End of day stock market report 16 June 2015
16th June 2015
What happened today?
- The ASX 200 closed down 3 points today.
- A vote of confidence from Warren Buffet, after taking a 3.7% stake in local insurer IAG, was a shot in the arm for financials as the market shrugged off the Greek woes and a weaker Wall Street to hit its straps, up nearly 36 points before the RBA minutes were released at 11.30am. Lack of forward guidance on rate cuts from the board sucked the enthusiasm out and with the FOMC meeting kicking off tonight and the Greek Issue, investors appeared reluctant to continue the buying spree and we faded into the close slightly down for the session.
- Banks once again dominated the shopping trolley as did insurers with IAG +4.31% andSuncorp (SUN) +0.82% following in their wake. Telstra (TLS) +0.67% also put in a good day for a change with other safe haven yield plays like Wesfarmers (WES) +0.51% gaining.
- After many years of working together, Buffets’ Berkshire Hathaway group is paying $500m for almost 90 million shares in IAG at $5.57 each. IAG is taking over Berkshire’s local SME business and the Americans are taking the renewal rights to IAG’s large-corporate, property and liability insurance business in Australia.
- In other news Westpac (WBC +1.83%) announced it was selling a major part of its stake in BT Investment Managers (BTT) with a sell down of at least 55m shares and possibly another 27m depending on retail demand. The sell down will raise around $700m and take its holdings from 59% to between 31-40%.
- Big rise today for both Amcom(AMM) +14.66% and Vocus(VOC) +1.52% after yesterday’s positive merger vote. Seems that the landscape is changing fast for telcos with the $1.56bn takeover of iiNet (IIN) +0.47% by TPG (TPM) -0.23% likely to be approved by regulators.
- Big movers today included second liner AJ Lucas (AJL) +28.0% with a positive result from UK planning authorities on its proposed drilling with a final decision at the end of the month, whilst Monadelphous (MND) -5.98% continued to underwhelm following the contract dispute announced yesterday.
- Once again the RBA notes were clear as mud with comments on the currency being too high beginning to sound like a broken record. They have retained the “banging their head against a brick wall on the dollar’ bias whilst maintaining a wait and see approach to rate cuts.
- Overseas China slipped under 5000 with another 2.4% fall in the Shanghai Index.
- One commodity that may be worth keeping an eye on is good old gold. Fears of a Greek exit will only help the metal along, with Australian producers doing especially well with a combination of a lower dollar, lower production costs and a flight to safety.
- Finally traders in the US are getting very bearish. The chance of a rate rise in September is now at 53% but worryingly bearish positions outnumber bullish ones by the most in eight months.
- Thought for the Day: 45% of all government bonds in the world currently yield <1% (that’s $17.4 trillion of bond issues outstanding).
The Aussie is trading at US77.48c.
- Volume was $4.85bn Daily (average $4.3bn)
- Dow Jones Futures are down 24 points.
- Dow Jones was down 107 overnight.