The rally continues.
After a slow start we checked the seat belts were fastened before a mid-morning moon shot again, as bargain hunting and hopes of a rate cut gripped the market. At its zenith we were up over 55 points before rocket fuel ran out and the parachutes were deployed as we floated back down to Earth in a blaze of GDP disappointment. At 11.30 we saw GDP underwhelm in a large was as we technically entered an income recession and GDP dropped below 3% again. The transition from a mining based economy to a whatever else we haven’t sold or closed based economy is taking somewhat longer than anyone had thought possible. So long in fact that it will never happen. As a result the dollar was bush whacked and the index lost throttle to close up 40 points at 5321.(big shove on the chocolate wheel match out).So a two day bounce after a two day fall. Consumer stocks are now benefitting from Santa, lower fuel prices and perhaps lower interest rates. Don’t forget though that the banks control rates on mortgages NOT the RBA. So although we will have to wait until February for the RBA to be brave, banks could actually cut their rates today. Of course they won’t but deposit rates are heading lower at least. Margins to improve.
Things turned somewhat mixed though as the day wore on, once again Chinese data was wishy washy and resources gave back some of their early gains, BHP Billiton Limited (A$30.44, +0.1%),RIO Tinto Limited (A$57.98, +0.1%),Woodside Petroleum Limited (A$35.64, +2.2%),Newcrest Mining Limited (A$10.00, +1.1%) all well off their highs but Fortescue Metals Group Ltd (A$2.71, +5.4%) seemed to gather strength from this. Oil and energy stocks found the power with Woodside Petroleum Limited (A$35.64, +2.2%) and Liquefied Natural Gas Limited (A$2.86, +13.9%) bouncing hard on brokers recommendations, but Santos Limited (A$9.08, -1.2%),Oil Search Limited (A$7.72, +0.3%) and Origin Energy Limited (A$11.84, +0.7%) barely moved the fuel gauge.
Consumer stocks were better even Myer Holdings Limited (A$1.665, +3.7%) found some wonderful today ,JB Hi-Fi Limited (A$16.05, +3.0%),Harvey Norman Holdings Limited (A$3.66, +0.3%) and Kathmandu Holdings Limited (A$2.80, +3.7%) also finding shoppers aplenty. Unfortunately media stocks did not fare so well as Ten Network Holdings Limited (A$0.225, -6.2%) slumped on lack of takeover news ,Fairfax Media Limited (A$0.765, unch), Nine Entertainment and Southern Cross Media Group Limited (A$0.99, -3.4%) all dropped out too. Gamblers were better ,Skycity Entertainment Group Limited (A$3.73, +2.2%),TABCORP Holdings Limited (A$4.22, +2.9%),Tatts Group Limited (A$3.50, +2.6%),Donaco International Limited (A$0.63, +5.0%) and Jumbo Interactive Limited (A$1.11, +1.8%). In financials we saw Macquarie Group Limited (A$59.87, +2.6%) perform well and Commonwealth Bank of Australia (A$81.40, +0.8%) but others went nowhere. REITS were better led by SCG, GPT Group (A$4.27, +0.7%) and Westfield . Big winners though were consumer discretionary Wesfarmers Limited, Woolworths Limited (A$30.90, +2.2%) and Metcash Limited (A$2.00, +5.3%) with Qantas Airways Limited (A$2.07, +6.2%) loving the new fuel regime. No cuts to surcharge yet either. Csl Limited (A$86.35, +2.0%) also had another blue blooded day as they continue to march ever higher. Could they be the nest $100 stock. NKOTB Medibank Private eased ahead slightly but Telstra Corporation Limited (A$5.68, +0.2%) stalled.
Sitting pretty today were Liquefied Natural Gas Limited (A$2.86, +13.9%),Chorus Limited (A$2.55, +9.4%),Corporate Travel Management Limited (A$10.69, +8.6%),Sirtex Medical Limited (A$28.63, +5.5%),Mesoblast Limited (A$4.53, +7.9%) and Amcom Telecommunications Limited (A$2.36, +6.3%) in the biggies and Cudeco Limited (A$1.25, +10.6%),Sino Gas & Energy Holdings Limited (A$0.19, +2.7%),Starpharma Holdings Limited (A$0.52, +8.3%) and Cardno Limited (A$3.00, +4.2%) in the smalls .Losers were Ten Network Holdings Limited (A$0.225, -6.2%)(seriously)Nufarm Limited (A$4.34, -6.1%),Beach Energy Limited (A$0.965, -3.0%),Southern Cross Media Group Limited (A$0.99, -3.4%),Bt Investment Management Limited (A$6.50, -3.1%),Greencross Limited (A$7.98, -1.5%) and Mineral Deposits Limited (A$0.91, -9.0%),Brockman Mining Limited (A$0.046, -8.0%) and #FLN# in the getting smaller stocks .Volume was the new ok at around $4bn.
The Aussie dollar had an interesting day after the GDO number dropping below 84 c before rebounding slightly.Bitcons at $453 and Gold at $1200.Asian markets were mixed to better following on from the US ,Japan was up 0.55% Honkers down 0.42 and Shankers up 1.5%.
Just to put it in perspective China has put on 15% to its market in a month(actually in the last 10 sessions) to a three year high, while the ASX 200 is down 200 in a month! Why are we so stuffed I wonder?
Stocks and Stories
Gross domestic product rose 0.3 per cent from the June quarter, when it gained 0.5 per cent. The result was less than half the expansion forecast by economists. From a year earlier growth was 2.7 per cent, also short of expectations for a 3.1 per cent figure.
Ten Network Holdings Limited (A$0.225, -6.2%) look s like the only bid they could muster was from Foxtel>?Discovery at around 23.5c.Not that flash really as things seem to be going from bad to really bad really quickly at the third FTA broadcaster.
Woolworths Limited (A$30.90, +2.2%) has made its first overseas acquisition with the purchase of a Chinese drinks distributor. Summergate is one of China’s top drinks distributors and represents a portfolio of around 80 global brands, including Concha y Toro and Chateau Masur.
Recall Holdings Limited (A$6.21, -0.5%) has bought its sixth business since July with the acquisition of Business Records Management for $77 million.
Fortescue Metals Group Ltd (A$2.71, +5.4%) has taken the knife to costs. They have moved to pare back the board of directors substantially and the ranks of senior managers in the wake of the Iron Ore rout.
China’s services sector grew marginally faster in November as new orders rose at their quickest pace in 2-1/2 years, a private survey showed.The HSBC/Markit Services Purchasing Managers’ Index (PMI) inched up to 53.0 last month from October’s 52.9.
Australians spend almost $2.4 billion buying groceries and liquor online, a sales index suggests, as online sales reach a record high.The latest NAB online retail index shows online groceries sales surged by 17.3 per cent in the 12 months to October.
Tomorrow’s News Today
7 year high for Nikkei despite ratings downgrade! Election and recession! Love more money printing and a low yen.
Looks like they are all pushing Humpty Dumpty off the wall. BHP is planning to split into BHP and ‘Rubbishco’ and now we have Vale from Brazil looking to split the company and create a new $14bn base metals spin off called Basevale.
Russia is heading for recession and having cancelled the Eastern European gas pipeline yesterday in favour of Turkey ,they continue to win friends around the globe.
Israel heading for the polls too along with Japan.
Riddle me this one Batman. Motorists were slugged with the third highest prices on record for the year at $1.50. Relief soon with luck.
Vale Phil Hughes