Ouch! Ouch! Well ,we finally caught up with the rest of the World today. News from the RBA at 2.30 this afternoon didn’t help matters either but the damage was already done as we tested the 5100 level. The market seems to have lost its way following Chinese slowdown concerns, US concerns and the swathe of downgrades that has swamped our market. Never have so many ,downgraded by so much. As the World gets used to life without stabilisers on the free money bike, there are a few inevitable wobbles. My target was 5100 and since our new masters in Canberra took over the market has dropped from 5140 to 5100.Meanwhile the US has risen from 14992 to 15372 in the same period. Today we opened pretty much down 75 ,slipped to around 92 down on the RBA decision to keep rates on hold forever but a small and I mean small rally towards the close, meant we closed below 5100 at 5097. Maybe a small leg down to come still but the damage has been done! All eyes on wall Street tonight to see if it can reverse its losses. There is an old adage about not fighting the Fed. When it is buying go along for the ride but when it sells or at least Tapers ,things get a little bit more interesting. In the last year the rising tide has lifted a lot of flotsam and jetsam. Time to be more circumspect. Don’t get me started on the Tech stocks valuations. There is a bubble waiting to burst. Emerging markets the target at the moment but it’s only a matter of time before Silicon Valley feels some heat.
Everywhere was red today. As expected the banks, and some insurers like QBE Insurance Group Limited (A$11.00, -3.3%) and AMP Limited (A$4.12, -2.8%), bore a huge burden led by everyone’s favourite National Australia Bank Limited (A$32.39, -2.4%)(except mine)falling the most with Macquarie Group Limited (A$52.92, -1.7%) and Lend Lease Group (A$10.21, -2.9%) joining in the rout. The Big Aussie also did its bit for the bears with BHP Billiton Limited (A$35.50, -2.6%) falling more than RIO Tinto Limited (A$64.11, -1.9%) and Fortescue Metals Group Ltd (A$5.19, -1.5%). There was some token resistance from REA Group Ltd (A$43.78, +5.0%) and Newcrest Mining Limited (A$10.16, +4.7%) but generally Moses would have been pretty familiar with what I saw on the screens today.
The industrial landscape was laid bare as Telstra Corporation Limited (A$5.08, -1.4%) fell in a heap, Amcor Limited (A$10.35, -4.4%),Csl Limited (A$69.03, -1.4%),Wesfarmers Limited (A$41.59, -1.4%) and Woolworths Limited (A$33.69, -0.7%) together with Brambles Limited (A$8.75, -3.0%),Flight Centre Travel Group Limited (A$45.70, -4.8%) and Crown Resorts Limited (A$16.29, -2.5%). However gold shares had a better day as the metal hung on to overnight gains. Evolution Mining Limited (A$0.64, +4.1%),Kingsgate Consolidated Limited (A$1.125, +3.7%),Regis Resources Limited (A$2.71, +0.4%) and Beadell Resources Limited (A$0.745, +0.7%) to the better though Silver Lake Resources Limited (A$0.585, -0.8%) slipped a smidge.
There were few winners today but gold stocks did standout with Newcrest Mining Limited (A$10.16, +4.7%),REA Group Ltd (A$43.78, +5.0%),#ZIM#.Beadell Resources Limited (A$0.745, +0.7%),Independence Group NL (A$3.32, -0.3%) and Regis Resources Limited (A$2.71, +0.4%) in the frame whilst losers were easier to come by like the England Cricket team! Energy World Corporation Ltd (A$0.325, -9.7%),Mount Gibson Iron Limited (A$0.99, -6.6%),Karoon Gas Australia Limited (A$3.08, -5.2%),Tpg Telecom Limited (A$5.01, -4.4%),#FLN#,Flight Centre Travel Group Limited (A$45.70, -4.8%) and #XRO#. Volume was acceptable at around $4.5bn.Computers were having fun but retail land still not in the groove. Asia was walloped by the US tsunami with Tokyo falling badly ,3%, as did other regional markets like HK down 2% and Shanghai down 1%, g after the New Year. So far the year of the horse is looking like an old nag!
Aussie dollar rallied as we have finished cutting rates and the next move will be up.88.70 and Bitcons at $1047 whilst Gold at $1256.
Stocks and Stories
Country Road Limited (A$7.00, +44.9%) had the reaction it should have had yesterday today. However before you get too excited the market is so thin and less than 3000 traded today.
REA Group Ltd (A$43.78, +5.0%) Good result with 30% revenue growth. Well you would expect that in the raging bull market that is property.
In house stocks today AWE Limited (A$1.26, -1.6%) presented today at BBY .Acrux Limited (A$2.08, -10.3%) went into a trading halt as well as rumours swirled on US FDA reports of side effects of testosterone. I know a few, driving too fast and thinking you are invincible and so good looking but that’s another story! Lynas Corporation Limited (A$0.265, -3.6%) also disappointed with their latest quarterly.
Westfield Group (A$10.27, +0.1%) and Westfield Retail Trust (A$3.00, -0.3%) will pay a half-year distribution in line with guidance in late February. Westfield Group has estimated a distribution of 22.5¢ for the six months to December 31 2013, exactly 50 per cent of the forecast distribution of 51¢ for all of 2013.
Acrux Limited (A$2.08, -10.3%) was in the spotlight today as rumours that the FDA may be looking at the link between heart disease and testosterone whacked the shares 10%.The company is due to issue a statement and has gone into a trading halt in the meantime.
Downer EDI Limited (A$4.80, -1.2%) today with its December half net profit of $99.1 million came in modestly ahead of market expectations of a profit of around $95 million. They even increased the dividend from 10c to 11c.
Former Treasurer Peter Costello has just been appointed head of the biggest SMSF of all as he is now in charge of the Future Fund. Let’s hope he doesn’t sell all the stocks at the bottom like he did with all our Gold!Or the last bloke who sold the Telstra Corporation Limited (A$5.08, -1.4%) at under $3.00.Still would be hard to justify your job if all you did was hold TLS take the dividend and relax. Performance would have been pretty good.
Tomorrows News Today
In the RBA statement today, “in its judgement monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.”Next move up. Not for some time though.
At the end of January 2013, Japanese stocks trailed only Portugal for the biggest rally among developed markets. Now the Nikkei 225 Stock Average is leading declines, slumping 8.5 percent last month and yesterday capping a 10 percent drop from its Dec. 30 peak.
Good start to the Yellen era as she is sworn in. Suspect she may have to do some soothing of the savage beat that is Wall Street. Free money forever!
The TOPIX Real Estate index just hit a bear-market – down 20% from Dec 31st highs.
This week three banking execs from Irelands’ Anglo Irish Bank – Sean FitzPatrick, Pat Whelan and William McAteer go on trial. These are the guys that nearly bankrupted a country. Of course in the US they make movies about people like that! Public funded rehab for a few years and then, just royalties. And in the UK ,banking chief Antony Jenkins at Barclays declines his GBP2.7m bonus for a second year. Does take the shares though so it’s not all bad news for him!
From the Beeb today, ”The extent of corruption in Europe is “breathtaking” and it costs the EU economy at least 120bn euros (£99bn) annually, the European Commission says.EU Home Affairs Commissioner Cecilia Malmstroem has presented a full report on the problem.She said the true cost of corruption was “probably much higher” than 120bn”.Need to get Today Tonight onto it. Shame they have been canned!
That is all