Another day with resources weighed down by the Iron Ore price and consumer sentiment hurting retailers. Although confidence has levelled out ,it’s at woeful levels and add a couple of downgrades and you have a recipe for a drifting down volume-less day. In the final wash up the ASX 200 dropped 16 points to 5454 after a high of 5467 and a low of 5445. Financials tried to hold the line but slipped slightly despite stories about increasing margins due to the cost of funding falling around the World. Iron Ore stocks continue to take a bashing as BHP Billiton Limited (A$35.94, -0.9%),RIO Tinto Limited (A$59.40, -0.4%) ,Fortescue Metals Group Ltd (A$4.54, -1.9%),Arrium Limited (A$0.895, -1.6%),Atlas Iron Limited (A$0.64, -3.8%) and Mount Gibson Iron Limited (A$0.75, -0.7%) all hurt punters pockets.
Industrials were weaker led by retailers like Super Retail Group Limited (A$8.24, -2.6%),Dick Smith Holdings Limited (A$1.88, -4.3%),JB Hi-Fi Limited (A$17.75, -0.6%) and Country Road Limited (A$12.00, -4.0%). Media stocks were also in the headlights as Fairfax Media Limited (A$0.925, -5.6%),APN News & Media Limited (A$0.795, +0.6%),Seven West Media Limited (A$1.69, -3.4%, Nine Entertainment and Southern Cross Media Group Limited (A$1.025, -2.4%) all looked sloppy in this austere environment. Consumer stocks were also well and truly in the red, Wesfarmers Limited (A$41.82, -0.5%) and Woolworths Limited (A$36.67, -0.5%) suffering as did the cheese makers Bega Cheese Limited (A$5.10, -1.4%) and the wine makers Treasury Wine Estates Limited (A$4.82, -1.4%) and the obesity makers Coca-Cola Amatil Limited (A$9.26, -0.9%).
In the winners enclosure today were Papillon Resources Limited (A$1.66, +4.4%),McMillan Shakespeare Limited (A$9.58, +2.7%),Oceanagold Corporation (A$2.81, +3.7%),Aquila Resources Limited (A$3.61, +3.4%),Northern Star Resources Ltd (A$1.19, +2.6%) and Kathmandu Holdings Limited (A$3.15, +2.6%) bouncing from a dismal May. Losers included Downer EDI Limited (A$4.70, -11.2%), Nuplex Industries both on announcements, Transfield Services Limited (A$1.15, -5.7%),Monadelphous Group Limited (A$16.14, -4.2%),Fairfax Media Limited (A$0.925, -5.6%) and Atlas Iron Limited (A$0.64, -3.8%). Volume was pretty hopeless, should look to short ASX Limited (A$35.43, -0.1%) at this rate, at around $2.9bn.Asian Markets were mixed with Tokyo up 0.5% and HK and China down 0.4% Gold trading around $1261,Aussie dollar at 93.87 and Digital tulip at $687.
Stocks and Stories
Aquila Resources Limited (A$3.61, +3.4%) Mineral Resources bought a 12.1 per cent stake from Prudential, in iron ore stock Aquila Resources, potentially setting up a takeover battle for the company.50m shares were bought by the mighty house of ??? on market. Congratulations guys.
Crown Resorts Limited (A$15.35, -1.0%) moves by the Chinese authorities against currency transactions in Macau and a slower than forecast growth rate there are having a serious dampener on Packer Plaything. Melco Crown now represents 56 per cent of the current Crown share price and with the local casino suffering from lack of punters die to the slowing economy things are a little tight.
Flight Centre Travel Group Limited (A$46.43, +1.2%) Not often a company announces a slight profit warning and actually rallies. Very surprising, usually they are trashed. It announced full-year underlying profit before tax will likely be between $370 million and $380 million, at the lower end of its previous guidance.
Downer EDI Limited (A$4.70, -11.2%) Lost a big coal contract and looks like making a whole bunch of workers redundant. The contract at the Goonyella Riverside mine in central Queensland, where it employs 427 people, would be terminated by the BHP Billiton Mitsubishi Alliance (BMA) in September.The contract was scheduled to end in June 2016.
Nuplex Industries had a profit downgrade due to FX and weaker than expected condition in Australia led to expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the 12 months ending 30 June 2014 to be between $121 million and $125 million. Previous guidance was between 130-145m
Ramsay Health Care Limited (A$45.14, +1.3%) can now claim market leader status in France too after it acquired a majority stake in French company Générale de Santé.Along with its joint venture partner in France, Crédit Agricole Assurances, Ramsay has acquired a 83 per cent share of GDS at a price of €16 a share, valuing the entire business at €902 million ($1.3 billion).
Karoon Gas Australia Limited (A$3.34, -3.2%) A director resignation as Stephen Power has resigned as a non-executive and is being replaced by two independent directors.
Good to see that the World bank has downgraded the growth forecast for 2014 to 2.8% from 3.2% on the back of a slowing global economy especially in the US. The U.S. forecast was reduced to 2.1 % from 2.8 % while outlooks for Brazil, Russia, India and China were also lowered. The setbacks may be temporary: the 2015 estimate for world economic growth was unchanged at 3.4 %. Apparently the weather is to blame! At least Obama gets it.
The Westpac-Melbourne Institute Consumer Sentiment Index gained 0.2 per cent to 93.2, after falling 6.8 per cent in May.Consumer sentiment is still down 8.8 per cent over the past 12 months.
Tomorrow’s News Today
Not sure what everyone is waiting for at the moment but the Global rush to list is sucking the blood out of equity markets at the moment. If there is any left that will be extinguished by the World Cup starting in a few days. IPOS and M&As the go. It’s just so 1987.All we need is Gordon Gecko back, and we would be there. The Hot Tub Time machine is in the house.
Our man in New York has been dining with the Sun King overnight as Abbott calls for more crackdowns on those pesky Internet global company thingies that are shifting their booty offshore to places like Ireland and the Bahamas. A brave attempt Sir Phoney Tony but good luck with that. Google have just bought a satellite company and I suspect that may be their next and last tax haven! Space the final tax frontier! To boldly offshore where no one has offshored before!
With the Euro residente positione up for grabs, looks like Christine from the IMF is in the running. Junckers is not a popular choice at all. At least not with the UK looking down the barrel of the UKIP.
Meanwhile in Iraq, what a huge success that has turned out to be, the second city of Mosul has been captured by extremists and they even managed to souvenir a couple of Black Hawk helicopters in the process. That should liven things up a bit. Now if they could only find someone to fly them….ah the joy of Playstation games!
The Ukraine/Russia talks on a gas deal is again in doubt as Russia had threatened to cut off gas supplies unless Ukraine paid its gas bill, which runs into billions of dollars, by Tuesday.
Talks between the two countries ended early on Tuesday without an agreement.
And it’s fifty years since Michael Caine sprang onto celluloid in Zulu as Gonville Bromhead (sounds like a STD) and uttered the immortal lines “a chap ought to look smart in front of the men, don’t you think?”. Indeed Sir Michael. Still the most VCs earned in one day and by the Welsh.Aamazing.
As IPO fever grips the globe, Lloyds Banking Group has underlined its determination to entice investors to back the stock market flotation of TSB by pricing shares in the new bank below its own valuation of the 631 branch network. TSB would be valued at £1.3bn, less than the £1.5bn value of its assets.
Its official the World has gone mad. A Banksy print called “I Can’t Believe You Morons Actually Buy This S—” on it is expected to sell for a five-figure sum. ‘Morons’, valued at about £10,000 ($17,900), is one of more than 70 works him going on display in London at Sotheby’s. I am in the wrong game! Where is my aerosol?
Focus is already starting to slip towards Brazil in a few days’ time. Who can blame us!
That is all