Another down and lacklustre day with major players waiting for ‘Dr Do Nothing’ Draghi and the US jobs numbers. Given the slightly positive lead from overseas and the spirited performance of the Iron Ore price ,it was a little worrying that the ASX 200 closed down again. After a vaguely positive start we kooked it again and closed down 8 at 5437 bouncing off the low of 5416 following a “don’t want to be short going into the ECB rally”. Banks were the major culprit as the fast money has stopped chasing them and Telstra Corporation Limited (A$5.30, -0.4%). Few headwinds appearing for the banks as the property market cools a tad and capital requirements from regulators is seen as a crimping of future dividend growth. Let’s face it my rudimentary bank index at $182 is still sky high. The yields will underpin their shares but the froth and bubble is leaving the building. Figures from Bloomberg suggest that domestic investor have lightened their load of Aussie banks by a mean of 4.5 percentage points this year through June 3, taking their average holding in the three Australia and New Zealand Banking Group Limited (A$33.23, -0.5%),Commonwealth Bank of Australia (A$80.95, -0.2%) and Westpac Banking Corporation (A$34.20, -0.4%) to 47 %.National Australia Bank Limited (A$33.23, -0.2%) fell the most by 6 %.Overseas guys appear to be taking up the slack on yield attractions.
Resource stocks were more positive today and my similar rudimentary big resource index of BHP Billiton Limited (A$36.20, +0.1%),RIO Tinto Limited (A$59.65, +0.4%) and Fortescue Metals Group Ltd (A$4.65, +4.3%) is currently just shy of $100.Back to September 2011 levels whilst banks are up 82!the rest of the resource sector was mixed Lynas Corporation Limited (A$0.155, -6.1%) the worst as they have a CEO resign unexpectedly. Never a good look. Oz Minerals Limited (A$4.23, -1.6%) and Panaust Limited (A$2.19, -0.9%) eased but Western Desert Resources Limited (A$0.245, +8.9%)Syrah Resources Limited (A$3.62, +2.0%) and Sirius Resources NL (A$3.12, +1.3%) all positive.
Industrials were weaker led by Telstra Corporation Limited (A$5.30, -0.4%), Wesfarmers Limited (A$42.40, -0.8%),Woolworths Limited (A$36.94, -0.2%),Westfield Group (A$10.68, -0.8%) and Westfield Retail Trust (A$3.18, -1.2%). Media shares came off too with Seven West Media Limited (A$1.75, -2.8%),Fairfax Media Limited (A$0.985, +0.5%),APN News & Media Limited (A$0.79, -1.3%),Southern Cross Media Group Limited (A$1.04, -0.5%) and #NEC# weaker. Retail stocks were mixed, David Jones Limited (A$3.83, unch) were steady at a nice discount to the offer price from Woolies SA while others eased Myer Holdings Limited (A$2.07, -0.5%),Harvey Norman Holdings Limited (A$3.01, -1.0%) and Billabong International Limited (A$0.52, -3.7%) following the Quicksilver results in the US the other day.
For the record todays biggest winners were Liquefied Natural Gas Limited (A$1.565, +9.1%) continuing its march to $2.00,Mermaid Marine Australia Limited (A$2.10, +5.0%)$,Aquarius Platinum Limited (A$0.46, +3.4%),#IFP#,Pacific Brands Limited (A$0.575, +4.5%) and #OFX# whilst the biggest losers at the weigh in were Village Roadshow Limited (A$7.25, -8.2%) after announcing a special div of 15c,Evolution Mining Limited (A$0.74, -5.1%),#VED# (fickle world) Billabong International Limited (A$0.52, -3.7%),Flight Centre Travel Group Limited (A$47.20, -3.0%),Mesoblast Limited (A$4.42, -2.4%) ( can’t stem the falls!) and Ten Network Holdings Limited (A$0.285, -3.4%). Volume was again on the skimpy side at $3.5bn as we head into a long weekend here ,ECB and jobs.
Around the grounds Tokyo and HK down 0.2 whilst China moved up a James Bond. Aussie dollar knocking on the door of 93 cents and digital tulip nearly $700 whilst Gold traded at $1244.
Stocks and Stories
Village Roadshow Limited (A$7.25, -8.2%) has announced a 15c per share fully-franked special dividend, below the previous guidance of 25c after a “generally disappointing” box office performance of the movie Transcendence. Johnny Depp is Captain Jack .Otherwise kiss of death! Der!
New float #ISD# rewarded the faithful with a stellar opening today. Champagne all round .
Oil Search Limited (A$9.52, +1.8%) were rewarded with a good rise following production news late yesterday as the PNG project comes online quicker than analysts had anticipated.
Westfield Group (A$10.68, -0.8%)/Westfield Retail Trust (A$3.18, -1.2%) have set a new date of 20th June for the next vote. Let’s hope they get it through this time or another forest in Tasmania will die.
Karoon Gas Australia Limited (A$3.27, -4.4%) continued to slide following this weeks’ positive announcement on the sale of their Browse basin project.
Iron Ore futures slipped again in Shanghai for the fifth day out of six. 40 million tonnes of iron ore stocked at Chinese ports are linked to financing deals, a trader in Singapore estimated. Iron ore at Chinese ports stood at a record high 113.6 million tonnes last week. Investigations were announced yesterday suggesting that commodity finance deals from Qingdao port were fraudulently used multiple times to raise financing from different banks. Eddie would know!
Balance of payments numbers came in far worse than expected as the Rural exports collapsed 6%,mining sagged by 1% ,while imports of designer taps featured on The Block rose 2%.The other reason in the jump in imports was that we ordered a staggering $8.4 billion of phones (presumably largely mobile phones).This cannot be right. That’s a $320 spend from everyone in Australia. Remind me to check where my new phone is!
GrainCorp Limited (A$8.45, -0.5%) will cut 80 jobs and shut unprofitable storage sites as part of a $200 million plan to revitalise the company’s country grain network. The company will spend $200 million over three years, the single biggest capital investment in its country network ever.
Lynas Corporation Limited (A$0.155, -6.1%) lost their CEO today and promoted a relative newcomer to the mining world in his place. Ms Lacaze, who has no experience in the resources sector, having spent much of her career working in the marketing and telecommunications sectors, replaces Eric Noyrez, who was appointed chief operating officer of the company in 2010.Not sure this is a positive.
Tomorrow’s News Today
D Day for Draghi. June 6th Anniversary of the landings too.70 years ago.
Expect we will see the first central bank go to negative interest rates tonight and with it billions of Euro money will be looking for a new home rather than get charged to store it in Brussels. Pick me! Pick me! Some are calling for as much stimulus as the Fed did at its peak and look how effective that has been. Of course he could do nothing and just say a few nice platitudes. Whatever it takes!
RIP Gavin Thomas former CEO of Kingsgate Consolidated Limited (A$0.735, -3.9%).
Eddie Obeid has been found corrupt by the ICAC. Now what?
59 % of US adults think the American dream has become impossible for most to achieve, up from 54%in a poll conducted in 2006.Not completely sure what the American Dream is ,date night with Beyonce perhaps? What’s more, 63 per cent of those surveyed believe most children in the US will grow up to be worse off than their parents.
Seen it all now, Deep Knowledge Ventures, has crossed the final frontier by appointing a computer algorithm to its board of directors. May actually be a good thing.
And as the French government continues to wade into the BNP $10bn fine issue, the largest ever, they have suggested that this fine has the potential to destabilise the entire Euro banking system. Of course 6 other banks have been pursued for the same offence with nothing like the fines imposed on BNP if it comes to pass. Not sure if they were US banks. Just saying!
That is all