Another quiet day as we wait for some kind of resolution in the US. After a dip, following the Unemployment numbers scuttled any rate cuts hopes, buyers stepped back in a picked up a few bargains. We all know the US will not really default don’t we! Resilience is showing in our market but low volumes show lack of conviction either way. In the end we closed down 6 points at 5147.

Financials were mixed with Australia and New Zealand Banking Group Limited (A$30.55, +0.3%) and Westpac Banking Corporation (A$32.20, +0.1%) looking splendid whilst Commonwealth Bank of Australia (A$70.80, -0.3%) and National Australia Bank Limited (A$34.17, -0.3%) stayed in the red. Bank of Queensland Limited (A$11.15, +6.7%) had a great day after announcing a string turnaround in FY13 results. Insurance stocks fell away Suncorp Group Limited (A$12.88, -0.9%), AMP Limited (A$4.59, unch),Insurance Australia Group Limited (A$5.81, -1.5%) and QBE Insurance Group Limited (A$14.15, -0.7%) In resource land BHP Billiton Limited (A$34.62, -0.6%) suffered as did RIO Tinto Limited (A$60.21, +unch) and gold stocks but Fortescue Metals Group Ltd (A$4.88, +2.1%) found a few mates to share a beer with.

Healthcare stocks were better ResMed Inc. (A$5.81, +2.7%),Fisher & Paykel Healthcare Corporation Limited (A$3.17, +2.3%),Sigma Pharmaceuticals Limited (A$0.55, +4.8%) although others did not fare so well with Unilife Corporation (A$0.55, -5.2%),Medical Developments International Limited (A$1.28, -9.9%),Starpharma Holdings Limited (A$0.915, -4.2%),Csl Limited (A$65.10, -0.2%),Acrux Limited (A$3.10, -1.9%) and Ramsay Health Care Limited (A$34.62, -1.5%). Telcos seem to be enjoying a day in the sun Telstra Corporation Limited (A$4.92, +0.2%),Newsat Limited (A$0.445, +4.7%),Vocus Communications Limited (A$2.54, +3.7%),Nextdc Limited (A$2.51, +3.7%) and Hutchison Telecommunications (Australia) Limited (A$0.073, +10.6%). Industrials fared ok with Leighton Holdings Limited (A$17.35, +1.4%) shrugging off the latest scandal stories, Toll Holdings Limited (A$5.69, +2.2%) improving, Asciano Limited (A$5.82, +3.2%) and Transurban Group (A$6.99, +0.6%) after their AGM today.

Summit Resources Limited (A$0.85, -23.4%) and other energy stocks were a tad easier. Santos Limited (A$14.82, -0.2%) slipped as did Woodside Petroleum Limited (A$37.50, -0.8%),Energy Resources of Australia Limited (A$1.335, -2.2%),New Hope Corporation Limited (A$3.86, -1.3%) and Paladin Energy Ltd (A$0.43, -1.1%) but Oil Search Limited (A$8.46, +1.3%) bucked the trend.

Big Cheshire cats today were Bank of Queensland Limited (A$11.15, +6.7%),Sigma Pharmaceuticals Limited (A$0.55, +4.8%),Senex Energy Limited (A$0.755, +3.4%),STW Communications Group Limited (A$1.53, +2.3%),Asciano Limited (A$5.82, +3.2%),#APE and Magellan Financial Group Limited (A$10.28, +2.5%) whilst sitting in the naughty corner were the usual suspects ,Regis Resources Limited (A$3.56, -7.3%),Evolution Mining Limited (A$0.73, -6.4%),Cash Converters International (A$1.215, -3.6%), NPX, Energy Resources of Australia Limited (A$1.335, -2.2%),Panaust Limited (A$1.89, -3.1%),Mount Gibson Iron Limited (A$0.725, -2.7%) and Atlas Iron Limited (A$0.94, -3.6%).

Volume was slightly better than yesterday but not the stuff of bull markets at around $3.5bn.Meanwhile in Asia, Japan was better(up 0.8%) after they announced very positive machinery orders whilst in China and Hong Kong things were not quite that great down around 0.75%.
Stocks and Stories

Todays’ unemployment numbers surprised the astrologists coming in far better than expected .It was then up to the boffins to try and justify and excuse their predictions. Unemployment numbers have become a little like pin the tail on the donkey but a surprise fall to 5.6% looks to kill rate cut hopes.

WorleyParsons Limited (A$22.41, +1.4%) moved to calm the savage beast with an investor day today. After yesterday’s rout it was heartening to see some mild strength back in the share price.

Newcrest Mining Limited (A$10.64, -2.7%) continue to slide as anticipation of a capital raising to pay out the departing CEO and Chairman swirl around the market. Sooner they go the better. CEO has destroyed 70% of the value in this one since he joined. Bonus? Surely not!

Stockland (A$3.86, +0.3%) has sold down to 11.6 per cent of FKP’s issued capital, with the largest line of 6.35 million securities sold on October 8 equal to $9.53 million.

Whitehaven Coal Limited (A$1.82, -0.3%) has contracted Leighton Holdings to build a rail loop for its $766 million Maules Creek project in NSW.

In house stocks today Roc Oil Company Limited (A$0.52, +11.8%) had some good results from Bohai Bay in China helping the stock along.

Now we know what is fuelling the current property boom. Investors, SMSF and foreigners. Foreign buying of Australian residential property has moved sharply higher in NSW over the past three months.

For the three months to September 30, 16 per cent of new property was bought by foreigners from 11 per cent in the previous quarter. Queensland’s share of foreign buyers in new property has remained steady at 20 per cent – the highest in the country.

Japan’s machinery orders jumped to 819.3 billion yen ($8.4 billion) in August, the highest since the collapse of Lehman Brothers Holdings Inc. in 2008 and a further sign of a strengthening economic revival.
Tomorrows News Today

More trouble brewing in Libya as their PM looks to have been arrested by armed men! Another one bites the dust. North Africa is starting to look like the axis of instability. Bring on the drones to sort it out as the US has pulled its financial support of Egypt too.

US House of Representatives Republicans are considering signing on to a short-term increase in the government’s borrowing authority to buy time for negotiations on broader policy measures, according to a Republican leadership aide.

‘Tall and tan and young and lovely’ the Central  Bank from Brazil raised interest rates for the fifth straight time overnight and gave no indication of backing off its battle with high inflation even as Latin America’s largest economy struggles to pick up speed.

Meredith Whitney, whose bearish calls on financial stocks ahead of the credit crisis turned her into one of the most famous analysts on Wall Street, has deregistered her brokerage firm and plans to launch a hedge fund.

Meanwhile in the UK the “Help to Buy” scheme that the Government has launched allowing buyers up to 600,000 quid to borrow 95% of the price is bringing out the fans and the critics. Am sure these sorts of loans were partly responsible for the issue pre GFC! Still will help prices in the UK!

From the FT this morning, ”If the Federal Reserve’s likely move to start scaling back its asset purchases or fallout from a possible US failure to lift its ceiling on public debt raise long-term interest rates by 1 percentage point, the IMF’s Global Financial Stability Report (GFSR) estimates that the market losses on bond portfolios could reach $2.3tn”. Serious money!

Britain’s deficit will shrink at the fastest pace in the developed world this year, according to the International Monetary Fund. The UK was just one of four advanced and emerging market economies to receive an upgrade from the IMF yesterday, with the overall deficit now expected to fall to 6.1pc of GDP in 2013, from a prediction of 7pc in April. America’s deficit is also expected to fall to 5.8pc this year, from a previous projection of 6.4pc.

Is the US debt default a “Neon Swan” event. Not a ‘Black Swan”. We have seen those before .A “Neon Swan” is a rare one indeed but it is one you can see coming but you cannot believe it even when it bites you on the behind!

 

Clarence

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