After the (irrational?) exuberance this week comes the reckoning with a pregnant pause from ANZ with their nine month update causing weakness across the board. Margin pressure is evident as the competition for home-loans heats up. This sent a ripple through the big blob of finance and saw all of the big four hit hard. Australia and New Zealand Banking Group Limited (A$29.45, -3.0%) was the worst hit but then again, it is the worst story with Westpac Banking Corporation (A$31.26, -1.1%) the best performer. Other financials also gave up the ghost with QBE Insurance Group Limited (A$16.90, -1.1%), Macquarie Group Limited (A$44.42, -1.2%),Henderson Group PLC. (A$2.96, -2.6%) and Platinum Asset Management Limited (A$6.12, unch) all easier although AMP Limited (A$4.79, +1.9%) bucked the trend. Weakness across the board today from the open and despite an attempt at a rally over lunch and at the close, the ASX200 still managed to fall back towards that 5100 level with a loss of 38 points. Nasty falls in Wesfarmers Limited (A$40.22, -2.5%) after the numbers yesterday. Telling the World that Target was ‘Broken” is probably not a good career move from boss Machin.
In other news Ramsay Health Care Limited (A$33.44, -6.5%) seem to be embroiled with a Medicare stoush on hospital costs which led to a little general weakness in the sector. In resource land BHP Billiton Limited (A$36.87, -1.2%) gave back some of their gains together with RIO Tinto Limited (A$60.08, -2.1%) ,Fortescue Metals Group Ltd (A$4.03, -4.0%) and Iluka Resources Limited (A$11.23, -2.7%) but the Golden boys were shining today with Newcrest Mining Limited (A$12.57, +4.0%) heading higher followed by other goldies like Kingsgate Consolidated Limited (A$1.975, +8.8%), Perseus Mining Limited (A$0.785, +19.8%),Regis Resources Limited (A$3.95, +2.9%),Alacer Gold Corp. (A$3.25, +8.3%),Silver Lake Resources Limited (A$0.92, +3.4%) and St Barbara Limited (A$0.665, +12.7%).
However Industrials were a little weary ,Csr Limited (A$2.25, unch),Bradken Limited (A$5.72, -2.9%),Seven Group Holdings Limited (A$7.54, -2.2%),Asciano Limited (A$5.24, -1.5%),Hills Holdings Limited (A$1.29, -0.8%) the standouts.
Energy stocks seem to be benefitting from the unrest in the Middle East with higher oil prices helping Woodside Petroleum Limited (A$38.29, -0.1%), Santos Limited (A$14.54, +3.8%) and Oil Search Limited (A$8.24, +1.7%).
Big grinners today were the likes of Domino’s Pizza Enterprises Limited (A$12.88, +11.7%),Resolute Mining Limited (A$0.91, +9.0%),Santos Limited (A$14.54, +3.8%),Beadell Resources Limited (A$0.81, +3.2%),Newcrest Mining Limited (A$12.57, +4.0%),Transpacific Industries Group Ltd (A$0.89, +2.3%) and Regis Resources Limited (A$3.95, +2.9%). In fact most of the Golds were very, very firm! Sunning themselves in the dog house today were Energy World Corporation Ltd (A$0.54, -7.7%), Hutchison Telecommunications (Australia) Limited (A$0.041, -6.8%),Ramsay Health Care Limited (A$33.44, -6.5%),Arrium Limited (A$1.045, -5.9%), ZIM,Linc Energy Ltd (A$1.68, -5.4%) and MFF.
Volume was a little ‘Friday on my mind’ at a tad over $4.4bn.Not too bad but seem to have a late spurt as the computers got back from lunch.
But wow, China today put on over 5.6% after a big turnaround. Then crashed to be down and authorities are now investigating. Gives you confidence doesn’t it! Could be the Fat Finger at work!
Stocks and Stories
Australia and New Zealand Banking Group Limited (A$29.45, -3.0%) Disappointed! Doh! Just don’t mention margin pressure. It was all going so well until then.
APN News & Media Limited (A$0.35, +20.7%) according to the presentation “ In 2013, we will know glory!…and we will know heartache” Well ,finally they seem to have found the former and showing some promise as they delivered 1H13 financial results slightly ahead of consensus forecasts, with generally positive guidance for the full year outlook. Underlying EBIT of A$48.5M compared with our estimate of A$45M and Bloomberg consensus of A$46.75M. Yippeee!
BHP Billiton Limited (A$36.87, -1.2%) looks to be in a little trouble with the regulators over hospitality and gifts BHP bestowed upon top ranking Chinese officials during the Beijing Olympics. It is also believed to be investigating BHP’s attempts to secure a bauxite project in Cambodia, where the miner was accused of paying ”tea money” to facilitate the process.
Domino’s Pizza Enterprises Limited (A$12.88, +11.7%) One of the few winners today outside the gold sector is Domino’s, which has soared more than 13 per cent to $13.07, a near three-month high, after the shares came out of a trading halt.
The pizza maker bought a majority stake of its Japan franchise from US private equity firm Bain Capital for 12 billion yen earlier this week.
Santos Limited (A$14.54, +3.8%) good performance today after posting a slightly higher June half net profit of $271 million, up from $262 million earned a year earlier, as slight declines in output were offset by a rise in product prices.Revenue rose to $1.53 billion from $1.49 billion, while underlying net profit for the half declined to $251 million from $283 million. A steady interim dividend of 15 cents a share has been declared.
The earth moved today in NZ as a magnitude 6.2 earthquake struck today, shaking the capital city Wellington and shutting the markets and sending the nation’s currency down almost half a U.S. cent.
China’s Shanghai Composite Index erased the biggest intraday surge since March 2009 as trading volumes climbed 80% above the 30-day average and the exchange investigated the spike.
The stock gauge slipped 0.1 % to 2,080.87 at 1:48 p.m. local time. It had jumped from a loss to a gain of 5.6 % in two minutes during the morning trading session. About 12.1 billion shares of Shanghai Composite companies changed hands, versus 6.7 billion at the same time yesterday!
Tomorrows News Today
China performed live-fire military exercises in the East China Sea as part of drills the army said were routine, as tensions simmered with Japan over islands in the area claimed by both countries. The military is conducting 10 days of exercises off the coast of Liaoning province, China Central Television reported on its website today, citing the People’s Liberation Army. Four Chinese ships entered Japanese waters around the islands.
And I know that we all applaud the US employment numbers but one commentator has suggested it is more Hunger Games than anything else as the rich do spectacularly well, while the poor do it very tough. If you are looking for evidence of this, look no further than the rise in part time low paid jobs as the average earnings continues to fall and low end retailers like Maccas and Wal Mart suffer sales drops. It seems that the free money in the US is getting nowhere near the poor. So does Ben care, probably not.47m people on food stamps can’t be wrong.
Numbers out from Goldmans show that 60% of US houses are bought for cash! That’s up from 20% five years ago. Buy and Flip is back. Musical Chairs is great til the fat lady sings.
Iron ore has lost its puff after a 14 day rally. Iron ore shed 1.1 per cent to $US141.2 a tonne in overnight trade ending its spectacular surge this month.
Just days after UK PM Cameron told everyone to “Keep Calm and Frack on!” Energy firm Cuadrilla has said it is scaling back work at an exploration site in West Sussex on police advice. They have been told to Frack Off. The company has been drilling for oil near the village of Balcombe but has not ruled out using the controversial technique of fracking to release gas. Police believe environmental activists at the site are about to begin a campaign of civil disobedience.
L’Oréal offers to buy Chinese face mask company for $840m.Apparently it’s Magic!And still on M&A there is life in the old commodity markets still as Chinalco Mining Corp. International of China is close to appointing investment banks Goldman Sachs Group Inc. and Morgan Stanley to advise it on buying the Peruvian copper mine owned by commodities company Glencore Xstrata PLC, in a deal that could be worth about $5 billion.
And the best news this week, Springsteen is touring again!