which is capable of carrying 14 helicopters. This has not escaped the Chinese who are a little worried about this east Asian arms race that is developing, especially given the animosity between these two powerful nation over a couple of little islands.
Milk futures tumbled the most in 33 months on concern that demand may fall after a contamination scare at Fonterra, the world’s largest dairy exporter.
The world has a new central banker as India appoints former International Monetary Fund economist Raghuram Rajan.
And here’s a thought for a Wednesday afternoon. Every incoming new Fed Chief has had a huge problem to deal with in a short space of time. Greenspan had 1987 crash, Bernanke the GFC..so what will Yellen/Summers inherit in 2014?
In a week when Trading Places is 30 years old ,it’s good to keep in mind Louis Winthorpe III ‘s famous quote,” “buy low, sell high; ‘fear’, that’s the other guy’s problem”
That is all