After rising nearly 5.6% in the last two weeks it was inevitable that we had to pause and reflect. It is the anniversary of the Great 1929 Crash after all. Despite the knock out results from ANZ this morning it was not enough to shrug off the breathlessness and vertigo that today gripped the market. Yesterday’s run was pretty serious so it was only right that we consolidate. We also had news out of China where short term rates are at their highest levels since June despite the People’s Popular front of China conducting its first injection of funds in two weeks. Looking across the leaders it seemed that only Australia and New Zealand Banking Group Limited (A$33.63, +1.2%) were in the green square today with other financials taking some oxygen and the resource stocks weaker as Iron Ore fell 1% last night. .Telstra Corporation Limited (A$5.16, +0.4%) another bright spot today in a sea of indifference though. By the close we had given back half of yesterday’s gain with the market down 26 at 5415.Resistance will become support!
Sectors in the headlights include Consumer stocks like Wesfarmers Limited (A$42.04, -0.6%) and Woolworths Limited (A$34.55, -0.6%) although Bega Cheese Limited (A$4.17, +4.3%) and Warrnambool Cheese & Butter Factory Co.Hold.Ltd (A$8.80, +5.3%) both improved. Industrials eased with Brambles Limited (A$9.37, -2.8%) showing a clean chep pallet
Resource stocks gave up some of the recent gains led by BHP Billiton Limited (A$37.59, -0.7%),RIO Tinto Limited (A$63.41, -1.5%),Fortescue Metals Group Ltd (A$5.32, -1.8%) on lower Iron Ore prices overnight and Golds also fell led by Perseus Mining Limited (A$0.53, -16.5%) after today’s quarterly. Energy stocks were also weaker with Origin Energy Limited (A$14.26, -2.5%),Santos Limited (A$14.97, -1.5%),Caltex Australia Limited (A$18.77, -2.8%) and Woodside Petroleum Limited (A$38.65, -0.4%) all showing losses.
Happy shiney people today included Kathmandu Holdings Limited (A$3.35, +3.7%),Village Roadshow Limited (A$6.99, +3.7%),#MYT#,Navitas Limited (A$5.90, +3.5%),Mount Gibson Iron Limited (A$0.885, +2.3%),Virgin Australia Holdings Limited (A$0.41, +1.2%),Chorus Limited (A$2.28, +2.7%) and Flight Centre Limited (A$51.65, +2.3%) whilst biggest losers were Independence Group NL (A$3.84, -4.2%),SAI Global Limited (A$4.10, -6.2%),Atlas Iron Limited (A$1.035, -5.5%),Whitehaven Coal Limited (A$1.695, -5.3%),Monadelphous Group Limited (A$18.28, -5.0%),Bradken Limited (A$6.27, -5.0%) and Lynas Corporation Limited (A$0.35, -2.8%). Volume was ok at around $3.8bn and Asian markets clawed back early losses but was still down between 0.5% and 1% in China. The Aussie Dollar also weakened following Uncle Fester’s talk today, back down to 95.1.
Stocks and Stories
Australia and New Zealand Banking Group Limited (A$33.63, +1.2%) kicked off the banking season in style as Mike (007) Smith unravelled more record numbers ,better dividend and promising outlook. Cash earnings rose by 11 per cent to $6.49 billion and the dividend was lifted to 91 cents fully franked and Mr Smith commented that there is “more gas in the tank.” Enough to put a smile on shareholders faces.
In stocks we follow, Resource Equipment Ltd (A$0.175, -12.5%) issued a trading update today. Not a good idea! Tough trading conditions and no sign of the turnaround.
Warrnambool Cheese & Butter Factory Co.Hold.Ltd (A$8.80, +5.3%) went bananas today after a line of $4m went through the market at $9.25 as the blessed cheese makers are beginning to look like Ludovici’s takeover battle. News that Fonterra maybe about to enter the race whey may have helped the stock push higher. Rumours that Japans Lion is the buyer of the stake today remain unconfirmed..
Atlas Iron Limited (A$1.035, -5.5%) sold off today despite announcing some success at their Corunna Downs project in the North Pilbara.
SAI Global Limited (A$4.10, -6.2%) also fell today after their AGM presentation.
Beach Energy Limited (A$1.34, -1.1%) quarterly revenue is up 59 per cent to a record $270 million on the back of higher oil sales, prices and production. The central Australian Cooper Basin-based company produced oil at record levels supporting sales volumes of 2.9 million barrels of oil equivalent (mmboe) in the three months to the end of September. It produced 2.5 mmboe, up 17 per cent on a year earlier. Cooper Energy Limited (A$0.445, +8.5%) has announced that following yesterday’s large block trade Beach Energy Limited (A$1.34, -1.1%) has moved to 19% of their neighbours. No plans to bid for company but then they would say that wouldn’t they.
Suncorp Group Limited (A$13.37, +0.2%) has received $60 million to $70 million in insurance claims from the NSW bushfire disaster, the financial conglomerate said this morning.
UGL Limited (A$7.72, -2.4%) has refrained from giving any earnings forecast for the year ahead while pointing to the severe impact of the resources sector downturn.
Shares in New Zealand power company Meridian Energy have climbed 8 per cent in their market debut, after the government priced the stock at the low end to help keep investors on side for two more partial asset sales.
RBA talk from Uncle Glenn today emphasised that things are getting better around the world. However he still feels that the fundamentals do not justify an Aussie Dollar at the current high levels. Get the feeling that rate cuts are well and truly off the agenda. Just jawboning the dollar down.
Tomorrows News Today
All eyes on the Fed as Uncle Ben settles into his seat for nearly the last time. Two day meeting starts on Tuesday US time. Few numbers out as well due to the US shutdown including September’s retail sales to be up 0.1% , when the numbers are released at 8:30am
CNPC looks set to buy Petrobas’ Peru assets for a deal worth around $2bn.
Prime Minister David Cameron is set to announce that the UK will become the first non-Muslim country to issue an Islamic bond. At the World Islamic Economic Forum (WEIF) in London, he will also announce plans for a new Islamic index on the London Stock Exchange.
Looks like the NSA is going to be hauled in front of Principal Obama for spying on his mates. They will need to make a good show of it as France, Spain and Germany are now furious.UK doesn’t seem to care as they are probably doing it as well.
The Chinese third Plenum is shaping up as the next big global event to focus on as we wait to see what far reaching reforms they put in motion.
Catch me on Sky Business at 6am tomorrow for an update on all the overnight action.